What are your best tips and tools for reducing credit card disputes?

[Purple_HS]

Credit card disputes are the worst! 

What are you doing to combat them? What has worked for your business, and what hasn't?

[_Violet]

Hi @Purple_HS - Thanks for reaching out to us here on the Square Seller Community👋

We have a few "best practices" listed here in  this article from our Support Center. I'll also tag a couple of our Super Sellers to see if they have any additional tips to offer: @HC_Charlie @TheRealChipA @ryanwanner

I hope this information is helpful but please do let me know if you have any additional questions.

[dbodymedspa1]

I am having trouble with online payments. i am working hours on clients and then they do a charge back and no matter the proof i have they never side with th emerchant. its unfair! i was thinking how can they upload their ID and credit/bank card where we can have more proof..thoughts? or should I do cash only?

[JK_Fiber_Art · Accepted solution]

Hi Dbodymedspa1,

It's a no win situation for sure.  Just like making a computer secure - never connect it anything or simply don't turn it on and you will never get a virus or get hacked - unfortunately, that's not the real world.   Accepting "Cash" is a solution and it does work for many businesses - you just have to educate your clients.  You'll also save money on CC Processing Fees and other costs - something to consider if want to go that way.   You can still take advantage of online booking - you just have let your clients know that you don't accept Credit Cards.   What's interesting, we were considering at one point going in the opposite direction and not accepting cash because  about 2% of our sales were cash sales (We are in a mountain resort community and most everyone pays with a card so that was not the best solution for us). 

From the Card Issuers and Processors point of view - Preventing credit card chargebacks can be challenging, but there are several best practices you can follow to minimize the risk.  Below are some recommendations that may or may not apply to your business but, worth a look:

1. Clear and Transparent Policies: Clearly communicate your return, refund, and cancellation policies to customers. Make sure they understand the terms and conditions of their purchases upfront. Provide detailed product descriptions, including accurate images and specifications, to avoid any misunderstandings.

2. Excellent Customer Service: Provide prompt and attentive customer support. Address customer inquiries, complaints, and requests in a timely and professional manner. By resolving issues directly with customers, you can prevent them from resorting to chargebacks as a means of resolving their problems.

3. Accurate Billing Descriptors: Ensure that your billing descriptors, which appear on customers' credit card statements, are easily recognizable and reflect your business name or website. This helps customers easily identify and remember their transactions, reducing the likelihood of chargebacks due to unrecognized charges.

4. Secure Payment Processing: Implement robust security measures for your payment processing systems. Use secure sockets layer (SSL) encryption and comply with Payment Card Industry Data Security Standard (PCI DSS) requirements to protect customer data and minimize the risk of fraud.

5. Fraud Prevention Measures: Utilize fraud prevention tools and techniques to detect and prevent fraudulent transactions. Implement address verification service (AVS), card security codes (CVV/CVC), and advanced fraud detection systems to identify and mitigate suspicious activities.

6. Detailed Transaction Records: Maintain comprehensive records of customer transactions, including proof of delivery or service fulfillment. These records can serve as evidence in the event of a chargeback dispute.

7. Clear Communication: Keep customers informed about their order status, shipping updates, and any changes to their purchase. Proactive communication helps manage expectations and reduces the likelihood of chargebacks resulting from customer frustration or confusion.

8. Properly Described Products or Services: Accurately describe your products or services, including their features, limitations, and any potential risks. Avoid misrepresentations or exaggerated claims that could lead to customer dissatisfaction and chargebacks.

9. Chargeback Alerts and Notifications: Sign up for chargeback notification services provided by your payment processor or acquirer. These alerts inform you promptly when a chargeback is initiated, allowing you to respond within the required time frame.

10. Track and Analyze Chargeback Data: Monitor and analyze your chargeback data to identify patterns, common reasons, and areas for improvement. This data can help you identify recurring issues, implement preventative measures, and fine-tune your operations to reduce chargeback instances.

Remember, while implementing these best practices can help reduce chargebacks.   it is impossible to eliminate them entirely. Some chargebacks may still occur due to factors beyond your control.  Regularly reviewing and updating your policies and procedures based on customer feedback and industry trends will help you continuously improve your chargeback prevention efforts.

jk

[_Violet]

Hi @dbodymedspa1 - Thanks for reaching out to us here on the Square Seller Community👋

I went ahead and merged your post to an existing thread where other Square Sellers have discussed this topic as well. We merge duplicate conversations together to keep like comments in one place, and to make it easier for others to find the thread in the future. 

In addition to @JK_Fiber_Art, some of our Super Sellers have provided their insight on this thread too.

I hope this information is helpful but please do let me know if you have any additional questions.

[TheRealChipA]

Hi @Purple_HS.  Before I begin, a disclaimer.  I’ve only had one “real” credit card dispute in my 11 years in business.  That’s not unusual, as I am an ice cream shop.  My one dispute involved an online gift card sale that was used (nearly immediately) for a food purchase a few years ago when I was in the food service business.  Different names on each transaction, but it was more than obvious that it was the same person trying to get food using a stolen card.  They succeeded because banks are the worst and they almost always make decisions in the card holder’s favor even in the face of overwhelming evidence.  Banks do not care about small businesses, trust me.  They live and die by “their customer is always right!”  Anyway…..

The document that @_Violet linked to is a good resource, especially for large sales (contracts).  Also, having your business show up on card statements exactly helps a lot.  If you have a return policy, spell it out on contracts, invoices, receipts, etc.

The biggest exposure any retailer has to fraud is online fraud.  It’s just a fact of life once you decide to do online sales.  So, spend some time reviewing something called Risk Manager.  It allows you to set up rules to flag and/or decline transactions based on the rules you specify.  You can review flagged transactions (daily is best, but…) to decide whether or not you want to go ahead anyway, or decline them.  Risk Manager is one of the best tools you have to reduce your exposure to online fraud.  It is found at Payments -> Risk Manager from your dashboard.

I’ll add one more thing.  At the end of each year, I’ve made it a habit to review what I lost in revenue due to waste, disputes and other uncontrollable accidents.  I figure out the percentage that is of my total sales and then add that percentage to my cost of goods calculation.  I know some sellers who take that “extra” they are charging and set it aside to draw from when things like disputes happen, so they aren’t hit so hard.  That might be something to look into as an internal insurance policy.

If you reply and describe your business, what you sell, is there a bricks-and-mortar location, etc, we can probably give you a few more pointers.

[Purple_HS]

Thanks, @TheRealChipA.

Yes, the banks often can't be counted on due to a lack of staffing and care, bad policies, etc.  

All your tips are great! One other tip I'll pass along to others is that once a dispute is filed, make sure all your communication with the customer is in writing. It's much easier to present a written conversation to a bank than to say I called and talked about "XYZ."

[HC_Charlie]

@Purple_HSthanks for your post. Another possible item to help in a dispute could be any video footage from any store cameras. If the purchase was made in person at your place of business, if you have any security cameras you could match the person/date/time with the disputed purchase. If it was indeed the real person who just wants something for free, that video proof may help you fight the dispute.