If your online business deals in online good or service sales, you need to constantly monitor the company’s chargebacks if you want to salvage both your company’s bottom line and your reputation among the credit card processors or merchants. Customers that dispute the transactions that appear on their credit cards are often appeased by having the merchant reverse the charges and transactions. For the merchant, this process of representment is usually in the best interest of customer relations, but it can be damaging to a company if it is not monitored or assessed.

Chargeback Fraud

Small business owners are the most susceptible to these issues of chargebacks. For instance, the situation of a business owner who purchases an item for $100 and sells it to a customer for $200 within a few days. If the customer opens a dispute for the item and the chargeback is issued, the business owner is out both the profit and the initial cost of the item. Reducing chargebacks protects your company’s finances, even if the cause wasn’t a customer’s complaint and was related to a clerical error. If you don’t have the time to monitor issues with your credit card processing transactions, using a company like Ethoca can help get your chargebacks under control.

Reasons for Chargebacks

When you know why chargebacks are occurring, you know where to set up your defenses. Here are the tops reasons a customer will initiate a chargeback on a transaction that occurred with your business.

  1. Shipping and Receiving Complains. If a customer doesn’t receive the item they ordered or it didn’t arrive in the condition that was described or promised, a dispute may be initiated. Always keep your shipping receipts, but also providing tracking information to the customer to help limit disputes in this area.
  2. Unauthorized Financial Transactions. A customer may call and deny that they ever authorized a payment to your company, whether it was a phone order or through the mail. Always keep detailed records of phone orders, getting as much information as you can from the caller in order to verify the legitimacy of the call. Ask for the last three numbers on the credit card, or the CVV number, as well as the address.

Unfortunately, there are customers who don’t want the best for your business and are only looking to get what they can from others in unscrupulous ways. They choose to lodge complaints and open chargebacks that are unfounded, costing your business money. Keep an eye on your company’s chargeback to avoid losing money in unnecessary areas.