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Credit card chargebacks are one of the biggest disadvantages of selling products and services online. A chargeback is essentially a dispute created by a customer over either a legitimate reason or to deceive.
In either case, if the customer wins, the payment that they made through a credit card gets reversed, and the business also has the pay a chargeback fee. Chargebacks can potentially result in huge losses and a tarnish reputation. It is therefore important that a business protects itself from such chargebacks.
Fair Credit Billing Act of 1974 (FCBA)
In hopes of protecting businesses from frauds and unfair billing practices, Fair Credit Billing Act was passed in 1974. According to this act, individual credit card companies must investigate timelines and procedures before allowing chargebacks.
Also, banks or other payment services are allowed and even encouraged to block accounts that exceed a specific chargeback to transaction ratio. Even then, it is fairly easy to be conned and get credit card chargebacks. Therefore, a business must take action to ensure protection.
Actions that Can Protect a Business from Credit Card Chargebacks
Credit card chargebacks result in the business losing earned money and potential sales or customers. Hence, it is advised to create an easy-to-understand return and dispute policy. This way, the customers will willingly contact the business before contacting the credit card company.
The return and dispute process can be made easy by following up after deliveries or purchases, creating an automatic quick return process, and providing ways to communicate, such as 24/7 customer service via message or email.
It is also important to use at least three or more fraud-fighting features to ensure protection and prevention. Such features prevent problems at the checkout by including chargeback prevention alerts, email verification methods, contact and address confirmations, and credit card security codes. By including such measures, a business leaves no loopholes for the possibility of fraud, thereby reducing credit card chargebacks.
Although such technical features are significant, the customer services team of a business is the ultimate solution to chargebacks. Training individuals who handle transactions and communications with customers ensure an overall better relationship between the business and its customers, resulting in their trust in its policies.
Furthermore, trained members of the customer services department can recognize suspicious transactions and collect crucial evidence to prove fraud. It is their eyes and hands that can stop a credit card chargeback. Analyzing annual transactions and assessing the data on chargebacks can result in better practices and cautionary measures. A POS system provides reports regarding transactions and forms charts showcasing trends. Such information helps a business monitor and prevent credit card chargebacks.
Furthermore, it is important to review the shipping and billing processes and make them as easy and transparent as possible. Easy processes not only reduce chargebacks but also increase purchases and customer satisfaction. All in all, chargebacks can be prevented through multi-layered payment protocols, a well-trained team, and quick customer services