In recent years, there has been an increase in chargebacks and credit card disputes which have been filed by consumers. A recent survey revealed that chargeback abuse costs US businesses over $500 billion a year! These actions can increase costs for sellers and create even more anger in the marketplace.
The chargeback recovery is a service designed to protect merchants who may suffer from customer fraud actions. Keep reading to learn more about chargebacks and how merchants can protect their money for growing business.
What Is Chargeback Recovery?
The chargeback recovery process protects sellers from dishonest customers who may attempt to get free merchandise or services. Recovery happens with the help of a representation solution that helps merchants reclaim revenue after abusive chargeback made by the customer. There are three main parties involved in the chargeback process: the cardholder, the issuing bank, and the merchant.
The cardholder is the person whose credit card was used to make a purchase. The issuing bank is a financial institution that issues credit or debit cards to consumers for purchases. A merchant is any business that receives payments by cards issued by an issuing bank and agrees to comply with its rules and regulations of transactions, such as crediting money to a cardholder’s account or honoring posted prices when rendering goods or services.
How Does Chargeback Recovery Work?
While traditional fraud protection systems may have been able to detect false charges and prevent fraud, they cannot recover the money when a cardholder files a chargeback. You should have a chargeback recovery company that consists of specialized professionals who can assist you in the chargeback process.
Though it may seem like a simple process, the recovery process is tedious and requires specialized skills: negotiating with the customer to settle disputes; monitoring every transaction; defending claims by arguing that merchants comply with their terms and conditions; collecting evidence such as invoices, receipts and other documentation used for billing support. The process can take 30 to 60 days, depending on the complexity of the dispute.
For chargeback recovery, a seller should respond to a chargeback request with evidence listed below:
- Transaction date.
- The whole transaction history regarding the order.
- Complete delivery information.
- All the communications between the merchant and customer about the order.
Thus, the seller should provide all the necessary information and appeal that the chargeback request is not legal.
Who Abuses Chargebacks?
Chargebacks can be abused, and it’s not necessarily that the customer is dishonest. Some of them may have wrong expectations about goods quality and may not understand the rules of returns. Other chargebacks are made by cardholders who may be looking for an easy way to get free products or services but lose money in the process.
Chargeback prevention also means merchants should have reasonable refund policies informing customers of their rights. Sometimes, chargebacks can be caused by a merchant’s error, but it’s normal not to dispute and resolve such issues directly with the customer. It can be a refund or an order replacement.
How Bad Is Chargeback Abuse?
The chargeback abuse has become a big problem for many merchants, leading to fraud and huge money losses. Sellers should keep in mind that chargeback abuse costs their business much more than the refund amount. Additional problems include:
- Chargeback fees that should be returned to a bank.
- Going out of stock.
- Lower customer relations.
- Losing time and effort while dealing with chargeback claims.
That is why it is highly recommended to hire chargeback management solutions, a chargeback recovery service that helps to avoid such situations. After you find the right institution, ask what kind of services they offer and how much money they charge for them.
What Are Chargeback Recovery Services?
There are many chargeback recovery companies that can help merchants who encounter chargebacks. Some of them specialize in helping small merchants, while others have a wider range and include big companies. If you want to know how chargeback recovery services work or find an honest service that works with small and medium businesses, check whether they offer free consultation and free case analysis.
The Bottom Line
It’s time to take action against chargeback abuse. You should have a chargeback recovery solution that helps you avoid such situations and save you from losses. Keep in mind that chargeback recovery services are here to help businesses, and their goal is not to protect cardholders but to help merchants who suffer from fraudulent actions.