Why Chargebacks Happen—The Provocative Truths
Not All Disputes Are Fraud
Technical Glitches & Billing Confusion
Dreaded “Item Not Received”
Over 60% of chargebacks arise from “friendly fraud,” where customers forget purchases, dispute legitimate charges out of convenience, or believe the merchant will handle it faster than the bank. Shocking? It happens more often than you think.
Dreaded “Item Not Received”
Technical Glitches & Billing Confusion
Dreaded “Item Not Received”
In the age of instant gratification, a package arriving even a day late can trigger a dispute. If your shipping notifications aren’t crystal clear, or if tracking data isn’t pushed to the customer in real time, you’re sitting on a ticking time bomb.
“Defective or Not as Described”
Technical Glitches & Billing Confusion
Technical Glitches & Billing Confusion
20% of chargebacks stem from product misunderstandings. Are your product listings vague? Do your images mislead? A single misleading adjective might cost you hundreds—or thousands—in revenue.
Technical Glitches & Billing Confusion
Technical Glitches & Billing Confusion
Technical Glitches & Billing Confusion
Was that recurring subscription charge buried in fine print? Did your website accidentally charge a customer twice? Friendly fire from your own system can trigger mass chargebacks if you’re not vigilant.
Proactive Chargeback Prevention Strategies
Perfect Your Product Descriptions
- Use high-resolution images from multiple angles.
- Provide accurate dimensions, weight, and material details.
- Include video walkthroughs or user-generated images if possible.
- Ask Yourself: Could a skeptical customer look at my page and still understand exactly what they’re buying?
Streamline Shipping & Tracking
- Offer real-time order status updates via email and SMS.
- Choose shipping methods with robust tracking and signature confirmation.
- Automatically send “Your order is on its way” notifications—don’t wait for the customer to ask.
Implement Clear Billing Descriptors
- Display a concise “ShopName.com” or “MidTrix Billing” label on customer statements.
- For subscriptions, send advance reminders (“Your next payment of $X is scheduled for MM/DD”).
- Provide an easy link for cancellations or plan changes without logging in.
- Ask Yourself: If a customer sees “Charge from AB29XZ” on their statement, will they recognize it instantly—or panic?
Leverage Fraud Detection Tools
- AVS/CVV checks: Confirm that the billing address and security code match the cardholder’s information.
- 3D Secure (e.g., Mastercard® SecureCode™, Verified by Visa®): Adds an extra authentication step.
- Real-time IP geolocation: Flag high-risk orders when shipping addresses and IP addresses originate from dramatically different regions.
Maintain Responsive Customer Service
- Offer 24/7 live chat or chatbot options to answer immediate payment or order-related questions.
- Train representatives to proactively reach out when orders are delayed or back-ordered.
- Provide “easy refunds” for legitimate complaints before customers escalate to their bank.
- Bold Challenge: Would you rather refund $50 today, or fight a $500 chargeback—losing the merchandise, fees, and potentially your processor relationship?
Document Everything & Dispute Wisely
- Keep order confirmations, tracking records, signed delivery receipts, and any customer correspondence.
- When a chargeback arrives, evaluate if fighting makes financial sense. If the cost of evidence gathering and management exceeds the disputed amount, consider issuing a goodwill refund instead.
- Ask: Are you tracking every critical data point that a bank requires to win a dispute? If not, why not?