For entrepreneurs, chargebacks are never good. Having a chargeback claim filed against your business is a frustrating and costly experience. It damages your performance and reputation significantly.
On our third #rooftopmeetup yesterday, experts from Chargeback Optimizer and Avitar shared some valuable tips on how to protect yourself against unfair chargebacks. Below you’ll find some key takeaways from their speeches.
Why do chargebacks occur and how to prevent them
Kostyantyn Silyuchenko, R&D director at Chargeback Optimizer, started his presentation with the introduction to chargebacks.
- A chargeback is a forced return of money to a customer.
- The chargeback process can be initiated by the cardholder or by the issuing bank.
- The right to file a chargeback is granted once the payment is made.
- The chargeback process involves customer, merchant, issuing bank, acquiring bank, processing, and payment system. The delivery service, service provider, rightsholder, marketplace, and middleman can be involved additionally, in some cases.
- Сardholders have 120 days to file a chargeback. The maximum time allowed for a response is 30 calendar days. The issuer can process a chargeback in 15 days.
- As for the chargeback reasons, statistics shows 3% of chargebacks occur when the order was billed twice; 4% because of the product didn’t match the description; 4% – the product didn’t meet the customer’s expectations; 15% – the retailer shipped the wrong product; 26% – the product never arrived; 30% – the purchase was made with a stolen credit card.
- The chargeback rate (the number of chargebacks to the total number of transactions) should be as low as possible, with a 1,5% figure being a red flag.
- Chargebacks draw attention to the weaknesses of your business. If it’s a fraud, learn how to protect from it. If the reason is failed expectations, fix the descriptions of your goods.
Marketing compliance as a way of minimising chargebacks
In his speech, Avitar’s Managing Partner Myroslav Khmarsky told how the way you create advertising and promotional materials can affect your chargeback rate and what you should do about it:
- Marketing compliance implies all your marketing communications are in line with the law.
- Dark patterns are confusing design elements, which may result in conflicts with users, and therefore should be avoided.
- All the information you release about your product has to be accessible and inclusive.
- The fastest the customer support reacts to users’ requests, the lower the chance of conflict is.
- You must comply with the legislation of your customer’s country and educate your employees about it.
- Make sure your advertising reflects the real qualities of your product.
- Develop internal rules for making promotional materials. These rules should be created or revised by the Compliance Officer.
- Create a single and straightforward customer journey for further analysis.
- Make all the legal documents and announcements as clear as possible.
Both speakers told about plenty of real-life cases regarding chargebacks and answered many questions from the audience. Though it was a closing event from the #rooftopmeetups series, we enjoyed sharing the insights with you and will definitely be back with some more activities. Stay tuned!