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What are the best practices for chargebacks?


Note: The following article is written for GoEMerchant customers, however - generally - these are best practices for working with chargebacks:


GoEmerchant has a dedicated chargeback unit. GoEmerchant’s practice is to assist the merchant in any way possible to make sure that they are successful in the chargeback dispute.
Please review the following information and feel free to contact your merchant provider sales representative to answer any questions or discuss any concerns you may have.

Chargeback is the term used when a customer disputes a charge on her credit card bill. Generally, chargebacks will happen for one of several reasons:
  • A clerical error, such as a customer being double-billed or being billed for an incorrect amount
  • Customer dissatisfaction, such as not receiving a product or receiving a product different than what was paid for
  • A customer not recognizing a purchase, especially if the merchant name that appears on her bill differs from the actual name of the store
  • Fraud — when a customer claims she did not authorize a purchase or a purchase was made as a result of identity theft.
For most transactions, customers have 120 days from the sale or when they discovered a problem with the product to dispute a charge.
The bottom line here is that whenever customers feel that they have been charged for something they shouldn't have, they can file a dispute with their bank which begins the chargeback process.
Whenever a chargeback is initiated, a merchant will receive a code from itsissuing bankthat gives a reason for the dispute. Some of the most common Visa and MasterCard chargeback codes are listed below. Once a customer has disputed a charge, a merchant's acquiring bank will begin going through a specific procedure to resolve the issue.
Chargeback Reason Codes
  • 30: Services Not Provided or Merchandise Not Received
  • 41: Cancelled Recurring Transaction
  • 53: Not as Described or Defective Merchandise
  • 57: Fraudulent Multiple Transactions
  • 62: Counterfeit Transaction
  • 71: Declined Authorization
  • 72: No Authorization
  • 73: Expired Card
  • 75: Transaction Not Recognized
  • 77: Non-Matching Account Number
  • 80: Incorrect Transaction Amount or Account Number
  • 81: Fraud—Card-Present Environment
  • 82: Duplicate Processing
  • 83: Fraud—Card-Absent Environment
  • 85: Credit Not Processed
Preventing Chargebacks
With the cost associated with chargebacks, merchants should take steps to protect themselves. Here are some simple steps that can help prevent chargebacks:
Respond Quickly
  • Respond to retrieval requests and chargebacks promptly. Banks will simply process a chargeback if a merchant doesn't respond to the dispute in the allotted time.
Deliver Great Customer Service Clearly Post Return Policies
  • Make it as easy as possible for customers to get customer service, and make the return policy clear at the time of the transaction. Many customers will go to a merchant to resolve a dispute first, only initiating the chargeback process if they cannot get assistance or a refund from the merchant. A direct refund from a merchant to a customer is always less expensive than if a customer wins a chargeback.
Swipe Cards When Possible
  • Card-present businesses can prevent chargebacks by requiring that cards be swiped, and get a signature whenever possible. This makes it easy to prove that the cardholder is the one using the card — so easy that, beginning in April, Visa will reject chargebacks with certain fraud reason codes if the card was electronically read.
Obtain CVV/CVC Codes
  • Another suggestion to prevent fraud is to require customers to enter the 3 digit security code on the back of their card when ordering products online. This helps to ensure that the person using the card has the physical card in hand and has not stolen an account number.
Use Verified by Visa MasterCard Secure Code
  • One more step to prevent fraudulent online purchases is to take advantage of Verified by Visa or MasterCard Secure Code — both programs that require customers to enter a password when using a card online.
  • Communicate with customers. If customers know the status of their orders, they will be less likely to dispute a charge.
Ensure Truth in Advertising
  • Advertise honestly and have clear terms of service — these can prevent customers from disputing transactions because the product they purchased was not as described.
Avoid Technical Errors
  • Take measures to avoid clerical or technical errors. Visa provides an excellent list of suggestions here.
Abide by Card Association Regulations
  • Follow the terms of service set by the card brands. Any compliance violation can cause a merchant to lose its chargeback rights.


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