Five Surefire Ways to Prevent Chargebacks and Retain Revenue
If you're a merchant reading this article, chances are you fall into one of two categories: either you've received your first chargeback and are uncertain how it happened, or you have excessive chargeback rates and are on the brink of losing payment processing rights if drastic measures aren’t taken.
Regardless of why you happen to be interested in the subject of chargeback prevention, this is a good place to start. Here are five things guaranteed to prevent chargebacks and retain more revenue:
Chargeback Prevention Strategy #1: Download the eBook
DIY chargeback prevention is a massive undertaking. There are various tools a merchant must utilize and strategies to implement. Everything from fraud detection to business best practices must be addressed.
The subject of prevention is so extensive we wrote an entire eBook that explains all the potential tactics a merchant can use for preventing chargebacks.
Each chapter addresses a specific prevention issue.
- Marketing and Branding Requirements
- Fraud Detection and Prevention
- Data Security Regulations
- Friendly Fraud Identification
The suggestions offered in this eBook will help a merchant lay a firm foundation for chargeback prevention.
Chargeback Prevention Strategy #2: Dispute Friendly Fraud
Merchants tend to base their chargeback dispute efforts on ROI.
Most feel that if the time and resources allocated to representment will add up to more than the revenue recovered, then it’s best to accept the chargeback as a loss. However, while evaluating representment based on ROI might seem logical for short-term gain, the long-term ramifications could be deadly.
Refusing to engage in representment trains consumers to believe that there are no consequences to their actions. This does nothing but reward fraudsters and encourage future attacks—that’s why it’s essential that merchants take a stand and challenge friendly fraud every time.
It’s a merchant’s responsibility to fight illegitimate chargebacks.
As long as merchants step up and dispute friendly fraud, they will see greater long-term ROI. If merchants refuse that responsibility, though, chargeback rates will increase and more revenue will be lost over time.
Chargeback Prevention Strategy #3: Eliminate Automation
There are various automated representment services available on the market today. Many businesses view automation as a cost-effective tool that is capable of streamlining the chargeback management process.
In reality, automation is just another technology that’s subject to glitches and errors. Without a manual review, these automated systems can easily respond with a dispute that doesn’t portray the business in the best light.
Find out how combining automation with human forensics creates the only truly effective chargeback solution.
Submitting an inaccurate or inconclusive dispute is just as harmful as failing to engage in representment. The unflattering representation of the business is in accordance with what the cardholder originally claimed; the merchant is unprofessional, cuts corners, and doesn’t appreciate quality.
Merchants need to forego automated systems and personally dispute each chargeback. This is another example of how effective representment is actually a form of chargeback prevention; the merchants with the best reputations will receive fewer chargebacks from issuing banks. Those merchants who are incapable of crafting an error-free dispute will receive more.
Chargeback Prevention Strategy #4: Build Relationships
The chargeback process is very subjective. Humans, with varying opinions, are involved at every stage. If a merchant isn’t perceived well by the various issuing banks, chargeback rates could skyrocket.
The expectations for one issuer might be vastly different from those of another financial institution. It is advantageous for merchants to establish professional relationships with representatives from each of the major issuers.
Merchants can learn what banks look for in a winning representment, which will ultimately help the merchant maintain a positive reputation free of assumed fault.
If issuers learn the merchant isn’t a pushover and expects fair treatment when transactions are disputed, the bank will ensure each chargeback filed is legitimate. Banks might even reach out to merchants directly to resolve the cardholder’s grievance outside the chargeback process.
Chargeback Prevention Strategy #5: Get Professional Help
The effectiveness of DIY chargeback management has its limits. Usually, merchants are only capable of preventing the low hanging fruit—the easily avoidable disputes.
Professionals are able to prevent those obvious transaction disputes as well as more complex issues. If it is possible to prevent a chargeback, a professional can help merchants avoid it.
Chargebacks911® offers various products and services that are specifically designed to help merchants keep chargebacks to a minimum.
Intelligent Source Detection™
In order to effectively prevent chargebacks, merchants must first determine what really triggered the cardholders’ actions. Unfortunately, interpreting the true reasoning behind the transaction dispute isn’t accomplished by reviewing the reason code or the bank’s description of the situation.
Genuine understanding is difficult, but not impossible, to come by.
Chargebacks911 created Intelligent Source Detection™, a combination of patent-pending technologies and expert personal analysis that is capable of determining the real catalyst behind the chargeback reason codes.
We’ve learned each chargeback is caused by just one of three things: merchant error, criminal fraud, or friendly fraud. Our Intelligent Source Detection™ correctly identifies which chargeback trigger is to blame in any given situation.
If merchants don’t successfully identify the source of the chargeback, they’ll never be able to devise an effective prevention strategy since they’ll forever be targeting the wrong source.
Merchant Compliance Review
Unbeknownst to merchants, many chargebacks result from the merchant’s own unintentional errors and oversight. Merchants are unable to objectively review the business’s practices and policies to identify potential sources of trouble.
Chargebacks911 created a much-needed chargeback prevention product, our Merchant Compliance Review, to help merchants detect and eliminate those errors that commonly lead to transaction disputes.
This proprietary product consists of three layers of support:
- A 106-point inspection carefully scrutinizes the business’s policies and procedures.
- After isolating the most common instigators of transaction disputes, Chargebacks911 provides a comprehensive, actionable report.
- Our personal integration consultants help merchants make the necessary changes and adhere to business best practices in order to eliminate chargebacks resulting from merchant error.
Merchants are encouraged to join chargeback alert networks. Networks of issuing banks have joined forces to help merchants avoid criminal fraud chargebacks.
When a cardholder contacts the bank to dispute a transaction based on criminal fraud, the issuing bank alerts the merchant to the situation. Merchants are given the chance to refund the unauthorized transaction before it turns into a chargeback.
This chargeback prevention product is especially helpful to merchants who need to quickly reduce excessive chargeback rates.
Chargebacks911 offers the broadest alters network on the market. If you’d like to learn more, contact us today.
Affiliate Fraud Alerts™
Affiliate marketing is a viable way to increase profits, but only if liabilities are kept to a minimum.
Chargebacks911 uses our Affiliate Fraud Alerts™ to help merchants identify affiliate fraud techniques that will likely result in chargebacks. We help merchants avoid unsavory affiliate marketers who could potentially increase the merchant’s risk of chargebacks.
It’s Time to Take Action
It doesn’t matter why you are here, whether you need to prevent one chargeback or one hundred. There are scalable chargeback prevention strategies available for businesses of all sizes in all industries. Fully outsource the task of chargeback prevention or receive on-demand services—just make sure you are receiving the assistance you need before chargebacks threaten the longevity of your business.