Do Chargeback Disputes Harm Customer Satisfaction?


How Chargebacks Impact the Customer Experience

How does a merchant’s chargeback management strategy effect the quality of customer relationships? Do disputes and prevention efforts impact customer satisfaction, trust and commitment?

Can merchants protect their bottom line and their reputation?

The Key to Success: Identifying the Source of Chargebacks

One of the primary concerns holding merchants back from engaging in chargeback representment is the idea that disputing chargebacks will negatively impact customer satisfaction.

It’s easy to understand why merchants would be concerned. After all, merchants don’t want to dispute chargebacks resulting from true criminal fraud, as doing so would just add insult to injury—calling the customer a liar after being victimized by a fraudster.

However, simply accepting all chargebacks allegedly resulting from criminal fraud isn’t advisable. Because chargeback reason codes were created in a pre-internet era, there are loopholes in the archaic system that unscrupulous consumers can exploit. Friendly fraud can be disguised with virtually any reason code—including codes that are associated with unauthorized transactions.

Rather than just accept these chargeback codes at face value, merchants need to determine the real reason for the chargeback.

As much as 86% of all chargebacks are cases of friendly fraud—not criminal fraud as the reason code implies. Therefore, merchants have a great deal to gain by engaging in chargeback representment, as long as they can distinguish the true source of their chargebacks.

Using our Intelligent Source Detection product is the only way to isolate chargebacks by source. The ability to determine the source of a chargeback is essential because without this insight, merchants would be fighting blind.

Two Chargeback Issues that CAN Harm Customer Loyalty

Avoiding transaction disputes through effective chargeback management is dependent on the right tools being applied with the right logic. An absence of these key elements can have negative, long-term consequences—including damage to customer retention rates.

1. Automation

When it comes to representment, human oversight is absolutely imperative. Solutions reliant entirely on automation could cause significant customer relations issues.

Automated systems will submit all available information associated with the customer and the transaction in question. This might include everything from profanity and insulting comments made by the customer service representatives to an admission of actual mistakes the merchant made. Considering this information will be viewed by both the bank and the customer, automation without human oversight can easily damage the merchant’s reputation.

Moreover, static, automated representment products will ignore everything that looks like criminal fraud, meaning that a lot of chargebacks which could have been won will slip through the cracks.

One of the defining characteristics of Chargebacks911’s Tactical Chargeback Representment product is expertly-applied human forensics. Not only does our approach recover lost revenue with greater success, but it also protects the merchant’s reputation and retains satisfied customers.

2. Disparaging Comments

Unsatisfied customers who complain online about their experience can damage the merchant’s reputation. This reputation damage can prevent future sales and cause higher churn through the perception of low quality and overall satisfaction.

When customers publicize their grievances, merchants experience more chargebacks. Customers feel a comradery with other unsatisfied shoppers and assume they are just another victim of a ‘fraudulent’ merchant.

Merchants need to monitor their online reputation carefully and respond to public grievances. However, this can be a time consuming process. BBB Review Mediation will ensure customers’ issues are addressed without funneling valuable in-house resources away from revenue-generating departments.

The Importance of Challenging Friendly Fraud

Challenging friendly fraud is about much more than just recovering lost revenue; it is a unique opportunity to optimize long-term success.

Merchants who forego their right to representment create a vicious chargeback cycle with dangerous, long-term implications.


Reduced Chargebacks and Happy Customers

Fortunately, merchants hoping to avoid transaction disputes aren’t in an ‘either-or’ situation, but rather a ‘both-and.’

It’s not an issue of either effective chargeback management or satisfactory client retention rates; it’s a case of both stable, profitable payment processing and gratifying customer relations.

However, finding this perfect balance won’t be easy.

You need a representment expert who is also a customer retention specialist. You need tactical disputes with an understanding of what should and shouldn’t be fought. You need Chargebacks911®.

Prevent Chargebacks.

Fight Fraud.

Recover Revenue.

Jul 22, 2016   219   Chargebacks    Best Practices  
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