Remedies for Chargebacks

To keep your chargeback ratio in check you have to take a proactive role. You can actually prevent chargebacks from escalating – and counting towards your monthly allotment.

The most common categories for chargebacks include point-of-sale errors, customer disputes, and fraud – and within these categories are a multitude of possible reasons. Understanding the reasons provides insight into how you can keep chargebacks in the “soft” phase from becoming full-blown chargebacks.

Let’s take a look at the possible remedies for common chargeback claims, along with the reason codes assigned by Visa and MasterCard.

Point-of-Sale Errors

Duplicate processing (82): This happens when the customer is charged twice for the same transaction.

Remedy: Issue a credit back to the customer’s credit card.

Customer Disputes

  • Customer claims services not performed (30): If you offer services and a customer claims that services were never performed, he or she will file a complaint with the issuing bank.
  • Remedy: If you did perform the service, send to the bank a copy of the invoice or contract signed by the customer and any other evidence that shows the service was performed. If the service wasn’t performed because it was scheduled for a date that is still in the future, provide a copy of the contract specifying that information. If the service wasn’t performed, issue a credit back to the customer’s credit card.
  • Canceled recurring transaction (41): This happens when a customer claims that he or she notified the merchant to cancel recurring transactions, but the merchant continued to bill the customer. Chargebacks can also result when a transaction amount exceeds a pre-authorized dollar amount.
  • Remedy: Issue a credit back to the customer’s credit card.
  • Merchandise/service not as described (53): If a customer claims that the merchandise or services received were not the same as described on your website at the time of the transaction, the bank will issue a chargeback.
  • Remedy: In these situations, it’s important to find out if the customer returned the merchandise or in the case of services, attempted to resolve the matter directly with you. Customers can’t file a chargeback unless they’ve attempted to return the merchandise to you. If the customer has already returned the merchandise, or for services rendered, issue a credit back to the customer’s credit card.
  • Defective merchandise (56): In these cases, the customer claims that merchandise was defective, damaged or not suitable for the purposes sold and the customer attempted to return the merchandise.
  • Remedy: If the customer did not return the merchandise notify your issuing bank. The customer must attempt to return the merchandise (and prove it). If the merchandise was returned, but is not defective, let your processing bank know. If the customer returned the merchandise and it is defective, issue a refund.
  • Customer claims merchandise not received (90): If a customer doesn’t receive the merchandise, he or she should try to work it out directly with you but it doesn’t always happen that way. Customers can file a claim with the bank disputing that the merchandise was ever delivered.
  • Remedy: If you did deliver the merchandise, send all evidence of delivery, including signatures, to your processing bank. If the chargeback is attempted less then 30 days from the date of sale, send a copy of the transaction to the processing bank showing that 30 days has not yet passed since the sale took place.

If you haven’t shipped the order but have notified the customer of the expected ship date, send all communications to your bank. You are entitled to a fair amount of time to deliver your product.

Potential Fraud

Fraudulent card-not-present transactions (61): Your bank will notify you if a customer claims that he or she did not authorize or participate in a transaction appearing on his or her billing statement.

Provide all documentation from the sale including authorization approval, confirmation of exact match to the AVS request (i.e., the customer’s street address and zip code), and proof of delivery to the AVS address. If you don’t have the above confirmations, you will probably end up with the chargeback.

With the right amount of due diligence and transaction monitoring, you can prevent chargebacks in the first place or remedy them before they become full-blown chargebacks. For tips on avoiding fraudulent charges, see our previous post on staying off the MATCH list.

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