Chargebacks can erupt into a huge hassle for any business that accepts credit cards. When customers dispute bank charges, merchants are forced to fight to keep the money they’ve already earned. For business owners, the problem is only getting worse: chargeback expenses increased 8% last year for all US merchants.
Since most chargebacks are settled in favor of the customer, we’ve put together a short list of things you can do to help prevent chargebacks in the first place.
1. Be transparent about return policies
If your contact information or return policies are hard to find, customers might go straight to their banks to challenge the charge. Don’t make your customers jump through hoops to make complaints or return merchandise.
2. Register your business under an obvious name
Customers are more likely to dispute a charge when they don’t recognize the business name on their credit card statement. Check with your processor to make sure you’re registered under a name your customers will remember.
3. Catch duplicate orders
No one wants to be charged for accidental hitting “submit” twice. Make sure your website or point of sale system is set up to track and prevent duplicate orders.
4. Keep track of who’s buying online
Fraudulent online orders are likely to be very large orders coming in late at night. To help prevent these scams, you can block IP addresses from countries known for suspicious cyberactivity or request a scan of customers' picture IDs.
5. Ban chargebacks
If you run a contract-based service business like IT or law, have your customers waive the right to charge back in the terms of their agreement.