Charge Back Fees? 5 More Ways to Avoid a Chargeback.
Charge backs can be not only incredibly time consuming, frustrating, and expensive but they can put your business as risk. A little while back we published an article titled “7 E-Commerce Essential Tools to Avoiding a Chargeback”. This article was so popular that we are constantly asked for more ways that business owners can protect their businesses against fraudulent charge back notices. So here are 5 more simple policies that you can put in place today to help prevent the paperwork, headaches, and fines associated with the dreaded charge back and focus on what you do best and that is running your business. The chargeback rate of e-commerce businesses is much higher than that for the retail industry, however, these practices can be implemented for many business models.
1. Make sure that you use AVS or address verification system. AVS protocol is a system that checks the address information provided by the purchaser against the information on the actual cardholder’s account. Criminals trying to use a stolen or counterfeit credit card will most likely not have this information to them. This enables you to carefully track or stop any orders that do not have matching credit card AVS and cardholder information. This one step alone will greatly reduce the number of chargebacks encountered, especially if you are a High Risk merchant.
Credit Card Billing Name
2. Clearly disclose what name will appear on your customer’s credit card billing statements. We have talked about this before, however, it warrants another mention. This is one of the simplest yet most effective ways to reduce the chances of a charge back. Many online merchants and e-commerce accounts that have high sales volumes utilize multiple names or third party payment processors to complete their orders. This can result in business names appearing on credit card statements that do not match your company name or website name. The result is consumer confusion which leads to chargebacks. So make sure that the charge name is clearly disclosed so your consumers will remember buying from you and not be tempted to call their credit card company to complain about the charge.
CVC2 and CVV2 Numbers.
3. Verify CVC2 and CVV2 Numbers. This one step has been estimated by the experts at Visa to reduce the number of charge backs to e-commerce merchants by almost 30%! The CVV and CVC numbers are located on the back of VS/MC/Discover cards to the right of the signature pane and are a series of 3 numbers. On American Express cards the numbers are located to the right hand side of the account number. This is an important step because these numbers are not available on the magnetic strip information. This will deter the use of counterfeit or fraudulent credit cards and ultimately your charge back ratio. There are many payment processing systems that will support this feature simply call your credit card processor and web technician to confirm compatibility.
4. Log IP addresses and Clearly post that all IP addresses will be captured as a security measure on ALL orders. This is an incredibly important step for e-commerce merchants as it makes tracking fraudsters much easier. Disclose that this practice is in place to protect consumers and reduce fraudulent orders and that IP addresses can be used to easily track fraudulent orders. This disclosure will greatly discourage credit card fraud prone criminals from your site and onto one with more relaxed security measures.
5. If you utilize a carrier who requires a signature for delivery, work with that carrier to see if you can maintain a record of it. Retain this information to prove that your commitment was fulfilled in the event of a charge back. For any business that takes a lot of phone, internet, or mail orders this is a simple step that may not prevent a chargeback but will greatly reduce the amount of time that it takes to defend yourself when one does occur.
If you implement these five simple additional policies you will greatly protect your business from unwarranted charge backs, credit card fraud, unnecessary fines, headaches, and unscrupulous customers. Too many chargebacks can lead to the Visa/MasterCard/Discover network levying heavy fines or worse placing your business on the black list banning your ability to ever accept credit cards again and these items would put most businesses out of business in this day and age. Remember preventing chargebacks is one of the biggest steps you can take to protect your business and with a little diligence to make sure that you are set up properly you will be able to focus on what you do best, running your business and not managing problems!
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