What is the best way to fight chargebacks? I have got over $2000 of chargebacks in the last 3 months.

If the customer is have the order shipped to a different address I try to verify the customer information by using the public directory or call them to verify their identity, but the problem is I am getting chargebacks from customer who have the orders shipped to their billing address and they still file disputes.

Is there a way to actually protect yourself from Fraud when you are doing business online? My merchant keep saying that "This is a risk you take when you do business online".

1. If the payment processor you are using provides 3D Secure authentication then the responsibility for chargebacks passes to your Bank - providing that the customer passes 3D Secure authentication. The Bank will still ask you to accept the chargeback but you have the right to say "No". This is a two-edged sword though - as the Bank may then classify you as "High Risk" and require that you pass a higher level of PCI/DSS compliancy.

2. Use a shipping system that requires a signature upon delivery. This is not foolproof, as fraudsters will dispute it was them that signed for the item.

3. For first orders only ship to the billing address.

4. Be suspicious about high-value orders from new customers, especially if they ask you to ship via Express Delivery to some out of the way place/country.

Vger

We do require signatures on most orders, but even with signature we have had people that file chargeback.

I even had one customer that called 3 times before placing the order, I was able to show call logs but he claimed his phone wasn't with him and he never authorized the call. Even though he had the same number 4 months later.

It is hard to limit the shipping to billing address in most cases. A lot of customers have their orders shipped to a shop where there vehicles are being serviced.

Most of our customers are one time only so we can't build a safe customer database. The problem remains some orders are high priced items ($1000). I have been more strict on such items but sometime I cancel and order and then have to fight with the customer over the reason, especially Canadian customers.

Is it too much to ask for them to fax a signed copy of the invoice and copy of id for a $1500 order?

Chargeback rate is less than 5% but that hurts when you get $1000 deducted for a chargeback overnight.

I am looking into this company called CashRun. I think they offer some kind of Chargeback Guarantee.

CoolCarPartsOnline:

We do require signatures on most orders, but even with signature we have had people that file chargeback.

I even had one customer that called 3 times before placing the order, I was able to show call logs but he claimed his phone wasn't with him and he never authorized the call. Even though he had the same number 4 months later.

It is hard to limit the shipping to billing address in most cases. A lot of customers have their orders shipped to a shop where there vehicles are being serviced.

Most of our customers are one time only so we can't build a safe customer database. The problem remains some orders are high priced items ($1000). I have been more strict on such items but sometime I cancel and order and then have to fight with the customer over the reason, especially Canadian customers.

Is it too much to ask for them to fax a signed copy of the invoice and copy of id for a $1500 order?

Chargeback rate is less than 5% but that hurts when you get $1000 deducted for a chargeback overnight.

I am looking into this company called CashRun. I think they offer some kind of Chargeback Guarantee.
I haven't found a good way to protect from chargebacks other than canceling transactions that make the hair on the back of my neck stick out. I had a $500 transaction over the weekend with a Canadian address, shipping to Texas, a New Jersey phone number, Sprint PCS ip address, and freebie email. The source keyword was "filetype: php intext: "fingerprint locks" site: com". A couple red flags? It was for me. The credit card companies won't provide any assistance to merchants and if it does wind up being a fraudulent transaction I'd be out the product, cash, and fees. Needless to say I canceled this transaction. You just need to assess how much risk you're willing to take with the understanding that you will most likely be the one that loses in a chargeback even if you have proof that you did things right.

So would verifying the IP address location, and calling the customer and get them to verify the information we have on the order help minimizing the chargeback rates???

I had 4 orders today that had different shipping address, I was able to get a hold of all customer and they verified the information, let's hope they are not Fraud.

So would verifying the IP address location, and calling the customer and get them to verify the information we have on the order help minimizing the chargeback rates???

Recording the conversation would! If anyone then initiates a chargeback just email them the sound file of them verifying everything.

Of course, depending on where you are based, that may not be strictly legal - but then neither is trying to defraud you.

The IP Address location wouldn't mean a thing.

Vger

Greetings, I have not posted in a while but thought I might be able to help out on this. We run a large active webstore using Zen Cart for about 5 years now. We had virtually no chargebacks for the first 3 years. When the economy took a dump consumers began getting very cranky over little things and instead of asking us to solve a problem they resort to charge back.

Master Card and Visa does NOT protect the merchant (you) unless you have a face-to-face transaction AND have a hard imprint of the card with a signature. For mail-order you are hard pressed to protect yourself. The moment a consumer disputes a charge MC/VISA initiates the charge back to you FIRST then sends you a letter asking you to explain the situation.

For shipping items you must have ALL items on the credit card match when you process with verification AND the item can only be shipped to the billing address AND you must have adult signature of the person whos name appears on the card to even be remotely protected.

Also MC VISA rules state that you must ship item within 7 days of charging card unless the item is Special Order and customer is notified of that and even then it's sketchy.

With American Express it's a little different. They will send you notice of a dispute and give you 20 days to respond and THEN depending on the outcome either will refund customer or not and let you keep your $$ -- sometimes in big disputes between vendor and customer -- AMEX will eat the charge back (usually up to $2k ) if you are a big merchant.

....
**So how do you protect from charge backs? **

1. USE ZEN off-line processing (do not process online)
2. Clear Product Descriptions and photos
**3. **Communicate with customer through Zen (keeping record)

We send an email within the customer order on each step:
Processing
Update
Update
In Shipping Que
Shipped (with track)

**4. **Have policies on your website and show up after sucessful checkout define_checkout_success.php (write this in defined page editor)

=====================================
Here is mine

TDL / STT Inc. Final Check Out Information -- PLEASE READ

We will notify you by e-mail if there are any difficulties regarding your order.

**All orders are processed upon receipt and credit card and PayPal payments charged and placed in a shipping or production cue. All internet orders are considered special order. **

If you need your order by a specific date please e-mail at [email protected] immediatley with that information.

COD orders can only be shipped to our DEALER customers. All orders requesting COD that are not TDL dealers will be e-mailed and asked for credit card or PAY PAL payment.

Please note, due to high volume of cylinder sales, all are shipped 7-10 business days after your order is placed and processed. All special sale items are shipped 7-10 days after your order is placed and processed. Custom length hoses, (anything other than standard lengths) can take upwards of 10 days. You will be notified of ship date when we process your order.

Certain high demand products and items on discount sale can take up to two weeks before shipping. You will be notified when we ship.

Any CLOSEOUT items on your order will NOT qualify for special coupons. If a coupon was used it will be repriced without the coupon without notice. Closeout orders are non-cancellable.

US Postal Orders cannot be tracked, unless you request Express Service. International Postal orders cannot be tracked at all. If you must have tracking or belive that your order is at risk of non-delivery because of postal to your area email us immediately to change to UPS at additional charge. International Postal shipments will receive a customs number only.

Apartment Numbers If you left off your apartment number email us immediately.

International Orders Note: If you have asked us to send your order with a lower valued invoice to avoid your countries import tax and VAT we will not do that. Taxes and VAT are part of your country and it is against the law for us to help you break those laws, and we are subject to huge fines if we do. Your order will be shipped at stated value.

International Orders for Free Ship Items will be assessed a $35 charge for delivery confirmation and insurance. This will be added to your final invoice when processed.

International Orders Note: No shipping is guaranteed regardless of the method of shipping you choose. Delays through customs, handing in local areas, on going theft in remote areas are NOT THE RESPONSIBLITY OF TECH DIVING LIMITED. Our responsiblity for delivery ends when we deliver to the shipping carrier here in the United States. If you require a specific ship arrival date please notify us immediatley at [email protected] and we will reprice your shipping accordingly.

Delivery Time. We are not responsible for any delays caused or lost shipments by shipping carrier. If you need something date specific please notify us immediatley and we will change your shipping to Express Mail or UPS Red and adjust your shipping accordingly.

Shipping Address: If you shipping address is different than your billing or account address please send us an e-mail at: [email protected] alerting us to this. Shipment re-directs after the order has been shipped will incurr additional delivery time beyond our control.

All pricing is double checked before processing to ensure you get the best price posted.

We appreciate your business. If you have any special concerns regarding your order please e-mail us at:

[email protected] or call our office at xxx-xxx-xxxx

Phone calls may take up to 24 hours to be returned.

**5 NEXT ---- **If you have a large order from a new customer - initiate a phone call - confirm the order. Confirm the shipping address and billing address -confirm with customer that there will be a need for a signature on the order for delivery. (make sure you have marked up your shipping module at least 15% to cover the signature charge) ) ask customer when they need product by, some customers don't need somthing right away and will tell you that. If there is a new delivery date -- send that in an email

*Mr. Jones, per our phone conversation today you understand your order will be shipped to you on XX date..... etc etc etc. *

6 -- All international orders are suspect. Especially large ones -- also all orders to Singapore, Hong Kong, Jakarta, eastern europe, parts of Spain, South Africa etc. Be suspect of orders with multiple expensive items or large bulks of small items. If you have any question contact the credit card company and ask for verification of the account information. Usually they will not tell you -- just ask for fraud department and they may "confirm the billing address?

7: know your marketplace -- spend time learning who buys your products through web boards, web communities etc.

8: Set up a reserve account just for this. Each day take 5-10% of your credit card processing money and put it in a seperate reserve account once you have about a weeks worth of average charges accumulated you can stop. This now becomes your "refund account" because refunds AND charge backs do happen. But now it wont hurt as much.

9. Use Pay Pal module in Zen -- (we use it a lot) while you are still subject to classic issues most fraud cards will not be run through pay pal. Also make sure you mark the pay pal payment system with a shipped date and track # -- this helps a lot on disputes. Plus using a pay pal account for taking payment through zen spreads your risk between two processing systems. (btw MC /VISA only let you have one true merchant account) taking payment through pay pal (not virtual terminal) gives you a second method of accepting payment.

10..... have fun -- don't sweat the small stuff -- do what you can to protect yourself but there will ALWAYS be dirtbag customers who want to rip off the merchant -- mostly because they know they can. But for the most part your customers are honest and will do what they can to help you succeed.

Hope this helps you

Cheers
JDS

CoolCarPartsOnline:

So would verifying the IP address location, and calling the customer and get them to verify the information we have on the order help minimizing the chargeback rates???

I had 4 orders today that had different shipping address, I was able to get a hold of all customer and they verified the information, let's hope they are not Fraud.
I have orders with different shipping addresses all the time. That in itself is not necessarily a problem. People order products as gifts, ship to vacation homes, order for people that don't have credit cards, etc.. When you start seeing things that seem off to you it's prudent to go the extra mile to try an validate the transaction. Verifying the ip address with the customer isn't likely to help since most won't even know what an ip address is. It might be a helpful piece of information to you though. If your order was from somebody in Texas and the ip address is registered to a Texas internet provider then at least that's consistent. Selling online is all about risk management. You need to assess how much risk you can take, set your risk controls appropriately, and develop policies that match. Use all the information available to make the best guess you can. There's no getting around it. If you sell online eventually you will have chargebacks. I don't get a lot but I do get them. I just do what I can to minimize them.

Be brave, it'll be fine!:lookaroun

Thanks for the information.

I have been lazy lately in verifying orders. After getting a chargeback on some orders, I have to hit my head against the wall because everything about the order is fishy but I was too busy to keep my eyes open.

Agree online business is all about risk management, when I was starting up I used to be careful, but lately been too busy to take care of everything myself.

CoolCarPartsOnline:

Thanks for the information.

I have been lazy lately in verifying orders. After getting a chargeback on some orders, I have to hit my head against the wall because everything about the order is fishy but I was too busy to keep my eyes open.

Agree online business is all about risk management, when I was starting up I used to be careful, but lately been too busy to take care of everything myself.

Off topic -- are you using zen for your car parts website or is that volusion ?

thanks
jds

It's showing a Zen Cart session id in one of the footer links.

Vger

JS1scuba:

Off topic -- are you using zen for your car parts website or is that volusion ?

thanks
jds

Modified Zen Cart.

JS1scuba:

Greetings, I have not posted in a while but thought I might be able to help out on this. We run a large active webstore using Zen Cart for about 5 years now. We had virtually no chargebacks for the first 3 years. When the economy took a dump consumers began getting very cranky over little things and instead of asking us to solve a problem they resort to charge back.

Master Card and Visa does NOT protect the merchant (you) unless you have a face-to-face transaction AND have a hard imprint of the card with a signature. For mail-order you are hard pressed to protect yourself. The moment a consumer disputes a charge MC/VISA initiates the charge back to you FIRST then sends you a letter asking you to explain the situation.

For shipping items you must have ALL items on the credit card match when you process with verification AND the item can only be shipped to the billing address AND you must have adult signature of the person whos name appears on the card to even be remotely protected.

Also MC VISA rules state that you must ship item within 7 days of charging card unless the item is Special Order and customer is notified of that and even then it's sketchy.

With American Express it's a little different. They will send you notice of a dispute and give you 20 days to respond and THEN depending on the outcome either will refund customer or not and let you keep your $$ -- sometimes in big disputes between vendor and customer -- AMEX will eat the charge back (usually up to $2k ) if you are a big merchant.

....
**So how do you protect from charge backs? **

1. USE ZEN off-line processing (do not process online)
2. Clear Product Descriptions and photos
**3. **Communicate with customer through Zen (keeping record)

We send an email within the customer order on each step:
Processing
Update
Update
In Shipping Que
Shipped (with track)

**4. **Have policies on your website and show up after sucessful checkout define_checkout_success.php (write this in defined page editor)

=====================================
Here is mine

TDL / STT Inc. Final Check Out Information -- PLEASE READ

We will notify you by e-mail if there are any difficulties regarding your order.

**All orders are processed upon receipt and credit card and PayPal payments charged and placed in a shipping or production cue. All internet orders are considered special order. **

If you need your order by a specific date please e-mail at [email protected] immediatley with that information.

COD orders can only be shipped to our DEALER customers. All orders requesting COD that are not TDL dealers will be e-mailed and asked for credit card or PAY PAL payment.

Please note, due to high volume of cylinder sales, all are shipped 7-10 business days after your order is placed and processed. All special sale items are shipped 7-10 days after your order is placed and processed. Custom length hoses, (anything other than standard lengths) can take upwards of 10 days. You will be notified of ship date when we process your order.

Certain high demand products and items on discount sale can take up to two weeks before shipping. You will be notified when we ship.

Any CLOSEOUT items on your order will NOT qualify for special coupons. If a coupon was used it will be repriced without the coupon without notice. Closeout orders are non-cancellable.

US Postal Orders cannot be tracked, unless you request Express Service. International Postal orders cannot be tracked at all. If you must have tracking or belive that your order is at risk of non-delivery because of postal to your area email us immediately to change to UPS at additional charge. International Postal shipments will receive a customs number only.

Apartment Numbers If you left off your apartment number email us immediately.

International Orders Note: If you have asked us to send your order with a lower valued invoice to avoid your countries import tax and VAT we will not do that. Taxes and VAT are part of your country and it is against the law for us to help you break those laws, and we are subject to huge fines if we do. Your order will be shipped at stated value.

International Orders for Free Ship Items will be assessed a $35 charge for delivery confirmation and insurance. This will be added to your final invoice when processed.

International Orders Note: No shipping is guaranteed regardless of the method of shipping you choose. Delays through customs, handing in local areas, on going theft in remote areas are NOT THE RESPONSIBLITY OF TECH DIVING LIMITED. Our responsiblity for delivery ends when we deliver to the shipping carrier here in the United States. If you require a specific ship arrival date please notify us immediatley at [email protected] and we will reprice your shipping accordingly.

Delivery Time. We are not responsible for any delays caused or lost shipments by shipping carrier. If you need something date specific please notify us immediatley and we will change your shipping to Express Mail or UPS Red and adjust your shipping accordingly.

Shipping Address: If you shipping address is different than your billing or account address please send us an e-mail at: [email protected] alerting us to this. Shipment re-directs after the order has been shipped will incurr additional delivery time beyond our control.

All pricing is double checked before processing to ensure you get the best price posted.

We appreciate your business. If you have any special concerns regarding your order please e-mail us at:

[email protected] or call our office at xxx-xxx-xxxx

Phone calls may take up to 24 hours to be returned.

**5 NEXT ---- **If you have a large order from a new customer - initiate a phone call - confirm the order. Confirm the shipping address and billing address -confirm with customer that there will be a need for a signature on the order for delivery. (make sure you have marked up your shipping module at least 15% to cover the signature charge) ) ask customer when they need product by, some customers don't need somthing right away and will tell you that. If there is a new delivery date -- send that in an email

*Mr. Jones, per our phone conversation today you understand your order will be shipped to you on XX date..... etc etc etc. *

---

6 -- All international orders are suspect. Especially large ones -- also all orders to Singapore, Hong Kong, Jakarta, eastern europe, parts of Spain, South Africa etc. Be suspect of orders with multiple expensive items or large bulks of small items. If you have any question contact the credit card company and ask for verification of the account information. Usually they will not tell you -- just ask for fraud department and they may "confirm the billing address?

7: know your marketplace -- spend time learning who buys your products through web boards, web communities etc.

8: Set up a reserve account just for this. Each day take 5-10% of your credit card processing money and put it in a seperate reserve account once you have about a weeks worth of average charges accumulated you can stop. This now becomes your "refund account" because refunds AND charge backs do happen. But now it wont hurt as much.

9. Use Pay Pal module in Zen -- (we use it a lot) while you are still subject to classic issues most fraud cards will not be run through pay pal. Also make sure you mark the pay pal payment system with a shipped date and track # -- this helps a lot on disputes. Plus using a pay pal account for taking payment through zen spreads your risk between two processing systems. (btw MC /VISA only let you have one true merchant account) taking payment through pay pal (not virtual terminal) gives you a second method of accepting payment.

10..... have fun -- don't sweat the small stuff -- do what you can to protect yourself but there will ALWAYS be dirtbag customers who want to rip off the merchant -- mostly because they know they can. But for the most part your customers are honest and will do what they can to help you succeed.

Hope this helps you

Cheers
JDS

What do you mean by "USE ZEN off-line processing" ?

It's a payment module, you can process the credit card manually offline.

I don't use that option but I only authorize the card and after verification (after shipping in my case) I charge the card.

This can be setup in your gateway interface.

CoolCarPartsOnline:

It's a payment module, you can process the credit card manually offline.

I don't use that option but I only authorize the card and after verification (after shipping in my case) I charge the card.

This can be setup in your gateway interface.

Thanks for answering. :bigups:

Can ANY merchant account/gateway be used with Zen Cart, or just Authorize.net only? I've only seen Authorize.net in the Admin panel.

http://www.zen-cart.com/index.php?main_page=index&cPath=40_48

Paypal Website Payments Pro is also a merchant account type processor.

badarac:

I have orders with different shipping addresses all the time. That in itself is not necessarily a problem. People order products as gifts, ship to vacation homes, order for people that don't have credit cards, etc.. When you start seeing things that seem off to you it's prudent to go the extra mile to try an validate the transaction. Verifying the ip address with the customer isn't likely to help since most won't even know what an ip address is. It might be a helpful piece of information to you though. If your order was from somebody in Texas and the ip address is registered to a Texas internet provider then at least that's consistent. Selling online is all about risk management. You need to assess how much risk you can take, set your risk controls appropriately, and develop policies that match. Use all the information available to make the best guess you can. There's no getting around it. If you sell online eventually you will have chargebacks. I don't get a lot but I do get them. I just do what I can to minimize them.

Be brave, it'll be fine!:lookaroun

There are several well written posts here about chargebacks.
As an online merchant and a rep for several merchant processors, all I can say is Merchant Beware!

All the large processors are there to help the consumer and not necessarily the merchant. I've been selling online for 12 years now with only a few chargebacks. My average ticket is between $200 - $500 with many smaller ones averaging around $80.
When things were full swing, we processed 5k - 6k shipments per year and only 2-3 attempted chargebacks per year. Attempted because there are those customers that have learned how the system allows the merchants to be cheated. Many of you won't dispute and will chalk it up to cost of doing business. Don't!
It's your money, product/services they are trying to steal.

I suggest you review your orders carefully by checking IP addresses, but I also have many orders that are shipped elsewhere as my main products are for weddings and parties.
Overtime you'll get to know the pattern for your business.

Terms and Conditions are SOOOOOO important in protecting yourself. Make sure they have to agree before completing the order and that a version be printed on your invoices.

If you receive large orders, please call to thank and to verify the information. As a suggestion, if you receive a larger than normal order call MC/VS/DC/AMex to verify the transaction. It'll cost you around $1.50 but what's your merchandise, services, chargeback fee and timeworth to you?
If it seems strange... it probably is.

Many online sites get orders to ship to other countries outside the US. Unless you want to take the chance... void the transaction before the end of the day and you won't get charged the transaction percentage.

There are no clear cut answers but as badarc said
"Be brave, it'll be fine!"

jmuniz:

Terms and Conditions are SOOOOOO important in protecting yourself. Make sure they have to agree before completing the order and that a version be printed on your invoices.

The Terms and Conditions are important but there again it's a risk decision you need to make. Forcing the customers to check a box on checkout and possibly interrupt the checkout flow might cause an abandoned cart. You need to decide if it's important enough to take that chance. If you sell high dollar items that would warrant taking a fraudulent transaction to court you would need to be able to prove that the customer took some affirmative action to agree to the terms. Having clear terms on the website is important though. I haven't had many chargebacks but I've never won a dispute even with clear proof that I met my obligations.

jmuniz:

If you receive large orders, please call to thank and to verify the information. As a suggestion, if you receive a larger than normal order call MC/VS/DC/AMex to verify the transaction. It'll cost you around $1.50 but what's your merchandise, services, chargeback fee and timeworth to you?
If it seems strange... it probably is.

That's interesting. I've never been able to get the CC companies to provide any assistance. Not even for a fee. The other problem is that you don't have the full credit card number. That makes it impossible to get even a phone number for the issuing bank. Can you provide some insight into how you get this type of assistance from the CC companies?

The other problem is that you don't have the full credit card number

Perhaps the other poster was using the Manual Credit Card module and opted not to have the middle digits emailed to them? This would give them (and anyone who hacked their site) full card details.

Vger

Vger:

Perhaps the other poster was using the Manual Credit Card module and opted not to have the middle digits emailed to them? This would give them (and anyone who hacked their site) full card details.

Vger

Well maybe problem is not quite accurate. I don't want to have that information in my DB or e-mail. The lack of that information does make it nearly impossible to have a conversation with the CC company though. I haven't found them to be willing to work off the transaction numbers.