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Thread: Chargebacks etc...

  1. #1
    Trench Warfare
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    Chargebacks etc...

    I am considering starting an ecommerce venture, but the main thing that is making me apprehensive, is the issue of chargebacks and fraud.

    Now, the site i am considering, will only service the US so i know that will minimize fraud, but i am concerned that people will order the product and then issue a chargeback. I will allow refunds within the first 48 hours after purchasing, but after that there is no ability to cancel orders. I am worries that cc companies and companies like paypal etc. will take the customers side of issues like this.

    Does anyone have experience with ecommerce sites and offer advice/recommendations on how to deal with this issue?

    Thanks in advance.

    Cheers...
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    Last edited by ozgression; 02-06-2011 at 06:49 AM.

  2. #2
    Well, there's not much you can do once you get a chargeback. The only chance to fight the chargeback is if you have a customer signature for the payment, which most likely you won't have.

    Just calculate the chargebacks as business expenses and put them into the cost of the product you're selling...


    Quote Originally Posted by ozgression
    I am considering starting an ecommerce venture, but the main thing that is making me apprehensive, is the issue of chargebacks and fraud.

    Now, the site i am considering, will only service the US so i know that will minimize fraud, but i am concerned that people will order the product and then issue a chargeback. I will allow refunds within the first 48 hours after purchasing, but after that there is no ability to cancel orders. I am worries that cc companies and companies like paypal etc. will take the customers side of issues like this.

    Does anyone have experience with ecommerce sites and offer advice/recommendations on how to deal with this issue?

    Thanks in advance.

    Cheers...

  3. #3
    Website Developer
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    If your not selling actual physical items chargebacks can be a problem. I may be wrong but I believe as long as you actually shipped something you can challange the chargeback. If the product costs enough you may even want to turn it over to a debt collection agency.
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  4. #4
    Administrator Chris's Avatar
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    The more security features you have the better.

    Check CVV codes, the card companies do not print these anywhere other than on the card, so unless someone claims their card is missing/stolen they have no grounds for a chargeback.

    Also do address verification, even if you're not shipping the product, its one more thing the thief has to know.

    If you are shipping the product you could only ship to the billing address and get signature confirmations.

    If you have the capability, the Verified by Visa service supposedly gives 100% protection against chargebacks.
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  5. #5
    Trench Warfare
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    I will be using OSCommerce and Paypal (and possibily 2checkout). Are those features part of OSCommerce or 2checkout?

    The product is tangible, so anyone who buys it and then tries to get a chargeback, will be commiting a theft? The problem is that I am not responsible for the shipping and returned products cannot be resold (so even if they try to get a refund, it would be useless). The product also doesnt ship for about 2 to 8 weeks. I am not using a drop-shipping service, but i guess it is similar.
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    Last edited by ozgression; 02-06-2011 at 06:49 AM.

  6. #6
    Senior Member chromate's Avatar
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    Be sure to check out ZenCart. I think there's a new version of OSCommerce on the way, but at the moment, ZenCart seems much better.

    Only shipping to the card holder's address is probably the best protection against possible chargebacks I would think.

  7. #7
    Administrator Chris's Avatar
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    Paypal has different rules entirely. The best protection with them is to only ship to verified members with confirmed addresses.

    The 2-8 week shipping thing is a problem though.
    Chris Beasley - My Guide to Building a Successful Website[size=1]
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  8. #8
    Registered User davesplace1's Avatar
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    Try to get your own merchant account so your phone number shows up on your customers Visa/MC bill. I have ordered things off the internet and then get a bill in 2 months for XYZ, Inc. $xxx and have no clue who they are or what the charge is for. I then call the phone number and find out that yes I really did order that. Hope this helps.

  9. #9
    Site Contributor stymiee's Avatar
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    Chargebacks can be won even if you are ecommerce. You just have to do the right things to protect yourself. Some things to consider are:

    - Does your business name state what you are selling? Will your customers recognize it on their statements. A large portion of chargebacks are from customers who don't recognize the name on their billing statement. If you can, have your business phone number included on your customer's statements so they can call you if they don't recognize the name.

    - Call or fax any large or suspicious orders. If you are unable yo reach the customer, do not charge the card or ship your product. Customers who are called to verify their orders not only appreciate the courtousy, they're less likely to charge it back.

    - Verify the customer's address. By calling your voice authorization center you can verify a customer's address and provide proof that you did indeed verify it.

    - Always get signed proof of delivery. Being able to produce a traceable shipping log is always helpful.

    - Charge the customer's card at the time the goods are shipped. If you know there will be a delay in delivery wait to charge their card.

    - Use AVS and CVV2. AVS is a must. CVV2 is VERY helpful.

    Delayed delivery is never a good thing for any business much less online businesses. The more time you give your customer a chance to change their mind the more likely they will.

    As for fraud, the only thing you can do about it is actively prevent it. Once it gets through you're screwed so be proactive with any suspicious orders. If your business is slow, verify every order.
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