Recently we have gotten a sudden surge in Chargebacks.
Here is an example of one we had this week:
Customer placed a very large order over the phone. Paid extra to have it shipped overnight. Our products are designed to work over a 90 day period- with patches you change every 3 days. Each package contained 10 patches.
Customer called 3 days after receiving product- claiming they didn't work. We were trying to contact him- but he wasn't answering the phone or e-mails. We wanted to go-over that they are 90 day therapies, and make sure he was using them right etc.... Our return policy clearly states- NO RETURNS OR REFUNDS on opened and used product. We were going to allow him to return or exchange any UNUSED product- less the shipping charges.
Customer just sent back all of the products- with over 90% of the product missing/used. Of course- Visa refunded him his money. Now we are stuck out money of a huge order- and big shipping charges- with returned product that is COMPELTELY unusable and we could not use or resell in any way shape or form.
What are our options and how can we minimize chargebacks? It's one thing- where chargebacks were designed to protect consumers- but what about small businesses who are getting frauded by customers who just automatically do a chargeback? They never even gave us a chance to "make things right" with the customer.
You offered overnight shipping to a new customer, with the hopes of scoring a large order. That should have set your fraud-flag waiving.
Don't offer overnight shipping to a new customer with no order history. The shipping charge they pay can become your liability, as you discovered. It's better to lose the sale, than get stuck with big shipping charges.
In cases like this I collect the money myself by 1. sending letters demanding payment 2. handing the issue over to a collection agency 3. go to small claims court
If I suspect fraud I report the case to the proper authorities.
However it seems it depends on the country where you live. From what I have heard in this forum so far there seems to be a weird custom in the US for example to accept the chargeback from the credit card company as final verdict and not to do anything about it. Not even invest a few cents in stamps and send a collection letter.