How does this happen?

not to start another chargeback rant...but I am cheesed!

[rachel123]

Yesterday, I got my first chargeback in 2 years and 10000 orders. It was a Visa code 72, No Authorization. Naturally, I flipped out.

Our website links directly to Authorize.net for Auth at the time of order, and then we capture upon shipment.

This transaction went through perfectly normally. We have a valid auth code, AVS matched, CVV2 matched, everything great. AND from a fabulous repeat customer. Captured and shipped 3 days after Auth.

So I thought, the customer must have initiated a dispute. I contacted her last night and she got back to us immediately this morning. She has no idea what is going on; she didn't dispute the charge and was really quite bewildered. I think she was more concerned that we might think she didn't like the widgets and accessories when in fact, she loves them and will want to order more in the future.

We contacted our bank and they said that it looks like the issuing bank just "made an error." Apparently code 72 only occurs if, say, we had a actual terminal where we swiped the card, but couldn’t get a response from the issuing bank. Then we would go through a third party for the auth and they would give us a phony one. Obviously, that is not what happened here, so, all we have to do is represent with the auth code, etc and will be reversed. (we're supposed to be happy about that)

[rant]Fine, but I am still TICKED off! I am out a chargeback fee and have a dispute on my merchant record because they screwed up? What?[/rant]

Anyone else out there ever have something like this happen? I didn't even realize a chargeback could happen if the customer doesn't initiate it, but apparently it can...

[HRoth]

Most of my chargebacks have been initiated by the bank, not the customer. I take too long between the authorization and shipping, apparently. I think it must vary from bank to bank how long the authorization is good for. For a while there, Paypal was letting authorizations drop off in a couple days. I guess they wanted those re-authorization fees. Maybe actual banks are doing the same thing. My cc processor told me I had 48 hours to charge after authorizing. I usually take a week or so. And there is no winning this kind of dispute with the bank, either. I have tried and found out, at least with my processor and the one I had before this. I think this is something new, though, because I have had way more of this type of chargeback in the past year than I did in all the past years I took credit cards, and I am actually charging sooner after authorizing than I used to do. I guess they want those fees.

[rachel123]

Arg. Auths with our processor expire after 30 days, though MC auths are going to a 7-day exp. starting Sept 01. Authorize.net doesn't even allow us to capture expired auths. It seems to be so random...we've waited longer than this to capture charges from this issuer. Our processor actually seemed very receptive on the phone and said it was an error by the issuer, so maybe we'll have some luck...
But this begs the question...for an online merchant, you aren't supposed to store credit card data. But you aren't supposed to charge until the item ships. The way to accomplish this is to obtain an auth and then capture later. If they close the window between auth and capture, what is the online community, collectively, to do? I can't obtain another auth without the information, but I can't store the information...there has to be a large number of folks in between like us, who can't process every transaction same-day. Weekends? holidays? Special orders? Made-to-order? Besides, the issuer doesn't collect the auth fee, the processor does...so if my processor tells me I have 30 days, I should have 30 days. At least, that would be logical, so, obviously, it doesn't apply to the payment card industry. LOL

[HRoth]

I didn't know that about MC. I'm glad you mentioned it. I have wrestled with this question too. I don't like that my cart gets an authorization right away because it does sometimes take me a while to get an order put together because I make many of my items. Sometimes I have to run the charge before I ship because of it. I thought I would switch to a cart that collects the card info and stores it on a secure server (not mine). That way I could get the authorization just before I get ready to ship. But switching to that cart means changing the html on every one of my 550 pages, so I haven't done it yet. Now I get a thing from Authorize.net saying they are going to change transaction numbers or whatever, so we have to make sure our cart software can deal with it. Mine is so old and there is no way I am paying for another update on it, so now I have to redo those pages anyhow.

I think what they want is for us to have to re-authorize, so they get the fee.

[rachel123]

Yup I just got that notification about the transaction numbers too.
I am not sure if the MC thing applies to all Authorize users...It was in my last month's statement from Wells Fargo (they are an Auth.net reseller)...so I'm not sure if it is a WF thing or an Authorize thing. The Visa auths are staying at 30 days...

I think Authorize wants everyone to buy their new Customer Information Manager service so that they can store the information on Authorize's server. ;-) I'll admit I'm tempted myself. But I have a SIM integration at the moment so I can't do it (only AIM integrated users can sign up).

Another thing I've thought of to circumvent is to have every transaction "held for review" prior to auth. Authorize gives me 5 days to decide whether to authorize the transaction, so that extends my window slightly...

[HRoth]

But won't that get customers upset if they see that?

[rachel123]

You don't have to tell them. =) You can give them the standard "Your order has been received, thank you for your business". The downside is (ironically, in this case, also the upside), the card doesn't get auth'ed, so you can end up fielding some orders from declined cards and you don't know it until you've got everything put together and go to auth. And the customer will wonder why it didn't tell them the card was declined when they checked out.
*sigh* You can't win.

[rampzoid]

one chargeback in 10000 orders - believe me you're on the + side.