Christmas 2008: Year of the Chargebacks

[jake66]

I've been getting an astounding number of chargebacks from purchases placed throughout December... even those purchased well after the deadline for guaranteed delivery.
Every single one of them: the customer never contacted me.. or even notified there was any issue with the product, or that it hasn't gotten there. I hardly know what any of these are really about.

I just got one the other day, for a product purchased on the 27th! That doesn't even allow it much time to get through the mail for goodness sake.

Orders were up quite a bit compared to last. I hope the chargeback trend doesn't come with the territory.. or is this simply due to scare tactics placed on the news about a recession throwing people into a frenzy?

My products are primarily low-end, $20 items.
How are you guys with the bigger ticket items doing?

[Essex_boy]

Can teh end buyer easily resell your items ?

[bwnbwn]

jake66 it sounds like there was some security checking that wasn't done and when one found out you didn't do a check on the address or whatever you do to insure the credit card is the real owner they posted it on one of there boards and you got a slew of them.

I would right now do a check on every order you did in December to make sure the address matches the credit card and if not issue a refund otherwise this could put your merchant account in serious default and you could lose it.

Besides every chargeback cost you 25-35 bucks a pop not counting the credit card processing fee so every charge back cost ya about 30-45 bucks.

[jake66]

Everything checked out with these chargebacked orders.

Except one order, which was received through PayPal with an Indonesian address.. but they entered their country as Australia on my website.

I received this particular transaction as a chargeback before I even logged online and seen this in my purchase queue. This order, I am not surprised of the chargeback as it was clearly fraudulent. Though I am a bit upset I didn't even get an opportunity to react to it.

The other orders were all seemingly legit, and the chargebacks are all "non-receipt", none "unauthorized" .. so it would seem to me the customer intended on the purchase and it wasn't a stolen card.

The problems with these are - none of them have even given the shipments time to reach them. Nor did they make any attempt to even contact me and ask me where they are. Puts me in a pretty tough position.

[Corey Bryant]

No receipt (chargeback code 60) is usually pretty easy to fix - I am sure most e-commerce webmasters on here email a receipt to the consumer. This chargeback is sometimes done in hopes of getting the merchandise without paying for it.

For the unauthorized, you might look at your vetting process to see what might have been missed and consider adding something else.

You also might look into adding something to your TOS about fraudulent chargebacks, etc and possibly selling those to a company.

[jake66]

My website automatically emails them a receipt the moment they click the confirm purchase button. I don't believe I've ever had a "no receipt" chargeback.. (never knew you could do a chargeback for that!) but I've been getting plenty of the "I haven't gotten my product" chargebacks.

You also might look into adding something to your TOS about fraudulent chargebacks

If my customers actually read anything, they wouldn't feel the need to issue those chargebacks in the first place. :) I'd just be irritating my good customers that DO read, if I put any nastiness in my TOS.

and possibly selling those to a company.

What do you mean, exactly?

[Sunshyn]

You might let each person know that, since everything checked out for the order, you'll be reporting it to their local police/sheriff's office. I think some people consider this sort of thing to be almost a "legal" way to shoplift because it rarely gets reported to the authorities. It can be a pain in the neck to file such a report, but just letting the person know your intentions frequently causes the item to "magically" turn up.

The authorities almost certainly won't do anything to help you. However, if this is a frequent habit and such reports begin to accumulate about that person they're likely to take notice eventually. If nothing else, it reinforces that theft is still theft, even over the internet.

[jake66]

For anyone that isn't speaking with me about their issues to begin with, does that really work though?

I mean, I have no way of knowing if my messages even get through to them if they don't respond (or the message bounces).

[HRoth]

I call them up. If they aren't there, I leave them a message. If they don't respond within a reasonable time, I leave them another message detailing how claiming not to have received something they actually received and which they bought on the Internet is wire fraud and is a federal offense that is prosecuted by the US Treasury Dept., which it is. I used to be a professor and I use my stern classroom voice. It is a handy tool when you get someone giving you guff. The few times I have had to do this, the person has withdrawn the chargeback. I still had to pay the fee, but I didn't have a lost chargeback on my file. But I think I have done it only three times in eight years.

There must be some reason for this rash of chargebacks. There is something that is either drawing the wrong kind of people to your site or a problem with your system. That is what I would look at. I got rid of a bunch of customers who were of the type that were quick to pull the trigger, screaming, using curse words at the drop of a hat, and so forth. I quit selling the items that attracted these scuzzballs.

[Corey Bryant]

What do you mean, exactly?

It depends on the way you word it and how it is worded. Usually when you sell a bad debt, there are a few ways to do it. You can sell it to a company for pennies on the dollar, or you can get a company to try to collect the debt for you. This can be problematic, especially if the company needs to verify what price you want when they finally get the user on the phone.

Selling the (fraudulent) chargeback is sometimes the easiest way for merchants. You would need to look at the local laws and see how much you could charge to a consumer that does a (fraudulent) chargeback. If you search for sell your chargeback, you will find some companies and some fees to impose.

The only people that would probably be offended at this would be the people that do this. Most consumers do not have this mindset and probably would not think twice about it.

Afterall, you go into a store and you probably see "$25.00 fee charged on returned check". Do you think anything bad about this company? Probably not. Fraudulent chargebacks can add up very quickly to smaller merchants and potentially put them out of business.

[Glitzer]

I'm getting many returns, but not chargebacks.

Suggestions.
1. Always get a delivery confirmation (USPS) or tracking number to show the cc company that it was delivered.

2. Tighten up your Terms and Conditions of Sale (TCS). Get an attorney involved. Include disclaimers and customer expectations.

3. At checkout, have a checkbox that the customer has to actively check to agree to your TCS. If they don't check it, they can't checkout.

I have one on the first page of checkout that they agree to the TCS and one above the credit-card submission page that they who they and that they authorize the charge. Yes, fraudsters can check the second one, but it helps filters the honest thieves.

4. Distinguish between when an order "ships" and is "delivered". You can't be responsible for shipper delays. What if you ship from NY to CA and the Mississippi River flooded causing delays? Or, there's a blizzard in the Rocky Mountains?

HTH!

[jake66]

The chargebacks have more or less stopped cold since my post. Haven't had many returns at all -- so things seem back to normal.

Makes me wonder what went on around the time all of these purchases were placed.

I have just started to affix delivery confirmation to every larger-sized parcel (these are the ones that have been causing me the most grief) and I'm working on a shipping solution that can have tracking on *every* parcel, not just the high-ticket ones.

Distinguish between when an order "ships" and is "delivered".

This intrigues me.
How do you spell this out to them without confusing anyone? The simplest of terminology throws some people off.

[HRoth]

Well, I would say that the problem is that you were not using a delivery confirmation. Before I started using one on everything, I regularly had people claiming not to have received an order. Now that almost never happens.

I use the phrase "once it hits the mail stream, it takes 2-3 business days." I also have on checkout that it takes me at least a week to get an order out, and if they want it by a particular day, they should let me know and I will get it to them. I am sure I lose some sales with my lag time, but really, it is the best I can do, and then people know what to expect. I hardly ever get people complaining about shipping time since doing that.

[jake66]

Where do you put on your checkout, that it can take a week to get an order out?

I process orders in a similar fashion, and I have wordage right beneath the header that states this and I still have people saying they didn't see any such thing.

[HRoth]

I use Mal's Cart, and it's the page they get after the transaction goes through and which has all the contact info on it, but I also have it on my main page under "Shipping," where I also explain that I make a lot of my products and sometimes I get behind. I have had two people email me after puchasing to let me know they don't want to wait a week and they want to cancel, which I am fine with. I have a good number of repeat customers too, so I don't think it makes people mad. I think most of the time people just want to know they haven't been forgotten and aren't being ignored. This seems like it's more important that shipping time.

[jake66]

Ohh, ok - so you don't warn them ahead of time, you wait until after they purchase?

I used to do that too, but nobody ever reads that page. (That visits my shop, at least)
For money orders I have a link to a printable invoice on that page... people still go to the transaction sheet and print out my color header and all of the fancy stuff from the stylesheets. :)

Gonna play around with the positioning of the text and see if it makes it any clearer. Thanks for the inspiration!

[lorax]

>> Makes me wonder what went on around the time all of these purchases were placed.

Maybe they read your post! ;)

[HRoth]

What about putting it on the email receipt they get? Even if it is hard to manipulate the text in that, you can usually add a sig line, and you could put it in there.