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It will probably be cheaper to eat the chargeback than to pay for postage to the 99% of customers that are honest. Your experience may be different than mine, since I sell physical products.
I have got my chargebacks down to less than 0.5% introducing on the backend a traffic light system, eg: different delivery address, 1 point, authorization attemps, more than 1 attempt gets a point, value of order.
Once the end user get to five points, it flags red, order can't go out and is referred to a manager, then the procedure starts to complete that order.
Barclays were supposed to bring out an insurance policy against chargebacks, you pay in and they gaurenteed the monies, but this never happened, i wonder why!
Maybe not make it required for every deliver, but make it an option, like requiring a signature for delivery. If the person refuses to have their picture taken, then they should have to provide a valid government ID.
Actually, I like that idea- adding an "require verification with government ID" option to shipping. If I had a high value product I was shipping, I'd probably be willing to pay extra for that.
Unfortunately, I doubt UPS/Fedex would go for it because it would slow down the deliveries. Then again, I can see that a lot of e-tailers might move their business to a shipper that DID offer such a service, IF it did its job of cutting down on chargebacks and the extra amount was reasonable.
I am more in favour of the banks taking the hit rather the e-tailor, once 1 bank gets a insurance policy in place the rest would follow. At the end of the day they won't, its down to businesses to do what they can, but if the end user know's the system you have lost, best place that end user on a internal blacklist with the property and carry on trading.
I had a 3 chargebacks last week. Some old lady had her card stolen, reported it stolen, but it took her bank about 2 days to shut down the card. Needless to say, the fraudster placed 3 orders valuing 900+ total from me and they all went through fine cause her bank did not send a Declined signal yet.
Btw, the software has 2 license types which cost $500 and $1000 USD, so the chargebacks from dishonest customers are pretty much unpleasant. Since the software is niche and mainly used by companies rathar than individuals, I've removed payment links from our website at all - customers call or write to get one. We've got no chargebacks recently, but the cashflow dropped by 30%.
Anyway my point is that since the unit cost to the developer is nothing in software, they have always said that if we have any problems with fraud or chargebacks they will refund us since they haven't lost anything (never had a chargeback, but they've been very good when a customer has demanded a refund for whatever reason).
I'd always assumed that this was the standard way of doing it - maybe if you approached your supplier they could sort something out? It seems harsh that you are bearing all that risk...