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Visa chargebacks

How do you guys deal with this?



6:53 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

I have just had a $500 chargeback from Visa despite getting name & address verificiation & the customer signing for the order. The customer claims that his credit card was lost and that he never made the purchase. Visa claim that without a signature that there is nothing they can do about it.
I am a small business in Canada & do credit card processing manually. Is there a better way?


7:17 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

Don't accept credit cards!

Seriously, we do not accept cc anymore due to the charge backs. We ask for bank transfer or mailed check (which is a pain in itself - "The check is in the mail") and experience that approximately 1% of clients cancel their order because they are not able to pay with cc.

So we are loosing 1% of business due to not accepting cc. In our case that is a lot better than loosing 5% due to charge backs (plus the fines).

However, every industry is different and you may be loosing all your business if you do not accept cc.

I would love to accept cc if the cc companies would stop putting ALL the risk on the merchant. Unjustified charge backs border (at least) on fraud and cc companies are an active party of that due to their policy of doing charge backs without questioning. They don't give a damn if you can prove that you delivered the order (signed, stamped and faxed). Which leaves us with the option to sue the "customer" for a 3 digit ammount in a different country?



7:27 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

You might have better luck with PayPal which has some additional ways of minimizing fraudulent transactions.


7:31 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

i get 5% chargeback too last month.
as sometimes i do not have delivery confirmation. some customers shamelessly says they never received the product. i emailed them and no response.

i am afraid if do not accept cc, it will have too much work to process check and talk to customer and sometimes they may forget to mail the check and lose sales.



7:35 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

If you have the customer signature, then you should try to dispute the chargeback. contact you merchant customer service and see what documentation they require in order to dispute the chargeback.

I don't think that refusing credit cards is the answer, unless you are willing to take serious hit to your bottom line. You should definitely put some procedures in place so that when you get high money purchases, you will be more protected against possible fraud


8:02 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

i get charge bacl every month. there is no way around it. you can do some kind of promo if they pay you with firepay, paypal, neteller or similar but otherwise they will never award it to merchant. friend of mine bought a couch andthey did not delivered it all the way to the door becues it would not fit in the elevator so they left couch in lobby and he called the bank and got his money back and ofcourse furniture company went out of business so they never came to pick it up and he got 2000 couch for couple of hours on the phone and two months of storage fee which in total is no more than 200 bucks. visa told him that chargebacks are not big when you take overall stats so they can put up with numbers :)


8:16 pm on Dec 10, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

Suck it up is what we do. If a customer does it more than once, we ban them from being able to order again from us.


8:16 pm on Dec 10, 2003 (gmt 0)

10+ Year Member

Dispute the chargeback with the merchant customer service results in:

"Your customer requested the charge back with his bank/cc company. Please contact your customer"

Every Charge Back I had to deal with was about customers "forgetting/misunderstanding yadda yadda" ... promising to redo payment and never living up to there promises. There was not a single issue of stolen/abused card or data.

There is a certain percentage of "faulty" people in this world and I don't want to deal with them. CC companies make it way to easy for those.

I, for one, do not accept credit cards!

My bottom line is not hurt by "lost" customers - who never have been or would be a customer anyway - but by throwing good money after bad one (charge back fees/workload/phone bills etc.)


9:22 pm on Dec 13, 2003 (gmt 0)

10+ Year Member

For those who do not have the option of refusing credit card orders:
  1. Use FedEx or UPS for all shipments.
  2. Enable all AVS protection and require card code at the POS.
  3. Require adult sigature requirement (UPS only) on orders which may be suspect.
  4. Maintain copies of all customer invoices, tracking reports, and visitor data (referrer, IP address, etc).
  5. Refuse @hotmail and @yahoo.com free email addresses.
  6. Avoid international credit card orders; if not, be ready for possible problems.
  7. Use Transact Secure (Authorize Net) for further verification on high ticket, high risk items (e.g. Require signature requirement on all orders, including Ground.
  8. Be prepared with a pre-written template rebuttal letter to the charge back. Include the details of the customer's transaction, and back it up with proof from UPS/FedEx tracking, signature, and AVS/anti-fraud counter measures.
  9. For intangible sales (e.g. download software, consultation, etc), try the full AVS and card code countermeasures, and if necessary, a credit card authorization form to be faxed in (may cause conversion issues of course).
  10. Manually verify cardholder data with the customer's bank when handling high risk orders which use a different shipping and billing address/party.

Also, major third party credit card processing companies such as CCBill.com and iBill.com will handle all chargebacks, customer service and support. They are not the best option just because of this, IMO, however.



9:38 pm on Dec 13, 2003 (gmt 0)

10+ Year Member

Many banking institutions offer Internet Merchant Accounts at reasonable costs per transaction with protection against fraud, etc. A couple of customers of mine use IMA's using Authorize.net for processing. Have had no problems.



4:06 am on Dec 14, 2003 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

This sort of thing makes me angry. There is a clearly fraudulent transaction on the part of the merchant yet Visa will not do anything just because it has a signiture:


We also had a chargeback recently because the customer claimed that the goods received were not as described. He claimed that the equipment we sold him could not work with windows XP but this was not true. If he had contacted us, we could have told him where to download the driver. Anyway, he made no attempts to contact us or to return the goods before contacting his bank. We are disputing this chargeback at the moment.

Besides disputing the chargeback, you should try to recover the goods. Lodge a report with the police.

For orders of this size, we will do some more background check besides AVS. We will probably ship to businesses only rather than individuals.


4:45 pm on Jan 4, 2004 (gmt 0)

My company (Europe and USA based)does only creditcard business online and we loose about 40.000 US$ a year representing 1% of the total online sales. We just calculate 1% into our markup. There is nothingelse to do.

But of course we never sell to Nigeria, Liberia and other strange countries...and learned our lessons the hard way.

The creditcard companies are not interested in the merchants security and do nothing to make this more safer for merchants.

Clever customers know this and know how to use this policy of the credit card company to get free merchandise.



6:26 pm on Jan 4, 2004 (gmt 0)

10+ Year Member

Basically, you can dispute the chargeback.

I have never had one go in my favor. Basically you just have to be cautious about the orders you fill and try to filter out the ones from outside the country, overnight, and large ticket odd item orders.

I just had one last month with AMEX where the customer had it shipped to her house, signed for it with FedEx and then disputed it a month later. I called her and she said there must be some mistake because she didn't dispute it. Then the next day her phone number was disconnected/changed!

If you only lost $500 you are doing good. Most of the ones I have come through are $2000+

I had a $3500 order that was recovered by the PD in the city it was being delivered, luckily. That seems to be the best bet.


4:05 pm on Jan 7, 2004 (gmt 0)

10+ Year Member

Go with your instincts! If you do not trust the order or the information entered, call the customer or email him to verify the order, especially for products over $100. Secondly, go with a processor that minimizes the chargeback risk. Unfortunately, the customers are always protected by the credit card companies. 9 out of 10 times, people do not recognize the charge on their credit card and a simple phone call is enough to reverse the chargeback.


8:43 pm on Jan 14, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

We offer downloadable products. We used to automate the process and immediately send the URL of the ebooks. Not anymore, after receiving 2 chargebacks from a single transaction (we disputed the chargeback and provided the emails we sent -- only to be chargedback again because we have not given back the money). Ouch. Really ouch.

So now we go to the expense of actually calling the customer if they are using yahoo, hotmail or any of the free email accounts to verify whether they did make the purchase. Chargebacks makes you think hard of how you do business, because it can hurt.


7:39 pm on Jan 28, 2004 (gmt 0)

10+ Year Member

What about Verified by Visa?


4:29 pm on Jan 29, 2004 (gmt 0)

10+ Year Member

"What about Verified by Visa?"

My understanding is that verified by Visa is not practical until it becomes more widely accepted by users.


6:02 pm on Jan 29, 2004 (gmt 0)

10+ Year Member


I had been approached by it's primary vendor and it was an informative call, and they sent me some very educational material. It cleared up several gray areas that VISA really has let merchants know about.

After encounetring certain threads it's obvious many people have no concept of what Verified by Visa can do for a merchant. If you have the software in place on your site, you are protected on 100% of all US consumer Visa cards, regardless of whether the shopper is registered in the program. I have been told by people who have already been employing VbV for the last 3 months that 75% of their transactions are Visa cards, and they are ALL covered for protection. One customer of this vendor, whom they put me in touch with, said that he had not a fraudulent trx since he turned the service on and it has saved his company over $300K since Sept 03.

I will be begining this program, and authenticating by Feb 11. You must undertand all Visa cards are covered. Call your Visa rep, or I can put you in touch with my vendor, but don't listen to all the gossip that is floating around because it is no longer true. VbV is for real and will be hitting the merchant market directly in 2004, and it really does protect you.


9:31 pm on Mar 4, 2004 (gmt 0)

I use worldpay for some months and never had a chargeback. Last month i had some big orders from Ivory Coast (Africa), for amounts above 3500 EURO. For security reasons, I asked for a copy of their credit cards (2 visa and 2 mastercard) and they sent me by FAX (front and back). I sent goods to them after confirming the cards identity with their shipping details. It matched. Goods were sent by FEDEX to their country.

After one month, worldpay contacted me, saying that those cards were reported lost/stolen. I lost my money and the goods and all my remmitence were suspended due fraudulent transactions.

Is there anything i can do in this situation?
Any help is welcome.


9:26 pm on Mar 5, 2004 (gmt 0)

10+ Year Member

Do VbV and MCSC.

Refer to above


10:04 pm on Mar 5, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member Top Contributors Of The Month

> Is there anything i can do in this situation?

Not really. Did the security code match up?

A faxed copy of the card is not too useful. Anyone can create a card that looks good enough when faxed to be real, and if it was physically stolen then it is exceptionally simple.

One method is to ask for the customer services telephone number on the back of the card. You can ring the number and check if the card number belongs to that bank. The staff should know which number ranges belong to them, or they can look it up.

Always err on the side of caution if you can't afford to lose the amount. I have lost some big genuine orders because of this. But then the customer tries to argue that it is the statement address, AVS disagrees and the customer says they haven't moved recently. Loss of an order is often cheaper than loss of goods and money.

Corey Bryant

1:02 am on Mar 6, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

verified by Visa is turning things around. When it was first introduced - way too many things had to be involved. Now Visa says the consumer does not necessarily have to be registered. If the merchant gets Verified by Visa, and then someone calls to say "I didn't do it" - tough. There will not be a chargeback. The problem is now with the issuing bank & the consumer. Not the merchant and not the acquiring bank.

As far as you getting the signature, your processor should have asked for a copy of that to compare. if they matched, then it should have been a lot more difficult for them to do a chargeback.



10:49 am on Mar 6, 2004 (gmt 0)

10+ Year Member

A lot of these problems seem to be peculiar to the USA.
I (in the UK) have never had a chargeback in eight years, although I accept that I am selling specialised goods which are not easily resellable and hence less lilely to attract fraudsters. (We do have a few crude attempts from Nigeria etc.) Perhaps our fear outweighs our greed and our gullibility. But only once in that time have we had a dishonest customer who claimed that he had not received the goods - and he was what Mr Bush calls called a "cheese eating surrender monkey". We were fooled and trusted him because he was an official at the OECD headquarters.

We do of course take precautions, and check the address match, CVV etc. We also have other sources we can check, such as membership of a relevant society.

The UK Post Office take a lot of stick - but in eight years we have never lost a consigmant (packet or parcel) in transit. In a few cases long delays of 3 weeks + for a journey of 25 miles have arisen. Recently we did claim for a lost parcel 8 weeks overdue, and were paid compensation. A week later the parcel was returned to us as "not collected by addressee".

It is quite untrue that "millions of letters are lost each day". A claim that "our cheque was lost in the post" is believable once in 25 years.


12:14 pm on Mar 6, 2004 (gmt 0)

WebmasterWorld Senior Member 10+ Year Member

Gcosta, welcome to webmasterworld. I am sorry to hear about this, unfortunately when chargebacks occur, they come big, especially for those who have never had chargebacks. Online merchants who sell products that are highly susceptible to fraud are well experienced to deal with them, so fraudsters are increasingly targetting other merchants.

There is really nothing you can do in this case, your fraud screening procedure was wrong in the first place.

1. You should have asked for a code 10 check (equivalent to a manual CVS check) from Worldpay, to see that the customer name and billing addresses match that of the shipping address.

2. Nobody in their right mind would agree to send front and back copies of their credit cards by fax or e-mail.

3. We would probably not have sent such an order under any circumstances given that it is for such a large amount from a high risk country. We would have insisted on 100% T/T or use an escrow service.


8:41 pm on Mar 7, 2004 (gmt 0)

10+ Year Member

We just joined a merchant group (no cost to join) located at www.emerchantsgroup.com that has an excellent credit card processing deal IMO.

Besides the excellent fee structure, the processor has a "chargeback defense system" which automatically examines incoming chargebacks to see if they can be challenged in any way. If they can the processor automatically does so for you. Even if you can't beat it, you don't have to deal with any paperwork and the fee is only $10.

More interestingly, you can also add to your terms with the processor a requirement that all customers at your store have to check a checkbox or otherwise agree as they checkout to your own special terms. Then later if the customer tries to chargeback for a reason covered in your store's terms, this processor will automatically go to bat for you and defend against the chargeback.

It's worth checking out!


12:13 am on Mar 10, 2004 (gmt 0)

10+ Year Member

Chargebacks can be a big issue for online commerce since as has been described, the rules do not favor the merchants. PayPal has achieved one of the lowest reversal rates due to some of the unique attributes of the service: payments are password-protected, PayPal verification through a bank account confirmation process, address confirmation in the US, credit card confirmation process outside the US, large percentage of bank transfer and stored balance payments, sophisticated fraud pattern analysis over a huge number of payment transactions.

I think many merchants will agree that offering an online payment option generally leads to more incremental sales than the possible chargeback losses.

Digital good merchants are sometime less concerned about chargebacks since, unlike hard good merchants, they normally have no out-of-pocket loss (other than chargeback fees).


1:49 pm on Mar 10, 2004 (gmt 0)

10+ Year Member

How many major merchants are currently using PayPal?


2:09 pm on Mar 10, 2004 (gmt 0)

10+ Year Member


Another thing, look a this article done by the Internet News


It seems that PayPal was delivered a "$150,000 fine" for "misrepresenting the rights of account holders when an affiliated merchant fails to deliver merchandise."

According to this article, PayPal offers this chargeback defense at the expense of its consumers. The government has been "tackling complaints from consumers about denied billing credits or 'chargebacks' when merchandise ordered through PayPal, and funding with American Express of Discover cards, where not received as promised."

Just to be the devil's advocate; PayPal will protect its merchants by simply denying a consumer a chargeback when they were clearly a victim of bad business. This doesn't say very much about the credibility of PayPal or its merchants. Is this the type of behavior that is encouraged by PayPal. Is this why "PayPal has achieved one of the lowest reversal rates due to some of the unique attributes of the service?"


9:36 pm on Mar 12, 2004 (gmt 0)

10+ Year Member

I just started a new E-commerce company and I've been researching on this forum for some time now. I've been reading a lot about fradulent chargebacks from dishonest customers. Would it be possible for online merchants to build a database of these customers?

It would be a searchable database that contains information about customers who have falsely claimed chargebacks and all Online merchants could contribute to it. I realize there would be some legality issues to look into. The information gathered would most likely have to exclude financial details and contact informaton.

Probably not a feasible solution, but it would be nice.


9:23 pm on Mar 14, 2004 (gmt 0)

10+ Year Member

i believe you were referring to PayPalPB, not me, however i'll respond... the $150K fine was paid to settle, however PayPal did not admit fault or concur with the charges made by State of NY. the user agreement was simply clarified to make the Buyer Protection Policy more obvious to buyers.

every processor has different ways to handle chargebacks and buyer/seller disputes. typically most credit card companies and processors stick the merchant for disputes. PayPal is a little more balanced in providing coverage for both buyers and sellers in certain situations.

for more info on PayPal Buyer Protection and Seller Protection, check here:

while PayPal may not eliminate all buyer or seller risk scenarios, we certainly do more than most to reduce the likelihood of fraud. also, our automated dispute resolution system also provides additional methods for buyers and sellers to resolve complaints:

This 33 message thread spans 2 pages: 33

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