Bogus Chargebacks and Merchant Banks

Accidental Chargebacks

[rlgaskin]

The other day I received notice of a customer who claimed he didn't recognize the charge on his credit card triggering a chargeback against my company. When I called the customer, it turned out he put the charge on this father's credit card and that his father had already been informed that the charge was legitimate, so theoritically the chargeback will be reversed.

I was told by my merchant "service" provider that the chargeback, regardless of results, will remain on my record, and that they may hold the funds upwards of 90 days, without interest of course.

Anybody else know of this practice?

[JuniorOptimizer]

Yeah. The processors truly suck. Every policy they have is for the customer getting the money back.

[lgn1]

If I get a chargeback that is in error, I just informed the customer that we are re-billing his/her credit card. Going through the chargeback reversal process is a pain.

If you have a lot of chargebacks, and you are at risk of losing your merchant account; then use the chargeback reversal route.

[Sunshyn]

It might be a good idea to make sure the merchant account contract doesn't have a problem about rebilling a card after a chargeback. I recall a clause in our's which sounded like it specifically prohibits that. Of course, such a clause might be unusual for a merchant account even it if I did understand it right.

[lgn1]

If you have worked it out with the customer, then I
see no problem with recharging the customers card, as it would be considered a new sale.

I think the no-recharging the card after the chargeback, deals when a dispute has not been resolved.

[Joop]

what is considered 'a lot of chargebacks'? Often seen that quoted on here, but what is it as a percentage?

[trader]

Also had that happen and the bank said unless they get a written letter from cust admitting the error and retracting the charge-back they let the debit stand.

They are always on the customers side and against merchants. I have even had charge-backs one full year after the purchase. When I protested saying why was it 3 or 4 mos in the past they claim it is now 12-mos.

Amazingly they even allow charge-backs if the cust uses the service, or KEEPS the merchandise or product and do NOT require its return or even ask if it was returned or not!

The Visa/Mastercard credit card merchant banks (including Discover/AMEX) really suck big time.

[Joop]

One year? That is just so out of order - it doesn't seem right that they trust peoples memory of what they bought a year ago! I can't remember what I bought last week!

[py9jmas]

The one chargeback I've issued against a large UK web site was after several months of getting nowhere with their customer services department. If there was a time limit on the chargebacks, it would just encourage more people to go the chargeback route first.

[SkyDog]

theoritically the chargeback will be reversed

You still have to dispute the chargeback, instead of taking the customers word for it. Send back the dispute form with a copy of the information your customer gave you regarding charge being legit along with any order and fufillment information.

[rlgaskin]

I'm still of the opinion that a class action lawsuit aimed at the credit card companies and a few key merchant service providers for knowingly participating in 'Theft of Services' would really shake things up.

Until I decided to run a small internet business I had no idea how snakey the credit card companies are, or how duplicitous the merchant banking industry is.

[Phillyrich]

First to re-charge a card after a chargeback is strictly forbidden. Second the bank is suppose to tell the customer to contact you first before they issue a chargeback. As far as a high amount of chargebacks if you are high risk it is anything over 1%. If you are in good standing you can go as high as 2.5%. The time limit for a chargeback was 6 months, it might have changed I will look into it. The reason that Visa and Mastercard are on the side of the customer is because the bulk of the Visa board members are on the issuing side of the industry not on the acquiring side.