Avoiding Chargebacks

Best Practices in Preventing Chargebacks

The best way to handle chargebacks is to avoid them in the first place. A comprehensive strategy focused on checkout, fulfillment, and post-checkout best practices can help you reduce the number of chargebacks you incur.

Learn more about dispute prevention tools here.

Checkout Best Practices

  • In accepting payments, collect as much information about the payment (e.g., expiration date, CVC code) and the shopper (e.g., name, address) as possible to allow BlueSnap to conduct more rigorous fraud checks.
  • Adding a checkbox on the checkout page that requires the customer to agree to all terms, conditions, and refund policies prior to placing the order is a way to ensure the shopper is aware of your policies and also provides compelling evidence for a representment if a chargeback is filed.
  • Provide very clear and concise policies on order returns, fulfillment, refunds, and chargebacks.
  • Add a prominently displayed statement on your website, making your customer protection policies very explicit. This will help discourage customers who look for opportunities to make fraudulent claims, commonly known as “friendly fraud.”
  • The use of 3D Secure where possible will help reduce "unauthorized transactions", such as chargebacks due to fraud.
  • Use easily recognizable descriptors so shoppers can easily identify where charges come from.

Fullfilment and Post Checkout Best Practices

  • Ensure that your site or your support team keeps shoppers updated on all aspects of their order from the items purchased, to shipping and tracking information, and delays.
  • When there are anticipated delays, such as with the supply chain, use only a pre-authorization, and wait to charge the card until the product ship.
  • Use automated emails or somehow otherwise contact cardholders upon identified delays, as a follow-up after a purchase, as confirmations and reminders of orders, and to otherwise keep the shoppers informed.
  • If a large volume of chargebacks is due to previously refunded transactions, review the timelines of refunds being processed and send a confirmation of the refund and projected posting date.
  • If the soft descriptor is very different than the DBA or website name, clearly advise your customers of the unique descriptor before the purchase to prevent unnecessary chargebacks caused by misidentification. For example, the ABC Store informs their customers, “Your credit card statement will show this charge as ABCompany”.

Customer Support

Provide transparent customer support and provide options for customers that are unhappy with a product or service. This can help mitigate any issues that may lead to a chargeback. If a customer is complaining about a product or service, your best option is to try and handle the situation before it becomes a chargeback. Customers are less likely to initiate a chargeback if they feel they can quickly and easily resolve their concerns through a company’s customer service department.

  • Ensure your customer service team is properly staffed during typical business hours to serve your target consumers' location/country.
  • Ensure your team provides timely responses and resolutions to customer support requests (emails and calls).

Disputes and Fraud

  • Always utilize strong fraud prevention techniques and tools such as Kount, as all business models can become a victim of fraud and/or friendly fraud. If you have a third-party fraud vendor or are in an industry with a higher risk for fraud, consider adding targeted fraud rules or a synergistic Kount model to increase fraud protection.
  • Consider using Verifi and Ethoca dispute and fraud alerts to refund orders as soon as a dispute occurs and proactively prevent chargebacks.
  • Blacklist cardholders that have initiated chargebacks in the past, to avoid future disputes from the same shoppers.

All merchants should read and fully understand the unique chargeback guidelines, recommendations, and policies for all accepted card types, such as Visa, Mastercard, and American Express.