Chargebacks

Q. What is a chargeback?

A. When a credit card transaction is disputed (either at the request of the Cardholder or by a card Issuer), the dispute handled through a chargeback.  A chargeback will cause the amount of the original sale and a chargeback fee to be deducted from the checking or savings account you provided in the Online Seller Enrollment Application.

Q. What is a retrieval request?

A. A retrieval request occurs when your customer requests more information about a transaction that appears on his or her credit card statement.

Q. How does a retrieval request occur?

A. Generally a customer contacts his or her credit card issuer to initiate the request.

Q. Are any funds deducted from my bank account as a result of a retrieval request?

A. No, a retrieval request is just a request for information.  The amount of a retrieval request is not deducted from your bank account.

Q. What are some of the reasons for chargebacks?

A. Some of the reasons for chargebacks include:

• A Cardholder does not receive the merchandise ordered

• Merchandise is damaged in transit and arrives broken

• A Cardholder returns the merchandise but has not received a refund

• A Cardholder disputes a transaction as an fraudulent use of their card.

Q. What should I do if I receive a chargeback?

A. If you receive a chargeback, read the chargeback carefully and see if you are able to provide the requested information.  For example, for a "credit not issued" chargeback, the cardholder is stating they are entitled to a refund, but have not received one.  In this case, if you receive a "credit not issues" chargeback but have already sent a refund check to the customer, you can provide a copy of the front and back of the cancelled check.

Q. How do I manage chargebacks?

A. To ensure safe receipt of merchandise, use a form of shipping that provides proof of delivery.  For higher ticket items, require a signature for delivery.

If a buyer contacts you with a complaint about a purchase, work with that buyer to resolve the dispute.  If you can't resolve the dispute to their satisfaction, instruct the buyer how to return the merchandise and what form of shipping they should use.  Once the merchandise has been returned to you, issue a credit to the same credit card used to make the purchase.

Pay attention to the AVS (address verification service response received.  Don't accept no matches and use common sense in shipping to an address other than the buyer's billing address.

International purchases are higher risk, in part because address verification is only available for US transactions.

Here are some terms you should become familiar with and some simple tips you can use to manage chargebacks:

• Chargeback

The return of a sale that has previously been charged to an Issuer and subsequently to its Cardholder.

• Re-presentment

The re-submission by an Acquirer of a previously charged back sale in an attempt to re-charge the Cardholder.  Generally requires some form of additional documentation confirming the validity of the charge and disputing the chargeback reason.

• Proof of delivery

A delivery receipt signed by the cardholder or a carrier's confirmation that the merchandise was delivered to the correct address.

Q. How does a chargeback take place?

A. A chargeback begins when a buyer contacts their bank to dispute a transaction.  The chargeback is passed through the credit card networks to the seller.  Your account will be charged at the time the chargeback is received.

When the seller receives the chargeback it will include a "respond by" date.  As the credit card associations only allow a limited amount of time to respond to a chargeback, it is critical any response be provided by this date.

In some cases, chargebacks can be "represented", in other words information can be presented back to the cardholder's bank disputing the chargeback.  Below are the most common scenarios where representment is feasible.  The ultimate decision of whether or not to accept the representment rests with the cardholder's bank.

Potential representments:

• If the chargeback reason is "non receipt of merchandise" and proof of delivery is available, the chargeback can be represented with a copy of the delivery confirmation.

• If the chargeback reason is "credit not processed" and the customer has already received a refund, the chargeback can be represented along with a copy of the cancelled check or the credit card refund information.

• If the chargeback reason is "fraud", and proof of delivery to the buyer's billing address is available, the chargeback can be represented with a copy of the proof of delivery.

• If the chargeback reason is quality related e.g. "not as described" or "defective merchandise", and the seller has not received the merchandise back, the chargeback can be represented with the statement that the merchandise has not been returned.

If the chargeback does not fit into one of the scenarios above, successful representment is unlikely.