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Preventing Chargebacks
Most chargeback situations arise at the point of
transaction—at the time the transaction is completed—and most can be
prevented with a little training.
Consider these tips to avoid potential chargebacks...
Card
Present Transactions
1. |
Do
not complete a transaction if the authorization request was
declined. Do not repeat the authorization request
after receiving a decline. |
2. |
If you receive a
“Call” message in response to an authorization request, call
your authorization center. Be prepared to answer
questions. The operator may ask to speak with the cardholder. If
approved, write the authorization code on the sales receipt. If
declined, ask the cardholder for another Visa card. |
3. |
Make an imprint
for all card-present transactions. If you have a
point-of-sale terminal with a magnetic-stripe reader, swipe the
card through the reader for every face-to-face transaction. If the
terminal isn’t working or a card’s magnetic stripe cannot be
read, key-enter the account information and make an imprint of the
embossed information onto the sales receipt using a manual
imprinter. Even if the transaction is authorized and the
cardholder signs the receipt, if the receipt does not have an
imprint of the embossed account number and expiration date, the
transaction may be charged back to you for “no imprint” if the
cardholder later denies participating in the transaction. |
4. |
Obtain cardholder
signature. The cardholder’s signature on
card-present transactions is required. Failure to obtain the cardholder’s
signature could result in a chargeback for “no signature” if the
cardholder denies authorizing or participating in the transaction. Always
compare the signature on the sales slip and the signature on the back of
the card. If the card does not carry any signature, ask the customer to
show you a picture ID, and have him sign the card at the time of
purchase. |
5. |
Make only one
imprint of the card for each transaction. Making
more than one imprint can lead to duplicate deposits and increase
the chance of a chargeback. If you need to redo a sales receipt
because of an error, write “VOID” across the incorrect sales
receipt, inform the cardholder, and tear up the incorrect sales
receipt in view of the customer. |
6. |
Ensure that
transactions are entered into point-of-sale terminals only
once—and deposited only once. Entering the same
transaction into a terminal more than once, or depositing both the
merchant copy and the bank copy of the sales receipt with your
acquirer, or depositing the same transaction with more than one
merchant bank can all result in “duplicate transaction”
chargebacks. |
7. |
Ensure that
incorrect sale receipts are voided and that transactions are
processed only once. |
8. |
If your
establishment has policies regarding merchandise returns, refunds,
or service cancellation, disclose these policies to the cardholder
at the time of the transaction. Your policy should
be pre-printed on your sales receipts within ¼ inch of
cardholder’s signature; if not, write or stamp your
refund/return policy information on the sales receipt near the
customer signature line before the customer signs (be sure the
policy shows clearly on all copies of the sales receipt). Failure
to disclose such policies at the time of the transaction will be
to your disadvantage should the customer return the merchandise. |
9. |
Deposit sales
receipts with your merchant bank as quickly as possible,
preferably within one to five days of the transaction date—do
not hold on to them. Failure to deposit in a
timely manner can result in chargebacks for “late
presentment.” |
10. |
Deposit credit
receipts with your acquirer as quickly as possible, preferably the
same day as the credit transaction is generated.
Failure to process credits in a timely manner can result in
chargebacks for "credit not issued." |
11. |
Keep customers
informed on the status of their transactions. |
12. |
If the
merchandise or service to be provided to the cardholder will be
delayed, advise the cardholder in writing of the delay and the new
expected delivery or service date. |
13. |
If the
merchandise ordered by the cardholder is out of stock and delivery
will be delayed or this item is no longer available, advise the
cardholder in writing and offer the cardholder the option of
purchasing a similar item or canceling the transaction.
Do not substitute another item unless the customer agrees to
accept it. By giving the customer notice and the option to cancel,
you may help avoid a customer dispute regarding the merchandise
and a possible chargeback. |
14. |
Ship merchandise
before depositing transaction. Don’t deposit
transactions with your merchant bank until you have shipped the
related merchandise. If customers see a transaction on their
monthly Visa statement before they receive the merchandise, it
could lead to a preventable chargeback. |
15. |
When refunding a
customer, always credit the same card that was used for the
corresponding sale. |
16. |
Respond to all
sales draft requests. Should
you receive a request for copy of sales draft, respond
immediately. Failure to send in copy will result in a chargeback
with no representment rights |
17. |
Change printer
ribbon frequently- illegible sales drafts can also initiate
chargebacks. |
Card-not
present Transactions:
1. |
Do not complete a
transaction if the authorization request was declined. Do
not repeat the authorization request after receiving a decline. |
2. |
If a customer requests
cancellation of a recurring transaction which is billed
periodically (monthly, quarterly, annually), always respond to the
request and cancel the transaction immediately or as specified by
the customer. As a customer service, advise the customer
in writing that the service, subscription, or membership has been
cancelled and state the effective date of the cancellation.
Failure to respond to customer cancellation requests almost always
leads to chargebacks. |
3. |
If the merchandise or the service to be
provided to the cardholder will be delayed, advise the cardholder
in writing (e-mail for e-commerce merchants) of the delay and the
new expected delivery or service date. Also, if the item is out of
stock or no longer available, offer the cardholder the option of
purchasing a similar item or canceling the transaction. Do
not substitute another item unless the customer agrees to accept
it. By giving the customer notice and the option to cancel, you
may help avoid a possible chargeback |
4. |
Ship merchandise before
depositing transaction. Don’t deposit transactions with
your merchant bank until you are about to or have shipped the
related merchandise. If customers see a transaction on their
monthly Visa statement before they receive the merchandise, it
could lead to a preventable chargeback. |
5. |
When refunding a customer,
always credit the same card that was used for the corresponding
sale. Do not offer a check or other form of payment in
place of a refund. |
6. |
Use the Address Verification tool (AVS)
and require a perfect match on cardholder’s billing address.
Partial AVS match will not stand in a “non authorization”
chargeback scenario. If you need assistance in setting the AVS
properly on your Gateway, contact your payment gateway provider or
the Loss Prevention department of your credit card Processor for
assistance. |
7. |
Make sure the billing and
the shipping address are the same. If not, make sure you
verify the shipping address. You can search through the
Yellow-White pages, ask for a copy of a utility bill, or a copy of
a Driver’s License to validate the shipping address. You can
also ask the customer to call the Issuer and add the new address
to the billing information |
8. |
Obtain and verify the Card Code
(CVV2/CVC2). This is the 3-4 digits number on the back of
your card (on the front for American Express). This information
can be captured only if your shopping cart, and your gateway are
set up for it. Please, contact your webmaster and/or Gateway
provider for details. |
9. |
Cancellation/Return Policy needs to be
acknowledged by cardholder. Policy needs to be
acknowledged by the customer. For telephone or mail order
merchants, policy must be acknowledged with a signature on the
order form, contract, or invoice. For e-commerce merchants, policy
can be incorporated in the online Terms and Conditions of the
sale, and require the cardholder to click on an “I agree”
button before completing the order. |
10. |
Generate an RMA number for
submitted cancellations. |
11. |
Obtain signed proof of delivery. Tracking
numbers without a signature are not considered valid proof of
delivery. |
12. |
Verify the Internet
Protocol (IP) address. Even though the IP verification is
not a 100% guarantee, adding this feature will help you detect
fraud. Your Gateway provider and/or other software vendor should
be able to help you get started with this validation process.
There is a variety of IP validation software that can be
downloaded at no cost. |
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