Return Item Chargeback
High risk merchant accounts often face return item chargebacks for various reasons. With 50+ chargeback reason codes across major card brands, it’s crucial to address the most common reasons for chargeback disputes and how to prevent them using efficient merchant processing and merchant services.
1. Fraud
How to prevent fraud in merchant processing:
- 3D Secure: Enhance security for Card Not Present (CNP) and high risk merchants using 3D Secure, developed by Visa and MasterCard.
- iSpy Fraud Tools: Utilize iSpyFraud, a rules-based fraud prevention tool, to screen suspicious transactions and stay ahead of chargeback fraud.
- Verified-by-Visa/MC Secure Code: Implement additional security layers provided by Visa and MasterCard to avoid return item chargeback fees.
- Gateway Tools: Employ standard gateway tools such as AVS (Address Verification Services) and CVV (Card Verification Value) to prevent unnecessary return item chargebacks.
2. Incorrect Transaction Amount / Fraudulent Multiple Transactions
Preventing and addressing incorrect or duplicate transactions:
- Monitor System Errors: Identify and rectify system errors promptly to prevent double charges.
- Customer Confirmation: Contact customers to confirm suspected duplicate orders.
- Minimize Manual Processing: Avoid manual processing errors and clearly state the chargeback time limit in your return policy.
3. Not as Described or Defective Merchandise
How to handle disputes over merchandise:
- Responsive Customer Service: Maintain a responsive customer service team with short hold times.
- Fair Return Policies: Display a clear and fair return policy on your website to reduce chargeback disputes.
4. Transaction Not Recognized
Processes to prevent unrecognized transactions:
- Clear Payment Descriptors: Ensure your payment descriptor, which includes the merchant name and other identifying details, is easily recognizable to avoid chargeback disputes in online payment systems.
5. Cancelled Recurring Transaction
Managing recurring transaction cancellations:
- Prompt Cancellation: Immediately respond to cancellation requests for recurring transactions.
- Written Confirmation: Inform customers in writing about the cancellation and the effective date to avoid chargebacks.
6. Services Not Provided or Merchandise Not Received
Preventing disputes over non-delivery:
- Clear Shipping Policies: Display visible shipping policies and keep customers informed with order status updates.
- Proactive Communication: Advise customers of delays and offer cancellation options to prevent return item chargebacks.
7. Credit Not Processed
Ensuring timely refunds:
- Timely Refunds: Process refunds promptly to the original payment method.
- Clear Communication: Inform customers about the refund timeline to prevent chargeback disputes.
Knowledge of these common chargeback scenarios and effective strategies for preventing them is essential for maintaining the integrity of your business. Choose a secure high risk merchant account for all your online payment processor needs to alleviate these challenges. For more information on whether your business is categorized as high risk and to learn about high risk merchant accounts, read more here.
