Credit card disputes, known as “chargebacks” within the merchant processing industry, are the bane of internet merchants worldwide. As an author who has worked hard to create my books and products and build a business to market them, few things are as disappointing and frustrating to me as receiving notice of a new chargeback on my merchant account.
I’ve frequently searched the internet for advice on how to prevent and win chargebacks, but the information I’ve found has largely been useless. The problem is that it addresses the prevention of fraudulent transactions, and discusses ways to identify them and block them.
The problem, however, isn’t actual credit card fraud, identity theft, or any of the usual culprits that take the blame for chargebacks. In over four years of doing business online and tens of thousands of transactions, I’ve had less than ten chargebacks that were the result of actual credit card fraud - yes, less than ten. The real problem, and the cause of nearly all of my chargebacks, is so-called “Friendly Fraud” - dishonest people who order and take delivery of merchandise only to file a frivolous credit card dispute in an attempt to keep the merchandise without paying for it.
In the real world, this is known as shoplifting and everyone knows you will go to jail if you get caught doing it. On the internet, however, it’s a regular and consistent pattern of behavior for unethical people who want to rip you off and get something for nothing. The problem is escalating thanks to so-called “Identity Theft Solutions” and similar ideas advertised by credit card companies, which in plain English means “we’ll let you dispute any charge for any reason at all, or no reason for that matter.” In the pre-identity theft days, credit card companies would only process disputes that were the result of a lost or stolen card being used by someone other than the authorized cardholder. Nowadays, they’ll allow disputes for just about any reason at all, and the scumbags in our society know this and are taking advantage of it.
To complicate this problem, many merchants believe that there’s nothing they can do about it. They think chargebacks are final, and as a result, they don’t even respond to the chargeback notices. In reality, you must take either one or two steps to fight back and win against chargeback customers:
Option #1: Dispute the chargeback with your bank immediately upon receipt of the notice.
Option #2: If option #1 fails and the bank upholds the chargeback, you have the right to go after the consumer directly for the amount of the chargeback plus all other costs you incur as a result, such as bank fees.
The other issue I’m going to address later in this article is that of refund fraud: customers who buy a product that is backed by a money-back guarantee, with the full intent to use or copy the product and then return it for a full refund. For now, though, let’s talk about chargebacks.
With the possible exception of running a credit check on each and every customer before shipping merchandise - and that’s entirely impractical and unrealistic - there is no way to effectively prevent chargeback fraud from taking place. However, as I’ve said, you can win and recover your money in the end. I do on well over 90% of my chargebacks and that number continues to rise as I become more experienced in playing the chargeback game.
First of all, I’m going to run through all the things you need to have covered in advance if you expect to win your “friendly fraud” chargebacks:
1. You must use Address Verification Service (AVS) on your merchant account and decline orders which do not provide a valid billing address (contrary to popular belief, you don’t necessarily have to ship to the billing address - I allow orders to ship to other addresses, and none have resulted in chargebacks or other fraudulent transactions - but you must have AVS active and must decline orders from customers who cannot provide a valid billing address).
2. You must require card security codes (commonly known as CVV and some other acronyms) from customers and decline orders which provide either no code or an invalid code. Make sure you set up your shopping cart and/or payment gateway to accept orders from credit cards that do not have security codes, as there are many outside the U.S.
3. Accept American Express. This may sound like an odd suggestion, and many merchants don’t accept them due to higher processing fees, but Amex has the most fair chargeback process and I’ve won 100% of my chargebacks with them that I’ve responded to. They give you the last word and objectively consider your side of the story and your documentation, unlike some Visa/MC processors who will side with the customer all the time (if you’re stuck with one of these, change processors; e-mail me if you need a referral). The number of American Express cardholders continues to rise, which means less chargebacks for us.
4. You must use a trackable shipping service, and preferably one that obtains a delivery signature.
Note to sellers of electronic products: Without some form of proof-of-delivery, you will have a needlessly high refund rate, you will have zero chance of winning chargebacks, and you will not have the documentation available for your collection agency to verify disputed accounts (I’ll cover that later). If you sell dowloadable products such as e-books, software, and so on, you *must* also ship something tangible such as a CD-ROM copy, with tracking and preferably with a delivery signature.
This also has the effect of dramatically reducing refund rates on e-products, usually to less than 2%. People simply don’t go to the hassle of returning a product unless they really want their money back, unlike customers of digital products who can simply demand a refund without returning anything and usually while continuing the use of your product, for free - for this reason it’s very important to use some type of digital rights management with your e-products.
(If you sell e-products and are not willing to ship something tangible, you might as well throw this article in the trash because I cannot help you if you don’t have proof-of-delivery available for each and every customer.)
In addition, you’ll need to have your return policy clearly articulated on your website (I don’t advocate the inclusion of return labels with products because then you’re just encouraging people to refund). If you have a time limit on your return policy, say so. If you impose restocking or processing fees, say so. If products must be in new and undamaged condition, say so.
You should also have a chargeback policy on your website. Mine is very clear - customers who pull chargebacks *will* be reported to all major credit bureaus as a delinquent collection account. End of story. Even if they pay, they will still have a paid collection account on their credit for at least seven years; this is an extremely strong motivator against chargebacks and will be your primary weapon in motivating people to pay after disputing directly with your merchant bank fails. It’s also perfectly legal as long as the information you report to the credit bureaus is up-to-date and accurate.
Which brings me to my next point: How to respond to chargeback notices that you receive from your merchant processor.
For starters, you need to make sure you receive these notices on time. Mail is not an option - banks give you a very small window of time to respond and you may miss it if you have to wait for the notice to arrive in the mail, and if you’re traveling you won’t get it at all in time. So, contact your merchant account provider and get set up for either e-mail or fax notices, and use an eFax account that sends them directly to your e-mail. This will give you plenty of time to respond. If your merchant account provider does not have this capability, switch to one that does.
How you specifically respond will depend on the nature of each chargeback. Here are examples of the most common kinds and how I successfully respond to them:
1. “I never received the product.” I include a copy of the proof-of-delivery tracking, a copy of the transaction receipt showing a positive AVS (address verification) and card code match, and any customer support tickets or e-mails from the customer that would prove they did indeed receive the product.
2. “I returned it but didn’t get a refund.” If the customer never returned the product to you and is trying to scam you, simply say so in your response and request tracking showing proof-of-delivery to your correct return address.
If the customer returned the product outside of your return period, say so and include a copy of your return policy in your response.
3. “I was dissatisfied” or “product not as described.” This is a weak excuse for a chargeback because if someone is not satisfied with your product, the correct procedure is to return it for a refund, not to keep it for free via a chargeback. Provide a copy of the proof-of-delivery tracking, a copy of the transaction receipt showing positive AVS and card code matches, a copy of your return policy, and a statement explaining that the customer has a right to a refund and that you’ll be happy to provide one if they’d return the product; however, unless and until they return the product, no credit is due. People who do this are generally trying to steal the product from you, so fight hard on these.
4. “I cancelled my order but they shipped it anyway.” My website terms & conditions explain that once an order is placed, it goes out to the fulfillment center for shipping and we cannot stop it. You should have the same terms on your website. Again, people who do this are generally thieves and ripoff artists because they file the chargeback without ever returning the product. Their intent all along was to get the product for free. Provide a copy of the proof-of-delivery tracking, a copy of the transaction receipt showing positive AVS and card code matches, a copy of your return policy, and a statement explaining that the customer has a right to a refund and that you’ll be happy to provide one if they’d return the product; however, unless and until they return the product, no credit is due.
5. Customers who have already received a refund and dispute charges on top of it. This one is the most disgusting and clearly criminal and fraudulent of all chargebacks, but thanks to credit card companies’ “dispute any charge for any reason” crap it’s becoming more and more common. In this case, provide a transaction receipt showing that you’ve already issued the credit to the customer. You’ll almost always win this form of chargeback, but if for some reason you don’t, report these people to their local police. What they’ve done is criminal in most cases.
In all cases where the chargeback is clearly fraudulent and with ill intent, you also have the option of filing a report with the customer’s local police or sheriff’s department. If the product was delivered via U.S. Mail or to a Post Office box, you may also file a mail fraud complaint with the postmaster. I did this to a customer who ordered three products three months apart, and then pulled chargebacks on all three without returning any of them or otherwise contacting us. He also refused my certified demand letters. Because he was stupid enough to hide behind a P.O. Box, it came under the jurisdiction of the U.S. Postal Service and I filed a complaint for criminal mail fraud against him (that may sound harsh, but judging by his actions, he probably scammed merchants on a regular basis and needed to be stopped).
After you respond to a chargeback, you will get an answer one way or the other from your merchant processor. My success rate in the above examples is about 70%. If you win a chargeback, the customer does have the right to appeal that decision and dispute again. If that happens, respond with the same information and documentation and reiterate your position. Most of the time, these appeals fail and the decision in your favor will be upheld.
If your rebuttal to the chargeback is denied and it is upheld in the customer’s favor, it’s time to move on to the next step - a final demand letter and invoice from you, mailed directly to the customer.
I use a simple form letter that explains to the customer that they have wrongfully and fraudulently disputed charges and are now responsible to me for the full charge amount plus the bank chargeback fees. They are notified that they have thirty (30) days to pay in full, and if they do not, they will be placed with a third-party collection agency and their account will be reported to all credit bureaus as a delinquent collection account, severely damaging their credit rating for at least the next seven (7) years. The letter also explains that we will no longer accept a return of the merchandise as settlement for the debt and will only accept payment in full.
The response to this letter will vary, but the people who care about their credit will pay immediately. It’s amazing how many people think they can get away with ripping us off with no consequences, and then immediately mail a check the instant they receive notice that their credit score is about to go down the toilet. With credit standards tightening and the disappearance of the sub-prime credit market, I expect the threat of damaged credit to become even more effective in collecting these outstanding debts.
In addition, at the time I mail these letters, I print the tracking information for each account. Many delivery services such as FedEx and DHL only keep them on file for sixty days, and you’ll need to have them available for the next phase of this process, so print (or .pdf) them and file them away with the copies of the letters you’ve mailed.
After those thirty days have passed, it’s time to take the customers who still haven’t paid and send ‘em to collections, which will also cause a collection account to appear on their credit reports, which will severely damage the customer’s credit rating and prevent them from getting credit and subsequently ripping off other creditors and merchants. And, if they buy or refinance a house, the title company won’t allow the deal to close until all outstanding collections are paid off, which will greatly increase your odds of getting paid, even if it’s down the road.
This will also further motivate customers to pay. A paid collection account on a credit report is still a negative entry, but it’s better than an unpaid account. Next time they are denied for a credit card, car loan, mortgage, cell phone, or need to pay a hefty deposit for utility services or cable TV - you name it - all because they tried to rip you off, your odds of getting paid go up dramatically.
If you need a referral to a good collection agency, e-mail me. They’re cheap, they charge a flat rate rather than a percentage of the accounts, and they report to all major credit bureaus.
Professional deadbeats will attempt to dispute the collection account, either directly with the collection agency or with the credit bureaus, in an attempt to get it off their credit reports. This is where it’s vital to have that tracking information available. Your collection agency, in compliance with Federal law, will give you about ten days to respond with documentation proving that the customer actually owes you the debt. You will need to send them the original transaction or shopping cart receipt, a copy of the tracking/proof-of-delivery, and a copy or copies of the chargeback documentation showing that the customer did indeed hit you with a chargeback. With this information, the customer’s dispute(s) will be denied, the account will stand, and it will continue to appear on the customer’s credit reports.
If this approach makes you nervous or seems harsh, stop that thinking right now. You have every right to do this under the law, as well as both morally and ethically. Customers who buy products and then slap the merchants with unjustified chargebacks are the lowest scum of society and cost honest businesspeople like you and me a huge amount of money. It is your obligation to send these deadbeats to collections and get the account on their credit reports in order to protect other creditors from them - if they get credit, they’re just going to defraud and steal some more, and it’s your job to make sure that doesn’t happen.
Once you place delinquent accounts with collections, more and more will start to pay up as soon as they receive collection letters and realize their credit and financial health is at stake; in other words, they’ll know your threat to ding their credit in your final demand letter was real, you were not bluffing, and now it’s time for them to either pay up or suffer for the next seven years in the form of denied credit and higher interest rates.
On the subject of refunds, this can be an even bigger problem than chargebacks. The internet is plagued with people who look for products offering money-back guarantees, especially information products. These thieves will buy your product, copy it as soon as they receive it, and immediately return it for a refund.
On the bright side, the reality is that you must offer a money-back guarantee in order to maximize your sales. The increase in sales will far, far outweigh any losses due to refunds. Having said that, there are steps you can take to keep the serial refunders to a minimum:
1. DO NOT include return labels, either postage-paid or not, with your products. While some may see this practice as “good customer service,” all you’re doing is encouraging dishonest customers to return your products for a refund. If you were a general, you wouldn’t supply your enemies with weapons, would you? Then why would you provide serial refunders with tools to help them in their ripoff game?
2. DO NOT pay for or reimburse shipping charges to return products to you. Again, why empower the enemy? If someone wants to return your product for a refund, let them pay their own postage.
3. Only refund the price of the product itself, not shipping and handling charges. You can’t recoup those, and the customer did get the opportunity to review your product (and has probably copied it) so it doesn’t make sense for you to pay for those charges.
4. Impose restocking fees on returned products. This is well within your rights as long as they are clearly spelled out in the return policy posted on your website, which few, if any, customers read before ordering. A restocking fee may cover your cost of goods and will discourage customers from returning the product, especially when they must also cover the cost of shipping on top of it.
5. Impose penalties for failure to follow the return instructions. For example, even though my return instructions are provided to customers in three separate places (on my website, in the e-book they download, and in the print book that is shipped to them), a small percentage of customers never read them and simply return the product to my out-of-state fulfillment house rather than to my office. This results in a return processing fee being charged by my fulfillment house, as well as added time and hassle in receiving the returned item. As a result, customers who fail to follow the instructions have a fee deducted from their refund amount. This is only fair because it takes my staff extra time to process these, and customers should be held responsible for the extra fees my fulfillment house charges for these improper returns.
6. This is very important: NEVER allow a customer to purchase after he or she inquires about your money-back guarantee. BAN THEM! After about a year of selling my products online, it occured to me that fully 100% of customers who called or e-mailed in advance to verify that a money-back guarantee existed returned the products for a refund almost immediately after receiving them! I now ban customers who inquire about the money-back guarantee, and this has really cut back on returns and the lost money that goes along with them. Remember, you reserve the right to refuse to do business with anyone, so exercise that right to protect yourself from professional refunders.
Hopefully this information will empower you to fight back against chargebacks, refund fraud, and the dishonest customers who commit them. The only way we as merchants and as a business community can put a stop to the ever-increasing “Friendly Fraud” chargebacks is to hold the people who initiate them responsible, and force them to either pay or suffer the consequences. If enough merchants follow these steps and punish dishonest customers who make a regular practice of ripping off honest businesspeople, fraudulent chargebacks will become a thing of the past.
I'd like a referral to a collection agency that does specialize in chargeback accounts. I'm more than ready to start referring clients to one, and for the really strange cases, to even go a step further and to start filing reports of credit card fraud.
We don't get may chargebacks, but the ones we get are doozies! And I think that the article says it all - they are intentional, and I have no doubt that these people are repeat offenders. I first encountered an odd chargeback when I was working for a company and we got a chargeback from a client that was for a year's worth of services! Despite having proof of providing the services and many of the requests in the clients own handwriting, plus authorized signatures on company forms, we lost. I wasn't actually involved in the dispute so I really didn't know what to think, and I assumed that the company just hadn't filled out something correctly - but I couldn't understand how the entire years worth of transactions could be involved.
Since then, we have opened our own company. And it seems that every chargeback it different. Whatever proof we provide, whatever explanation - the processing company seems to look it over and ask for whatever we 'don't have' - as if they are looking for a way for the cardholder to win. And that's on the ones that the processing company are kind enough to bless us with any data at all. We've only had about 4 in a year, and out of those four, we've only received notices on two without having to call and ask for the information. While we do respond, we rarely ever hear anything back - win or lose. We've become so frustrated that we finally implemented a system to 'record' our orders, and this very last chargeback is the first one that we have the authorized order on tape. Lo and behold, we have finally gotten contact in a very short time period. Now, they want a signature:)
Unlike many merchants, our product is part service and soley provided on the internet, which we can print for them, but it is not shipped - and they know this from our application - which they approved. Yes, we are an internet company, but all of our polices and services are very clearly spelled out on our website (in big letters - not small type), which they also checked out before granting us a merchant account. We even go a step further by mailing a copy of our terms to our clients and an agreement, which we need on file for different reasons, in order for the client to receive the full benefits of the program. This is clearly explained to the client at the time of the order, and they are told that if they don't return the form, it may affect their results as they will not be complying with all of our terms. They are sent a copy to retain for their own records and a self addressed stamped envelope in which to return it. We've had clients use the envelope to send other things (and we keep this in their file for future reference if needed) - indicating they received it - and that still hasn't sufficed Visa:) Anyway, all of this was recorded, the client was told it was being recorded and agreed, and agreed to these terms - and still, Visa wants a signature:)
Needless to say, we are fed up with this. It's almost an oxymoron is some ways. If the signature is the only thing that Visa will accept, than they should not even allow orders to be accepted by telephone or internet when a physical product isn't involved. But, they obviously don't want to give up those fees!
As for AVS and CVV and all the fraud prevention, I fully understand the reasoning behind those. For us, they really don't play that important of a role, though. We're establishing a relationship with a client that is going to be on-going, and we're not shipping something to them that they're going to receive before we get notice of a fradulent card. In essence, no one is going to use a 'hot' card to purchase marketing and advertising with. So the risk of taking a fradulent card is much less with our kind of business. Our chargebacks are almost 100% intentional, and that makes them fradulent.
And we have no choice but to believe that there is a reason that we don't receive our chargeback information in a timely manner. We receive our discount information just fine, and we receive our information from both American Express and Discover just fine, too.
We have found both American Express and Discover to be much easier to work with and much more reasonable and fair. So, as the article pointed out, their fees may be a tad bit higher, but when clients ask us which card we prefer, we've started telling them anything except Visa or MasterCard.
Oh - and the reason that the client gave for wanting his money back on the above mentioned chargeback? The one that Visa now wants a signature for because they can't seem to make a reasonable determination on what should constitute a valid reason for a refund? It had nothing to do with a defective product or a non-receipt of a product or not receiving a service or our company at all. The reason the client said that he wanted his money back was because 'things were moving too fast!' We're a marketing company that helps clients sell equipment. Normally, we would hear a complaint that 'we're not moving fast enough!' (LOL). Because when people want to sell something, they want to sell it yesterday! So, three weeks later, in our business, we'd take that to be a compliment. That kind of a comment has left us scratching our heads. It's hardly a valid reason for a refund.
And the other four we have encountered have been similiar -
1. 'Yes, I've gotten calls, but everyone wants to steal my item' (That's because it's overpriced - and that was through Discover - and they lost that one).
2. 'I haven't sold my item yet' (This one was written by a person who didn't even authorize the tranaction - so we consider this one to be fraud, and we may pursue this further. Our guarantee is that we will market the item until sold - there is no time limit. They received a refund, and we never received a notice).
3. 'These people get their mail at a Drop Box'. (Okay? You didn't ask where we received our mail. If you had, we certainly would have told you.) Again, Visa authorized a refund based on this and didn't notify us.
Anyway, I understand that Visa adopted these policies to protect their cardholders from predators, and no one is advocating that they eliminate a cardholder's right to dispute a valid complaint. But the pendulum has swung so far that merchants now need to be protected from these consumers, and it's obvious that Visa isn't going to protect us, so we're going to have to do it ourselves. These consumers have learned how to play the system, and I was unaware that once a chargeback had been ruled on, they could still be pursued. I think a lot of other merchants are unaware of this too, as well as the consumer. I believe that they think that once they get their money back, they're untouchable. It's time they learn that they're not, and to swing that pendulum back to the middle. No, four chargebacks is not a great deal of money - it's not the money that's the point. The point is that I believe that these four people that have done this to us have probably done this to someone else. Until someone stops them, they'll probably do it again. They're issued credit cards based on their credit worthiness, but maybe the time will come when they'll be a way to track people who constantly charge back their transactions, and the issue of who is responsible enough to have a credit card will become an issue and not just who's credit is good enough. It would be nice if some entreprenuer could find a way to have merchants send their chargebacks to them and then enter this information into a database (like bad check information) so that other merchants could have access to it before they accepted a consumer's credit card. If that consumer showed up, the merchant could refused to accept it - and boy wouldn't that make the consumer think twice, and of course Visa would lose those transactions, but then they wouldn't have to worry about processing these chargebacks anymore either - since they don't seem to want to handle them fairly.
Anyway, I know this is lengthy, but any information you could provide on collection agencies would be helpful. I've been speaking with several other merchants who are also fed up with this, and they are also interested in this information which I will be happy to pass along. Instead of concentrating on our business right now, I'm branching out into another area here, and focusing on this issue, which I think is long overdue to be focused on.
Thank you
Posted by: Frustrated Merchant | October 06, 2007 at 09:43 AM
I work for a home heating oil company that is in an unusual position. We are an internet based company and all of the orders are placed online. The issue we are having is when someone decides they want to charge us back and refuse the sale through merchant services. Merchant services is giving us the same line every time that they need a signature from the customer and if we had that, the customer would not be able to refuse the charge. Therein lies the problem, heating oil is delivered during the day while the homeowner is at work, that of course being why we can never get a signature. Now, the orders can not be placed unless they check a box on the online form saying they understand the terms and conditions and payment information, but this so far has not been good enough for merchant services to rule in our favor regarding these chargebacks.
Is this box being checked off legal as an internet signature? Merchant services doesn't seem to think so. But if it is, do they still have the right to decide that, since it is not their policy, they won't rule in our favor and the consumer can refuse payment even though they took delivery of the oil? Can they have a policy that contradicts the law? Any help on this matter would be greatly appreciated.
Posted by: Blarpgh | October 10, 2007 at 12:32 PM
Thank you for a very informative article. I do, however, take exception to your suggestion that customers who enquire about refund policies be immediately banned.
I have purchased several information products over the last few years - many of which did not live up to sales page promises. I usually just shake my head and chalk it up to experience.
In one particular instance, an information product I purchased online proved to be particularly disappointing. I thought that perhaps I wasn't using the product right, so I wrote to the marketer, asking if he could suggest ways that I could get the promised benefits from the product.
Although I did not request a refund, he issued one immediately. I was impressed with what I thought was proactive customer service... until I found myself banned from ever accessing any of his sites, without as much as a warning or an explanation!
I realize that there are unscrupulous customers who try to rip off merchants. But please don't judge us all in that light. Whatever happened to "innocent until proven guilty"?
Let's not forget that there are also many marketers out there who create the largest number of information products possible in the least amount of time, in order to make a quick buck at consumers' expense. (There are even many courses and e-books that teach people how to do just that!)
A prospect who asks about a merchant's refund policy may have been burned before and may just be seeking reassurance. A guarantee should be genuine, and not just posted for the sake of making more sales. By the same token, customers need to trust that they won't have to jump through hoops to have the guarantee honoured if the product is not what they expected.
We should all practice due diligence, but let's also give each other the benefit of the doubt.
Surely, there must be a happy medium.
Posted by: Honest Customer | October 11, 2007 at 04:45 AM
My favorite is the "call to cancel the order" trick. This where they place an order, wait until it's been shipped and then call right after shipping to try to cancel. Then threaten a chargeback if you refuse... So basically they are trying to get the product for free this way. You KNOW they aren't going to send it back.
Posted by: GLN | December 05, 2007 at 05:35 AM
Oh, and yes I agree, BAN the people that inquire about the guarantee policy... I have kept track of the people that call me first about the guarantee policy... 100% of them returned their order after using it all almost immediately and requested a refund. Coincidence? I think not.
Posted by: GLN | December 05, 2007 at 05:38 AM
I'd like a referral to a collection agency that does specialize in chargeback accounts, where customer's order, then want to cancel and will do a chargeback to keep from paying the cancellation or restocking fee. American Express is pretty good at upholding our Terms, but Visa and Mastercard just ignore them and refund the customer.
Posted by: GFS | May 31, 2008 at 05:48 AM
I would like a referral to a collection agency also. We recently lost a $5000 chargeback w/American Express through PayPall. The customer never returned the item or asked to return it. Left us positive feed back after the sale: ITEM AS DESCRIBED - FAST SHIPPING! Never heard anything else from him until almost 5 months later when PayPal notified us of the chargeback.
He has done this other times on ebay. He keeps the item and then sells it!
He lives in New York. Thank you.
Posted by: CLR | June 13, 2008 at 08:22 AM
Can you send me the form letter template you use to type this below......I like this....
use a simple form letter that explains to the customer that they have wrongfully and fraudulently disputed charges and are now responsible to me for the full charge amount plus the bank chargeback fees. They are notified that they have thirty (30) days to pay in full, and if they do not, they will be placed with a third-party collection agency and their account will be reported to all credit bureaus as a delinquent collection account, severely damaging their credit rating for at least the next seven (7) years. The letter also explains that we will no longer accept a return of the merchandise as settlement for the debt and will only accept payment in full.
Posted by: Jeremy G. | July 07, 2008 at 10:07 PM
Pls email the forms/info as well. I am sick and tired of these customers wanting to keep the item based on "Defective/Not as described" Yeah? So I guess you can just keep the item?
Why don't I order a Plasma TV and say that it is not as described and keep it for free? Fcuk these people. We run pretty decent volumes and keep records of ppl that do disputes.
If they even hint of calling their credit card companies, we flag their order and never communicate with them again. Then they lose the c/b based on them not sending the item back. They then send it back after they lost, thinking that they can get a refund now. Well.... tuff sh!t. I ain;t gonna issue a refund, I ain't gonna help you... and you better believe it... i keep the item that was sent back and keep the money I won from the dispute. Then you call and ask for a refund? Well, it is passed the 30 days. Why don;t you send me some more money for the Shipping for that item back to you + handling fees? Or we'll just hang up on your frivilous, fraudulent, shop=lifting azz.
Don't feel all that powerful now since your CC company took away your temp credit? Wanna call for some sympathy? Should have thought about it before you shot your mouth off and acted a fool. Now you got no moeny, no product and spent more money sending it back and getting high blood pressure. Serves your azz right.
Typical scenario. I'm gonna call my lawyer and reprot you to the BBB. (If you do have a lawyer that is willing to take your <$1000 case, I ain't worried about this 2-bit attorney. He ain;t got the funds to even mail a certified letter). And the BBB... whatever... get in line behind all these other cry babies. Oh, you wanna get crazy on the telephone talking about how your CC company is going to back you up? I have a 80%+ win streak... I'll play the numbers.
I'll now add the destroying your credit line to these morons when they threaten.
Posted by: Mike | July 19, 2008 at 05:03 AM
POS degenerates. If you steal from me in my store, I'll take a bat to your head. Too bad I'm online based only. So my revenge will be to take the product and your money, respond to your emails and requests in such a way that you'll stress about it for the next 2 months.
Taking VISA and M/C, you better have a good merchant bank. The process goes like this: Everyone is supposedly conforming to VISA/MC regualtions... however, there is much grey area. If everyone upheld it, Issuing banks won't let so many frivilous disputes go thru.... but nooooo. They want to keep the customer happy so that they will use that bank's CC more often. That's why do do what the cust wants.
When it gets to my merchant bank, by law, they have to let me respond. When I can convince my merchant bank that I am in the right, they will reject the dispute, stating that their client (ME) is conforming to VISA regs. Once their Mickey Mouse Credit Card Co gets the rejection notice, they will take the money back from the idiot shop-lifter.
So you see, VISA don;t get involved. it is really up to your Merchant Bank to release or not. So build a good relationship and track record. The regualtions are there to be interepreted by the ppl handling your case. The rules ARE SUBJECTIVE. It you have a scaredy cat Merchant Bank... you'll be screwed. That's why we don;t accept BS like Google Checkout or Paypal.
Again, please email me more tools you spoke of. Together, we can send these idiots to the curb!
Posted by: Mike | July 19, 2008 at 05:14 AM
Thanks for the informative article, I would appreciate it if you could email me the final demand form letter you use and your collections agency referral as I am going through a doozy of a chargeback right now.
I have a guy that was upset because he thought that an order of a custom made product took too long to arrive even though it clearly states the timeframe on both our terms and conditions page and the checkout page. Now, a full MONTH after his order was marked delivered by UPS, he's filed a chargeback for the full amount (over $800) claiming the items were not received. I haven't heard a thing from him from the time it was delivered until now (wonder why that is?), even though he would email and call several times daily before the delivery asking where his order was.
Here's the kicker though, this person was dumb enough to write a scathing public complaint about by business under his real name on a consumer website where he ADMITS he received his order, but was upset about how long it took and states that he did not receive shipment until he threatened to contact Visa (which he was doing several times daily up until the UPS delivery when the threats coincidentally stopped).
I followed your advice and sent everything you suggested for the item not received along with a full printout and link to his public complaint to my merchant bank. It is still pending and one would assume that no reasonable person could possibly rule in his favor given the evidence, but as stated, Visa tends to side with the customer most of the time.
If the bank rules in his favor, I intend to not only refer him to collections, but also file a report with the appropriate criminal authorities. Even if they rule in my favor, I stll intend to pursue collections for all bank service charges that have been charged to me.
You are absolutely right, until we start punishing these criminals, they will continue to rip honest businessmen off.
Posted by: Flamin Mad | September 03, 2008 at 11:20 AM
I am so happy to come across this - Please if you could email the form letter you used as well I would greatly appreciate it.
Dia
Posted by: Dia | September 21, 2008 at 04:17 PM
Great article - a business associate sent it to me and I found it very useful. Would you be able to e-mail me the form letter, as well as the collection agency that you use? Thanks!
Posted by: Rich | September 25, 2008 at 10:26 AM
I am having a similiar situation with a purchasee at the moment. Please send me the simple form letter that explains to the customer that they have wrongfully and fraudulently disputed charge and the referral to the collection agency.
Posted by: shae | October 04, 2008 at 05:54 AM
Great article. Thank you so much for this information. Could you please send me the letter you use along with the information on that collection agency you use or would recommend please.
Thank you.
Posted by: Dan | October 29, 2008 at 05:44 AM
What about customers that have honestly been frauded? I called Immigration Helpline in Colorado Springs for a free consultation and got taken advantage of. I admittedly gave away my credit card info away too freely without demanding a description of terms & services, as well as refund policy. But I am a college student that was just looking for advice, and as a result got $960 charged to my credit card which I could ill afford. The rep I spoke to told me no charges would be made to my card for 30 days after services & implied that my credit card info was only needed to reserve an appointment (nothing was final) - but my card was charged immediately!! These people royally screwed me over...now I am undergoing the horrible process of trying to remove these charges with a dishonest company that is not cooperating. If I had honestly been told what would be charged when I would have no complaints, but I was blatantly lied to & taken advantage of. I am a college student that only has a part-time job & this kind of fraudulent activity has seriously disrupted my life. I understand that there are people out there who take advantage of merchants, but what about dishonest merchants that prey on unsuspecting customers....any advice would be appreciated in my case... I have never ever contemplated screwing a company & the treatment i have received from this company has humiliated me (immigraion helpline in CO Springs). I naively thought companies would be straightforward with me & I have been totally screwed. I am only hoping that this company will refund my money or the credit card company will come to my defense, otherwise I have been completely taken advantage of. Companies like this deserve bankruptcy & total failure. Obviously consumers deserve the benefit of the doubt when dealing with companies like these.
Posted by: screwed customer | October 30, 2008 at 11:09 PM
Hi....great article...actually gives me some hope that merchants can fight back instead of just being robbed by the customer and the issuing bank. Please email me the form letter and also a collection agency that you recommend.
Thank you so much!
Posted by: David | November 06, 2008 at 12:46 AM
Thank you. Very good info and will be helpful. Do you have a base copy of the collection letter and how and where should we file the deliquent account with? Thanks so much.
Posted by: Jon | November 12, 2008 at 07:53 PM
Great article... If you could send the name of the credit reporting agency and the collection letter you send out (if possible), we would like to start implementing your suggestion... Thanks for getting the word out! Any ideas on what you can do about customers who we have tracking information that the package was delivered but no signature? There are a number who will claim they didn't receive their package, but the tracking says they were delivered. To add a signature confirmation to every order isn't cost effective, but it is an issue.
Posted by: D.Yates | November 17, 2008 at 09:12 PM
Excellent article - please send me the letter you send out, and if you have a referral on a collector that would be terrific too. I find it astounding as to how unscrupulous some people are. Unfortunately, it just hurts other ethical customers and the hardworking employees of businesses.
Posted by: seth | December 05, 2008 at 06:32 AM
I would like the name and number for a good collections agency - one that is cheap and has a flat rate.
Thanks!
Posted by: Barbara Windsor | December 15, 2008 at 12:27 PM
Excellent source of info for all merchants - I'm also one of those merchants affected by chargebacks. Would you please email me the form letters your use to fight those merchants.
Thanks
Posted by: F>Mosqueda | January 02, 2009 at 11:34 AM
Great article! Thank you for writing it!
Please email me name and number of a good collection agency. Also I will appreciate a copy of your form-letter that you send to a fraudulent customer giving him/her 30 days to pay chargeback money back. Thanks!
Posted by: Jenya | January 23, 2009 at 02:46 PM
Can you please send me a copy of your demand letter along with the contact information for a Collection company. I'm an online merchant that is tired of being riped off. at this time more than 3000 worth of chargebacks.
Posted by: Feed up Merchant | January 25, 2009 at 05:38 PM
I've read dozens of articles on chargebacks and you are right, most are useless. I wrote a short post last year for my website, but is trash compared to yours.
None of the articles ever tell you what to do.
The steps to take, the possible claims, and the advice on refunders is super detailed, clear and amazing. The bit of angst is perfectly justified. I'm going to link to your post as the definitive last word on this subject on my payment processing blog. Great job, thank you.
Posted by: Dat To | February 06, 2009 at 05:47 PM