August 15, 2007


Frustrated Merchant

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


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.

Honest Customer

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.


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.


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.


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.


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.

Jeremy G.

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.


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.


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!

Flamin Mad

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.


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.


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!


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.


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.

screwed customer

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 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.


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!


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.


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.


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.

Barbara Windsor

I would like the name and number for a good collections agency - one that is cheap and has a flat rate.



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.



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!

Feed up Merchant

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.

Dat To

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.

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