Credit Card Chargebacks

[SPYLIFE]

Anyone here a small business owner who deals with people using their credit cards as a civil court system and doing a great job of such?

 

[Dana757]

I deal with chargebacks from time to time. Both c.c. and PayPal. Always contest them and only won once.

 

[LargeOrangeFont]

I deal with chargebacks from time to time. Both c.c. and PayPal. Always contest them and only won once.

You obviously don’t sell re-pitched props as new.

 

[Dana757]

You obviously don’t sell re-pitched props as new.

obviously! I would prolly win that chargeback! lol

 

[Kenny D]

Yes .....we get a few a year.What really bugs me is ....we will sometimes lose the money and not get our product back.

 

[Tooms22]

The majority of my clients are in the credit card processing industry. Tons of people have learned how to scam the chargeback system. Responding on time and with solid evidence of the transaction is the first step that most businesses fail to do.

The other issue becomes "card present" and "card not present." It's a lot harder to win a "card not present" transaction chargeback.

I go to a compliance conference every year in Vegas. Visa and Mastercard are trying to streamline the process for businesses to address their chargebacks. I'm not sure exactly when it will be implemented. Your current processor may have a timeline for that.

 

[Jed-O]

The majority of my clients are in the credit card processing industry. Tons of people have learned how to scam the chargeback system. Responding on time and with solid evidence of the transaction is the first step that most businesses fail to do.

The other issue becomes "card present" and "card not present." It's a lot harder to win a "card not present" transaction chargeback.

I go to a compliance conference every year in Vegas. Visa and Mastercard are trying to streamline the process for businesses to address their chargebacks. I'm not sure exactly when it will be implemented. Your current processor may have a timeline for that.

That's good info to know. Only a small percentage of my clients pay via PayPal. But I was unaware that the money could be siphoned back to the client after the transaction was completed assuming that the transaction was legitimate and legal.
In my case, would PayPal have the authority to pull $ from my bank account and then send it back to my client over a possible issue without my consent?

 

[Enen]

Fuck man. This topic really hits a sore spot with me. I could write a book about our business experience dealing with this shit over the last year.

When a consumer purchases a service or product then elects to initiate an unwarranted chargeback its called " Friendly Fraud"

The way things are set up now chargebacks highly favor the consumer. Similarly I suspect to how divorce ( used to at least) favor the woman.

We got hit with a friendly fraud scheme, and the financial damage is not something I'm going to comment on a public forum about.

Specifically what are you asking? Are you asking how you prevent this from happening? Are you asking how you manage your MID health so that you don't get shut down, or are you asking for a service that will manage the chargeback response process for you?

 

[Cobalt232]

We usually lose the chargeback. We can always prove delivery and digital delivery, but it doesn't seem to matter. We use Stripe on our website, but use Paypal for 'phone-in' type orders. I used to spend time proving our case, but it doesn't seem to help.

 

[Tooms22]

That's good info to know. Only a small percentage of my clients pay via PayPal. But I was unaware that the money could be siphoned back to the client after the transaction was completed assuming that the transaction was legitimate and legal.
In my case, would PayPal have the authority to pull $ from my bank account and then send it back to my client over a possible issue without my consent?

Yes, the customer automatically gets the money credited back while your account is debited until the chargeback is resolved.

We usually lose the chargeback. We can always prove delivery and digital delivery, but it doesn't seem to matter. We use Stripe on our website, but use Paypal for 'phone-in' type orders. I used to spend time proving our case, but it doesn't seem to help.

Both of those are "card not present" types of transactions. It's easy to say "I didn't authorize that." The problem is that someone could have their card number stolen and used for internet or phone orders. The cardholder doesn't even know the number is stolen because the card is still in their possession.

That's the premise of these fraudulent chargebacks. It's hard to prove the cardholder is lying and the tie goes to the cardholder.

 

[Yellowboat]

I stopped taking cc after my 1st charge back. It was for a $200 oven install. Took 6 weeks and I don't know how many hours on the phone and countless emails. Said fuck that shit.

 

[Cobalt232]

Yes, the customer automatically gets the money credited back while your account is debited until the chargeback is resolved.



Both of those are "card not present" types of transactions. It's easy to say "I didn't authorize that." The problem is that someone could have their card number stolen and used for internet or phone orders. The cardholder doesn't even know the number is stolen because the card is still in their possession.

That's the premise of these fraudulent chargebacks. It's hard to prove the cardholder is lying and the tie goes to the cardholder.

The thing is we can prove what IP the order came from. Additionally, the customer name, email and ship to address almost always appear correct.

 

[Tooms22]

The thing is we can prove what IP the order came from. Additionally, the customer name, email and ship to address almost always appear correct.

I'm not disagreeing with you. I think the current chargeback system favors the cardholder way too much.

But again, playing devil's advocate and not knowing your product, what if it never arrived? I've had "delivered" notifications and it wasn't at my front door. It then becomes a situation where you need to figure out who is liable during transportation. But, a chargeback is still easier for the cardholder because of the leniency built into the current system.

 

[Enen]

Yes, the customer automatically gets the money credited back while your account is debited until the chargeback is resolved.

Both of those are "card not present" types of transactions. It's easy to say "I didn't authorize that." The problem is that someone could have their card number stolen and used for internet or phone orders. The cardholder doesn't even know the number is stolen because the card is still in their possession.

That's the premise of these fraudulent chargebacks. It's hard to prove the cardholder is lying and the tie goes to the cardholder.

We had a group approach us and wanted to sell our product through call-centers. They had relationships with various call centers, and asked us to create a product that would ship on a monthly subscription. We created a program specifically for this and started selling. The call-centers would send us daily the recorded verification of the consumer stating their name, address, CC number, listening to the offer, agreeing, and asking us to ship them their product. We were billed a $21 commission for accepting a successful sale.

It started out great. We were seeing very high retention statistics. New sales were being originated. Think we got to 1000 sales per day. Then the trouble started.

We started receiving waves of chargebacks. Multiple CB's per client. We went and hired a chargeback response company. Provided all of the verification we received, and it didn't matter. We lost the chargebacks. The MID claimed the evidence wasn't sufficient to support that the customer actually ordered from us and the chargeback was ruled in favor of the consumer.

Chargebacks are a HUGE profit center for MID's. They charge anywhere between $25 and $50 per occurrence. Many of them will charge you a "mailing fee" on top of the CB fee of up to $15.

We hired Chargebacks 911. The group that is supposedly God's gift to companies dealing with CB's. They're not. In fact I received an invoice from them for 9k for alerting me of CB's that I had already been alerted of, and charged by my MID for.

This is one of the biggest risks of E Commerce. When a customer initiates a fraudulent CB the company;

1 loses the money they were paid for their product/ service
2 loses product, labor, shipping, marketing, sales commissions; all hard costs associated your business.
3 is charged as much as $55 per occurrence. Customers can initiate a chargeback for up to 6 months, so in the case of a monthly subscription you are taking risk of CB fees of $330 plus all hard-costs and margin associated with your goods/ service.

The CB system is setup to favor the client for the reasons mentioned. Consumers have learned this and many of the exploit these policies and practices to their own benefit. They get your product/ service then initiate a chargeback to get their money back. Its unscrupulous and happens to companies every-day

 

[Cobalt232]

I'm not disagreeing with you. I think the current chargeback system favors the cardholder way too much.

But again, playing devil's advocate and not knowing your product, what if it never arrived? I've had "delivered" notifications and it wasn't at my front door. It then becomes a situation where you need to figure out who is liable during transportation. But, a chargeback is still easier for the cardholder because of the leniency built into the current system.

Yeah, we just consider it a cost of business. I do think that Stripe's "Radar" program weeds alot of it out before it even happens thoiugh.

 

[Tooms22]

We had a group approach us and wanted to sell our product through call-centers. They had relationships with various call centers, and asked us to create a product that would ship on a monthly subscription. We created a program specifically for this and started selling. The call-centers would send us daily the recorded verification of the consumer stating their name, address, CC number, listening to the offer, agreeing, and asking us to ship them their product. We were billed a $21 commission for accepting a successful sale.

It started out great. We were seeing very high retention statistics. New sales were being originated. Think we got to 1000 sales per day. Then the trouble started.

We started receiving waves of chargebacks. Multiple CB's per client. We went and hired a chargeback response company. Provided all of the verification we received, and it didn't matter. We lost the chargebacks. The MID claimed the evidence wasn't sufficient to support that the customer actually ordered from us and the chargeback was ruled in favor of the consumer.

Chargebacks are a HUGE profit center for MID's. They charge anywhere between $25 and $50 per occurrence. Many of them will charge you a "mailing fee" on top of the CB fee of up to $15.

We hired Chargebacks 911. The group that is supposedly God's gift to companies dealing with CB's. They're not. In fact I received an invoice from them for 9k for alerting me of CB's that I had already been alerted of, and charged by my MID for.

This is one of the biggest risks of E Commerce. When a customer initiates a fraudulent CB the company;

1 loses the money they were paid for their product/ service
2 loses product, labor, shipping, marketing, sales commissions; all hard costs associated your business.
3 is charged as much as $55 per occurrence. Customers can initiate a chargeback for up to 6 months, so in the case of a monthly subscription you are taking risk of CB fees of $330 plus all hard-costs and margin associated with your goods/ service.

The CB system is setup to favor the client for the reasons mentioned. Consumers have learned this and many of the exploit these policies and practices to their own benefit. They get your product/ service then initiate a chargeback to get their money back. Its unscrupulous and happens to companies every-day

Yup, I agree with you 100%.

The subscription model has been under scrutiny lately. I'm guessing the third party company didn't tell you the high risk of chargebacks with a subscription model? Subscription MIDs are hard to keep open as most aren't monitored well enough to keep the chargebacks below the MC and VISA thresholds.

 

[Enen]

Yup, I agree with you 100%.

The subscription model has been under scrutiny lately. I'm guessing the third party company didn't tell you the high risk of chargebacks with a subscription model? Subscription MIDs are hard to keep open as most aren't monitored well enough to keep the chargebacks below the MC and VISA thresholds.

It was a negative situation. The problem was less about the subscription and more about their tactic of "selling on the cancel"

There are some positive things that have come out of it and over-time we will win. We developed a software that allows us to manage our CB rates. We have been able to keep our CB rates below 1%. I'm confident that we will be able to scale and keep our CB rates within Visa/MC limits.

 

[RaceTec]

We get screwed once or twice a year. Even had a guy that races a sprint car do a chargeback and kept the parts, won't respond to anything at all... Best part is he called it CC fraud and we never even had a chance to contest it! I hate this subject, some people are just crooks and know how to game the system. If we have not done business with you in the past we verify everything... Then we still hesitate!

 

[rivermobster]

We get screwed once or twice a year. Even had a guy that races a sprint car do a chargeback and kept the parts, won't respond to anything at all... Best part is he called it CC fraud and we never even had a chance to contest it! I hate this subject, some people are just crooks and know how to game the system. If we have not done business with you in the past we verify everything... Then we still hesitate!

I can one up you here...

When I was at JMS, we got a charge back on an engine we built and installed.

The POS told the CC company it didn't run the way he expected it to, and we didn't build it the way he wanted it built.

It was a Killer stroker motor Mike designed and built. The customer almost shit his pants when I took him for a test drive. We might have even got the Pistons from you. It freaking hauled azz, and ran great!

Mike didn't know about the time limit thing. He had never had a charge back before...

We were talking to the guy about bringing it back in. But this fucker was smart. He set an appointment date to bring it back, the day after the time limit for us to contest had expired.

We got scammed big time.

This POS customer knew Exactly what he was doing the whole time.

 

[DLC]

I can one up you here...

When I was at JMS, we got a charge back on an engine we built and installed.

The POS told the CC company it didn't run the way he expected it to, and we didn't build it the way he wanted it built.

It was a Killer stroker motor Mike designed and built. The customer almost shit his pants when I took him for a test drive. We might have even got the Pistons from you. It freaking hauled azz, and ran great!

Mike didn't know about the time limit thing. He had never had a charge back before...

We were talking to the guy about bringing it back in. But this fucker was smart. He set an appointment date to bring it back, the day after the time limit for us to contest had expired.

We got scammed big time.

This POS customer knew Exactly what he was doing the whole time.

Not that you have a ton of time to deal with this but you could take him to small claims, does he still have the motor in his car?

Once it’s all said and done the fraud is apparent!

 

[guest hs]

Just one more thing to put the brick and mortar stores under!

 

[SPYLIFE]

I provide a service therefore nothing to take back. That service also has no guaranteed results. The agreements I have clients sign could not be any clearer, its a non-swipe transaction but I have signed agreements where they write in their card number, code, name and address, then a signature. Back in 2010 to say 2016 I always won them. Now its not going that way. AMEX is pointless even responding to. As of today we no longer accept AMEX. There is nothing more I can get from these people when we take on their file. I asked my merchant what about a copy of their drivers license and the credit card? Nope- they tell me its illegal to be in possession of a copy of a card and that would violate my agreement with them. The one thing that could potentially put a stop to it, and it's illegal. What could I possibly do from a crime standpoint with a copy of their card over and above having the vitals off of it? What the heck did I go through the background check to begin with to setup a merchant account if they think I am nefarious? Its getting worse and worse and there is nothing to stop the clients doing this. The are using their credit card company as a civil court judge, and the banks are afraid to lose a customer and seem to be completely ok with this when its so obvious they're lying. Not only do I lose the money they spent, I lose the fee I paid my employee to go take care of that service. Calling the charge-back department which is First Data who handles the processing for what seems 99% of U.S. banks is point-less. They used to want to help you, now they answer the phone and can barely speak English.

Late last year I split the company up and gave 1/2 of it to my ex-girlfriend/current best friend. She ended getting together with a company out of Canada called Helcim, and it telling me she rarely loses one anyone. I have they're application on my desk, and hopefully that gets us past this.

 

[rivermobster]

Not that you have a ton of time to deal with this but you could take him to small claims, does he still have the motor in his car?

Once it’s all said and done the fraud is apparent!

This was quite a few years ago now. As you said, time is a rare commodity. IF memory serves, we did get some of the money back, but there was a Substantial portion we didn't recover due to our ignorance of how the CC system works.

I mainly posted this so other business owners will know to act IMMEDIATELY if someone charges you back. There are time limits on how long you have to respond.

Lesson learned.

 

[bonesfab]

Yes. Fuck American Express. Had a fucktard do a 5000+ charge back on a swiped transaction. Responded right away and they sided with the prick. Nothing can be done. He knew exactly what he was doing. Lost 2500.00 plus in parts plus the labor. Just had a guy bounce me a 13000.00 check last week. Got to love running your own business.

 

[LHC Kirby]

Yes. Fuck American Express. Had a fucktard do a 5000+ charge back on a swiped transaction. Responded right away and they sided with the prick. Nothing can be done. He knew exactly what he was doing. Lost 2500.00 plus in parts plus the labor. Just had a guy bounce me a 13000.00 check last week. Got to love running your own business.

I hope KARMA bites those people hard.... REAL HARD

 

[bonesfab]

I hope KARMA bites those people hard.... REAL HARD

I am a firm believer in Karma. Another customer who screwed me good ended up with colon cancer. Couldn’t have happened to a nicer guy.

 

[Jed-O]

About a decade ago I did some work for a single broad up here on the mountain and most of the work was subcontractors. She was unhappy with the rain gutter work and I worked it out between the gutter guy and her the client. Got a check directly handed to me by her, and I thought I had dodged a bullet. Three days after her check cleared, she renigged and canceled the check.
I went Ape shit on the local bank manager! There was nothing I could do... My initial thought was "what the fuck!!! “ how can you take anything from my account without the state sending a letter or a court judgment or my explicit authorization? Even when I showed contracts and receipts I was still fucked...
So being the upstanding member of the board of directors for the "Association of Building Contractors San Bernardino Mountains INC." I sent email's and made phone calls to every building contractor on the mountain telling them not to work for this "capital C" and she left town shortly after.
So in short, I got a little revenge.

 

[pronstar]

I am a firm believer in Karma. Another customer who screwed me good ended up with colon cancer. Couldn’t have happened to a nicer guy.

If karma is handing out ass cancer, then I need to start being nicer to people.


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[Yellowboat]

Yes. Fuck American Express. Had a fucktard do a 5000+ charge back on a swiped transaction. Responded right away and they sided with the prick. Nothing can be done. He knew exactly what he was doing. Lost 2500.00 plus in parts plus the labor. Just had a guy bounce me a 13000.00 check last week. Got to love running your own business.

A big part about why I became an employee is this shit. 400k in liens that I know I will never collect on. What's funny it's always the ones that seem to have the most that fuck you.

 

[DLC]

Slightly off topic

A good friend that is filthy rich once told me to work for people that need the work done more than I need the dinero!
Those are ones that will always pay....

Sometimes I see the possibilities more than the risk involved.....

 

[rivermobster]

I am a firm believer in Karma. Another customer who screwed me good ended up with colon cancer. Couldn’t have happened to a nicer guy.

You either believe in God, or you believe in Karma...

I do the best work I possibly can, cause I don't want either of those forces messing with ME!!

 

[pronstar]

You either believe in God, or you believe in Karma...

I do the best work I possibly can, cause I don't want either of those forces messing with ME!!

It’s gonna be a bad day when your karma runs over someone else’s dogma [emoji90]


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[rivermobster]

It’s gonna be a bad day when your karma runs over someone else’s dogma [emoji90]


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Been there, done that...