Not only do you lose the original purchase amount, but you also lose the product sold and any fees or penalties incurred. This type of fraud is especially common online where eCommerce merchants process card-not-present (CNP) transactions from anonymous shoppers.Īlso known as “cyber shoplifting,” chargeback fraud is far more costly than refunds. To initiate a chargeback, customers only need to call their banks or click the “dispute” button associated with their online accounts. Unfortunately, consumer protection laws make this easy to do. In fact, 86 percent of all chargebacks are likely cases of “friendly fraud” – customers knowingly buy items with the deliberate intention of disputing these charges after the fact. This happens all the time in what is commonly known as “friendly fraud.” Worse still, they could pretend not to recognize the purchase. Any customers who failed to make the connection could end up disputing those particular charges. However, the payment descriptor attached to your merchant account could be TAS, Ltd (i.e., The Acme Store, Limited). Another common trigger is when customers don’t recognize certain charges on their credit card statements.įor example, the name of your business might be Acme Store. Just as with traditional refunds, there are any number of legitimate reasons for triggering a chargeback - including damaged, late, or poor-quality merchandise. The bank then credits the users’ accounts before coming back to you - the merchant. Instead of contacting you directly, customers go through their card-issuing bank to dispute the charges. Like refunds, chargebacks are also initiated by the customers. If you agree, it’s simply a matter of crediting that user’s account or returning the money. There are any number of reasons why a customer might request a refund, including:Īs the merchant, it’s up to you to decide whether or not to reject the customer’s reason. Most of us are familiar with refunds - i.e., returns that are initiated by the customer and agreed to by the merchant. This typically involves some type of dispute or fraudulent action related to the original purchase, and may come with additional fees for the merchant. For chargebacks, the consumer receives credit from his or her card issuer. In the case of a refund, the merchant gives the customer the money back directly after the return or exchange of a product or report of dissatisfaction with a service. The main difference between a chargeback and a refund is who issues it. a refund means for you - and what steps you can take to reduce their frequency.
As a retailer, it’s important that you understand what a chargeback vs. In the retail world, chargeback and refund are two terms often used interchangeably to describe situations in which dissatisfied customers want to reverse purchases and get their money back.Īs a merchant, you lose the sale either way - which is why these terms are so often confused.Īlthough chargebacks and refunds share much in common, there are major differences between the two. Apps and integrations Extend your Clover system to do even more with best-in-class apps.Apps and Integrations Extend your Clover system to do even more with best-in-class apps.Clover Capital Turn future credit card sales into working capital with flexible financing.Gift cards Drive sales, create loyalty, get new customers with digital and physical gift cards.Customer loyalty Create loyalty programs to help keep customers coming back and driving sales.
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CHARGEBACK MEANING PROFESSIONAL
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