All chargebacks are not created equal.
There are those that arise when professional fraud rings use stolen identities or account takeover to make unauthorized online purchases. A small number of companies, including Signifyd, have come up with an effective solution to this problem — a model known as guaranteed fraud protection.
But there is a whole basket of online payment chargeback claims that are far more difficult to navigate — those chargebacks that result from consumer abuse or an honest mistake by a consumer.
The second brand of chargebacks puts a retailer in the uncomfortable position of doing battle with a customer, essentially trying to prove that the customer is a cheater or a criminal.
In an era of heightened consumer expectations and an unrelenting focus on providing a top customer experience, retailers can’t afford to be doing battle with their customers — especially in cases where customers have a legitimate complaint. The trick, of course, is knowing when a complaint is legitimate and when it’s the result of a customer attempting to take advantage of a retailer.
American Express, in its recent video, offered some wise advice for retailers concerned about pitting themselves against their customers when it comes to handling chargebacks: Prevent chargebacks in the first place.
3 common disputes that can harm your customer experience the most
With the Amex video as inspiration, let’s take a look at the three specific types of chargeback fraud and the characteristics that make them difficult to manage.
No knowledge: Consumers are naturally confused when they see a charge on their credit card statement from a business name they do not recognize. As the video mentioned, retailers should be sure that the name they do business by is the name that appears on the customer’s credit card statement. Not doing so is asking for confusion and a poor customer experience.
Item not received (INR): As the video mentioned, INR is hard to prove for the retailer. It’s difficult to truly know if the item made its way to the shipping address without incident. Package thieves, faulty tracking systems, confused mail carriers—you’re facing many variables beyond your control even in legitimate dispute cases.
Significantly not as described (SNAD): A SNAD claim arises when a buyer claims the item they received is significantly different from what they expected to receive, based on the website or item description. Again, a retailer is left with something of a mystery. Was the customer truly disappointed in the oder that arrived? Or did the customer have second thoughts about the purchase overall?
Searching for an answer is time-consuming and in the end, not all that satisfying. A spate of SNAD claims is reason enough for any retailer to assess the product descriptions and photographs on its sites and to consider whether there are additional steps it should take to make sure customers’ expectations align with reality.
Your loss is also your customers’ loss
Merchant Chargeback-related disputes hurt your customers, too. Few interactions with customers are more fraught than ones in which you’re questioning their honesty. And challenging a chargeback is a formalized process to do just that.
Blindly challenging every chargeback automation, or even most chargebacks, means you will inevitably be challenging honest, and valuable, customers. And when you think about it, if the chargeback resulted from a customer never receiving his or her order, or receiving an order that didn’t live up to its description and promise, you are further alienating a customer who is already frustrated.
Any guesses on whether such an experience would lead to angry reviews on your product pages and the loss of a customer for life?
Innovative retailers realize that the best way to avoid doing battle with their customers is to take some of the proactive steps recommended by AMEX, while also gathering sufficient data and deploying algorithms that help them know, understand and serve their customers. Signifyd recently announced its Chargeback Recovery product, which removes the burden of managing ecommerce chargeback protection from retailers, leaving them to focus on their core businesses.
Signifyd Chargeback Recovery supports the idea of being proactive to avoid chargebacks in the first place. But it also means that when chargebacks happen, retailers now have a comprehensive fraud management process to handle every kind of chargeback, from payment fraud at checkout to chargeback for item not received claims during the fulfillment process..
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