How to handle the Chargeback and Disputation Resolution

Nov 18, 2022

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As a business as a business, you must keep your customers happy. That can lead to the possibility of chargeback and dispute resolution especially depressing. If you've received your firstone, you might be confused about which option to take.

The issue of payment disputes isn't an enjoyable experience for any business owner. Fortunately, there are ways to deal with these issues and settle them as swiftly as possible, hopefully keeping your clients.

In this post we'll explore the nature of chargebacks and how they happen. We'll then share a four-step plan for resolving payment disputes and allowing you to get on with more constructive issues. Let's get started!

Understanding Membership Chargebacks and the Reasons They Occur

Chargebacks or disputes with payment is when a client calls their bank and asks for an amount of money to cover a charge completed using their card. The payment processor or the merchant will notify you about the issue. If you believe the chargeback was not valid, you'll have a period of time to refute the claim.

If the client wins the dispute, then the amount of the transaction is taken out of your account and returned to the customer. It is also possible to pay a fee to the merchant or gateway.

There are many reasons why the customer might initiate a payment dispute. They have the legal right to demand a chargeback when the product or service does not meet their expectations or in the case of fraud. For example, someone may access a user's PayPal account and purchase any item with the consent of the person who owns the account.

Other customers may resort to lying about payment fraud. You may even encounter some customers who get their products or services as promises but isn't willing to spend.

Illegitimate chargebacksare sometimes called "friendly fraud", are rising. According to a report by experts in legal research at LexisNexis The average number of attempts by fraudsters to disputate payments per month has increased by 128 percent from 2018. The same report found that as high as 43 percent of the losses due to fraud can be attributed to friendly fraud.

Simply being unhappy with your customer experience does not grant someone the legal right to request a chargeback from their bank. If you suspect a customer has made a false claim or claim, then you've got the right to dispute it.

What you should do about the Chargeback and Dispute Resolution (4 Essential Actions)

However, they are a the most common aspect of running a successful business. To keep this in mind, here is our four-step plan for resolving the dispute as efficiently as is possible.

Step 1: Do Your Research

The first step is gathering as much information about the dispute as you can. In particular, you should examine evidence to prove that the buyer received the purchase or had access to the service.

For physical products, this might involve looking up the delivery tracking number. For virtual products or services, this process can be more complex.

If you're using any tracking or analytics program, you can look for proof of engagement. This might involve proof that the client has visited your site, signed into their account, or opened email messages that were sent to their email address.

If you are able to prove the user registered their account's activatedemail This is important evidence to prove that they were given access to your website as stated in the contract.

The  dashboard transactions screen.

It is possible to view the full details regarding each transaction by going to > Transactions. The information includes the transaction ID as well as the date and time, and the user(s) involved.

Step 2: Call the Customer

Your research may indicate that the client is being a subject to fraud. In this scenario, it's best to accept the dispute. While it's frustrating to lose an opportunity to make a purchase and suffer additional fees imposed by the seller but it's not worth negative publicity.

Let's say your research suggests this isn't a legitimate chargeback. If this is the scenario, it's generally worth calling the customer directly. It's a good idea to explain in a polite manner that you've researched their transaction and you believe that you have sufficient evidence that disproves their claim.

For a customer who knows the claim they made is false they may be able to convince them to drop the matter. Or, they could reply in a way that gives doubt to the claim, or incriminates the claimant. This can be valuable evidence that can help you strengthen your argument.

Regardless of how this interaction is handled, it's crucial to be courteous and professional. Even if your correspondence doesn't look particularly fascinating You should keep careful records of any communications for the event of a dispute.

Step 3: Respond to the Dispute

Every merchant and payment gateway has their own procedures for dealing with chargebacks. They'll usually request you to draft a statement that clearly describes the situation, and to provide supporting documents.

Wherever possible, you should be sure to provide proof that proves that the customer received what was assured of. For physical products it is usually a evidence of the postage cost and delivery. In the case of digital items, this may include screenshots or PDFs.

It's also smart to offer a copy the policy on refunds, if you offer it. This will show the buyer was able to get another option for recovering the money they paid if they were dissatisfied with your item or services.

Step 4: Take your time and accept the result of the dispute

Once you have submitted your proof after which your payment processor or retailer will present your case to the customer's bank. Unfortunately, there's no guarantee your case will be accepted.

If you provide ample proof, there are a lot of consumer protection laws in place. If you lose the dispute, then it's best to pay back the funds to the seller and settle any other costs promptly.

This helps you avoid any further negative consequences, including the bad publicity associated with being branded an unpaid payee. It also means you can end this negative page and begin to focus on positive aspects.

If the disagreement was a result of any type of membership or subscription service, then you may want to shut down the account of your customer. Users can remove a member's membership at any time , by going to Member > Membership. It is then possible to locate the member associated with the dispute, and remove the account.

Conclusion

No one likes dealing with unhappy customers. However, as it is said, you can't satisfy everyone all the time. Certain chargebacks and disputes over payment are inevitable but some might be completely unrelated to you.

If you are confronted with a complaint which you suspect is not legitimate, our four-step plan can help you resolve it within the fastest timeframe possible.

  1. Do your research.
  2. Get in touch with the client.
  3. Respond to the dispute.
  4. Take your time and be patient with the final outcome.

Do you have any questions regarding how you can handle chargeback and dispute resolution? Contact us in the comments section down below!