LET'S DISCUSS ON DELIVERY CONFIRMATION AND CHARGEBACKS

It should not come as a shock if a merchant receives a chargeback after the product is delivered. At the time of delivering the product to the customer, signature confirmation is necessary as it can save merchant from chargebacks (when the chargeback is based on the reason code: goods/services not received). It can be used as a part of chargeback prevention solution and representment strategy. But if it is so helpful then why are merchants completely ignoring it?

Delivery Confirmation

There are multiple methods to ensure that the product reached on the address provided by the customer. There are methods that provide the merchant with detailed information about the delivery (when, where and how). This type of information is quite relevant from the perspective of chargebacks but unfortunately is not used by all the merchants.

Let us discuss a few methods; how they vary from one another and which ones severely affect the chargeback management.

1. Confirmation of the Delivery: This is a most basic method used by merchants, which facilitates the merchant to know the status of delivery but does not assure that the package was handed over to the customer or was just dropped at the door. This method comes with certain disadvantages like:

• Doesn’t guarantee that the product is delivered to the right person, who ordered the product and paid for it.
• Does not prohibit re-routing of the package.
• Does not verify delivery address.

2. Tracking of the Delivery: Some of the shipping companies use tracking techniques via which a package can be tracked by the customer as well as the merchant with the use of a tracking number provided by the shipping companies. Especially, if the package is scanned at the shipping locale or in the post office, the shipment number goes into the system and can be tracked. Pros and cons of this system are:

• Assurance of successful delivery without guarantee of the package being handed over to correct person.
• With the use of tracking number, the merchant can track the progress of delivery.
• Tracking number can help the merchant in identifying the problem.
• The Customer can track the location of the package.
• Track of delivery date (when the package will arrive)
• Helps in reducing chargebacks by providing more credible evidence.

3. Signature Confirmation: In this method, actual signature of the receiver is required at the time of delivery. This signature can be physical (on paper) or electronic. This method helps the merchant to fight against friendly frauds. If due to any reason, delivery was not successful, the customer will be notified and asked to collect the package from the carrier location/office. Optional variation in this method are :

• Direct Signature Required
• Adult Signature Confirmation

4. Direct Delivery: In this method, the package cannot be delivered to any alternative address without merchant’s permission. There is no requirement of recipient signature. This method helps the merchant to avoid fraud and chargeback by not letting them re-directing the address.

Limitation of delivery confirmation

• Intentional or unintentional mistakes made by carrier personnel
• Forged signature of the cardholder
• Case manager might not consider the confirmation receipt as adequate evidence.

UNDERSTAND CHARGEBACK CYCLE IF YOU WANT TO PREVENT CHARGEBACK.

Chargeback is one of the worst words for merchants today. While they are a huge pain, chargebacks are a part of any business that accepts debit and credit cards. Originally chargebacks were used to protect consumers from charges made fraudulently, along with keeping merchants accountable and honest. However, today chargebacks are used by many more people and can feel like a vendetta.

What is Debit Card Chargeback?

Like a credit card chargeback, a chargeback from a debit card is a reversal of the transferred funds. A chargeback requires the consumer to directly contact their bank. Their bank then contacts your bank, and the money is returned to the consumer.

The Chargeback Cycle

To start a chargeback a customer has to go their bank, and file their dispute against any transaction that is false or they were not provided service for. Their bank or the issuing bank will issue them a temporary credit for the amount of the transactions.

You can fight chargebacks. However, as originally chargebacks were designed to protect consumers, you will need to provide proof that you are in the right. The problem is even if you win all the cases of chargebacks, having too many will harm your business’s reputation. This causes your account to be frozen, or your whole account to be terminated. There can also be criminal charges and investigations done. Along with those, there are also huge chargeback fees that are debited from your account if you lose the fight or choose not to fight chargebacks. The best thing that a business can do is to avoid chargebacks in the first place.

To fight a chargeback, a business’s needs to fill out paperwork and provide proof of the transaction to the issuing bank. The issuing bank will contact the credit card company, for more information about the transaction. After the issuing bank has all the information about the transaction, they look all the documentation and make a decision. This could take just a few days to a few months depending on the credit card company, as some have delays in their sending of information. If the chargeback is found to be wrongful, the money is given back to the business, and the temporary credit is taking away from the customers. If the document is rejected, the temporary credit turns into permanent funds.

Avoiding Chargebacks

The simplest solution to not having chargebacks is to not accept debit and credit cards. However, in today’s modern world you have to accept debit and credit cards. At the same time, there are some things that you can do to limit the amount of chargebacks you receive.

The first is to have a refund policy that is easy to understand. Unhappy customers just want their money back. Having a refund policy makes it easy to do this. Chargebacks take time, and most consumers would prefer just walk in and get their money.

Lastly, you should have clear records of everything. There are bad people who file chargebacks to get free things. Having and keeping all the records, you can fight chargebacks and prove that they got the item. Your receipts need be legible and complete.  

Good Customer Service Helps to Avoid Chargebacks

Chargebacksprimarily occur for three reasons:

    • Item Not Received. The cardholder placed an order, paid for a service or product, but claims to have not received the order or service.
    • Significantly Not As Described. The cardholder claims that the product or service received was sub-standard, compared to the merchant’s description.
    • Unauthorized Transaction. The cardholder claims that a transaction is fraudulent or was processed without the cardholder’sconsent.

In all three scenarios the cardholder has a legitimate right to file a chargeback and receive a refund of the transaction amount.

Good Customer Service and less costly solution.
 
As a merchant you want to maintain a good customer relationship toavoid the inconvenience and costs associated with chargebacks. Here are a few suggestions:

    • Customer Service Contact Information. Ensure that your website makes it easy for customers to find your contact information. Using an email contact formis a great idea. The easier it is for a customer to contact you directly the less likely they are to call their bank or credit card company first and file a chargeback.
    • Order Confirmations. Send a confirmation email as soon as an order is received, and make sure to include your contact information. Or call the customer to confirm the order before dispatching.
    • Customer Inquiries. Respond quickly to all customer inquiries. No one likes waiting unnecessarily for a reply.
    • Dispute Resolution. Have company policies in place to resolve common customer complaints. A well-trained customer service team is a must.
    • Return Policy. Make your return policy easy to find online and word it in a way customers can easily understand. Not everyone understands legalese

Preventing Disputes from Turning into Avoid  Chargebacks

    • Item not Received Dispute. Keep a record of the shipping address provided by the customer during the order process. Purchase shipping insurance to cover any damagedor lost orders. Use a shipping method that allows online tracking of packages and delivery confirmations which will give youand the customer proof that an order was sent on time and to the correct location. If an Item is not available or was damaged or lost while in the process of being delivered, inform the customer that you are regretfully cancelling the order and give them a timeframein which to expect a refund. Then process the refund as quickly as possible.

    • Significantly Not As Described Dispute. Product and service descriptions should be accurate, with nothing kept hidden from the customer. Include such things as “no color choice” or “product may appear slightly different than the picture.”
    • Unauthorized Transaction Dispute. There are situations when a charge is clearly fraudulent, and then there are times when a transaction may only appear to be fraudulent to the cardholder. In the second instance, the cardholdermay have just forgotten about a purchase, may not recognize the company name, or has forgotten special circumstances that permitted the charge. The only way to resolve these kinds of disputes is through direct contact with the cardholder.

Dealing with customer service and chargeback issues can be overwhelming and takes away time from other business activities.Contracting out customer service functions and chargeback management is always an option and can prove to be a more efficient and less costly solution.