| December 2, 2021

How To Prevent Costly Chargebacks

Praxis Tech Team


As a merchant, credit or debit card chargebacks are an endless source of aggravation. First, you’re taking a loss once you’ve accounted for the money coming. Then, you’re getting slapped with fees on top. Plus, and possibly more importantly, over time chargebacks chip away at the relationship with the banks and processors you work with. While chargebacks are certainly not avoidable altogether, there are a few key things you can do to protect your business better and significantly offset the risks associated with chargebacks.

Tip #1 – Clearly Communicate Your Return Policy

Return-based chargebacks are one of the most common types of chargebacks. When a customer isn’t able to return the item they bought, and they don’t get the answer they want from the merchant, they simply go back to their credit card company or bank and request a chargeback. If your terms are clearly stated, you can easily point to your policy and refute the chargeback. Furthermore, it helps to create a better customer experience by clearly stating your return policy and setting expectations from the start.

Tip #2 – Have Itemized Invoices and Charges with Clear Descriptions

A very common type of fraud is when a customer requests a chargeback saying that they were charged for something they had no recollection of ever buying or receiving. This can even happen innocently if the shopper forgets, looks at his credit card or bank statement and can’t remember what it was that they purchased. That’s why it’s so important to make sure that the description is unmistakably clear. 

Tip #3 – Document the Entire Chain of Custody

You should always be able to track your product at every stage – from inventory through to delivery. This will help you to reduce the number of chargebacks that you cannot dispute. The better your paper trail, the easier it is to dispute chargebacks successfully. Doing this legwork is important and should be built into your operational protocols. Document and store records in a way that’s easy to access.

Tip #4 – Use the Support of 3rd Party Technology

There are countless things you need to do in order to run your business successfully and while tracking suspicious or potentially fraudulent behavior is certainly one of them, very few businesses have the means to do this alone. Invest in services that can help to track and identify any suspicious payment activity and alert you. This gives you the opportunity to block transactions proactively or respond to cardholder requests for information around unrecognized transactions before they dispute the charges.

Chargebacks can be minimized but never really eliminated. That said, being proactive can help to save you a lot of hassle, and a lot of money. Part of what we do at Praxis Tech is to help our merchants eliminate fraud at every stage and keep their business in excellent standing with banks and credit card processors. This article talks about what you can do to minimize chargebacks. Talk to us to learn how our technology will help you take that to the next level.


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