Chargeback was created as a protective tool for customers from any fraudulent merchants on the market. Nowadays the situation has changed. Merchant payments for chargebacks became a target for numerous fraudsters. So, if your client started a dispute, it is recommended to check all the reasons immediately and make sure that no criminal scheme is involved.

Unlike the refunds procedure, chargeback does not require contact between seller and buyer. Instead, the customer contacts the bank, files a complaint complaint and starts the dispute. Bank decides whether to approve chargeback or not. Unfortunately, chargeback fraud happens often, even with the best merchants with solid reputations. Some customers misuse the chargeback process to receive money after getting the product or services they paid for.

Legal Actions or Crime

Customers who misuse chargebacks for their gain learn this system well enough to know that their actions are partly legal. Regulations of the dispute are far from perfect and stay unchanged for decades. While this type of fraud is still called friendly, every merchant who suffered from such a scheme disagrees with the name. Unfortunately, not all actions can be argued. If the customer did not put the signature on the delivery document, they may claim that there was no package delivered.

Dishonest cardholders can get motivated by next reasons:
  • They don’t need to contact the merchant directly;
  • They want to receive free services;
  • They want to avoid the handling fee;
  • Refund limit is expired;
  • The delivery schedule is not suitable for them;
  • The return process on the website is too difficult;
  • The real owner of the payment card does not know that  a purchase was made;
  • The buyer is not aware that he made the transaction.


Best Ways to Protect Your Business against Chargebacks

No matter which digital tools or strategies you use, there is no 100 percent guarantee of protection from chargebacks. Every day the global market is attacked by fraudsters and criminals. Whether you have a small business or a big one, you can only minimize the chances for unnecessary spending and cut the damage that may occur.

Follow the next steps:

  1. Use the payment processor you trust. Even if you don’t know the system, check out the reviews, ask your colleagues. Pick the trustable way to accept payments. It must be highly secured fraud hackers with the detection of frauds. It may ask for the CVV card number or AVS. This way, you will not only protect your money but your customers as well;
  2. Advanced seller protection. If you use services like Cash App, PayPal, or even Shopify, you have an automatic fraud detection system that monitors every action. You may decide which charges you can approve automatically or not, whitelist some accounts while blacklisting others. Many reliable companies also offer insurance in case of chargebacks. Besides, you may handle the disputes started by customers through the platform of payments;
  3. Always keep receipts and proofs of transactions. Whether you trust your client completely or not, you have to make the transaction screenshots and automatically save all the receipts. These are the major pieces of evidence of your point of view. Save copies of all receipts and orders. If you can, save the conversation screenshots with customers. Make screenshots of delivery moves and keep them in the specific folder;
  4. Provide the information on the payments and return policy clear and visible. Your customers need to know what to expect and how to file for a refund. A refund is always better than a chargeback since you don’t have to pay unnecessary fees;
  5. Monitor the quality of services you provide. Perhaps, the chargeback you have to pay is justified. Check out the quality of the product and the reliability of the delivery company.

Life without Chargebacks

Although there is no 100 percent guarantee that your actions will keep your business safe from chargebacks, you can still avoid them. Pay attention to every factor on the list, and make sure you follow these basic rules. A happy customer will stay with you for a long time.