Online business attracts more buyers each year. The internet has become a way to eliminate the costly overhead associated with retail store fronts. Internet sales are expected to rise by as much as 11 percent in 2009. With a greater number of merchandise being sold on the internet, businesses are more susceptible to fraud and chargebacks. There are ways to protect your profits in uncertain times.
Chargebacks were created as a form of protection for the consumer. The Federal Reserve created regulations guaranteeing card holders the right to a reversal. Various bank networks have their own corresponding rules. Initially, it would seem that a merchant would be more likely to provide quality products and speedy shipping if they had a threat of a chargeback or even having their merchant account turned off, however these rules are extremely one sided.
Consumers typically dispute transactions for a variety of reasons, and each one is issued a “reason code.” The most common reason code used is fraud and identity theft. Merchants are often left with little or no recourse. Visa and MasterCard may even issue their own fines for high chargeback ratios. But what happens when you have a consumer that is abusing the chargeback system? Some consumers make it a habit of reversing transactions.
Some online merchants have opted for chargeback insurance. Chargeback insurance is coverage protecting a merchant who accepts credit cards. With chargeback insurance merchants are covered in the event a consumer claims fraud, lost or stolen credit cards, and post purchase shipping information changes. Chargeback insurance can be costly and, in some cases, unnecessary. Chargeback disputing and prevention are key in ensuring your online business is making money for legitimate product sales.
Keeping your business safe against online consumer predators is easier and more cost effective than most may think. There are legal ways for a merchant to dispute and win a chargeback. Ensure that your site has clear and well written terms and conditions and that your system is verifying AVS. Systems like Verified by Visa and MasterCard Secure can give your site extra security during the purchase process. In some cases, when a customer agrees to the terms and conditions on your site, it is as good as an actual signature at a store front. There are also systems that will respond to chargebacks on your behalf. This route will save you time, headache, and money.