We have things to say

March 29, 2019

Friendly fraud: The chargeback that hurts worst

Friendly fraud is more than an insult—it’s the main type of chargeback that small business merchants have to deal with, making it a big expense, in addition to the headache that it causes. Even the best credit card processing company can only do so much to protect merchants from chargebacks. It takes effort, and know how.

Generally speaking, friendly fraud happens when the merchant did everything right, but something leads the buyer to feel that they were not treated fairly. In the worst-case scenario, the business transaction is completed as usual, the product is shipped and delivered, but after, something goes wrong. Either the customer realizes something that they didn’t beforehand, or some other such circumstance causes the customer to have a complaint. If they feel it can’t be resolved adequately, they feel that the only recourse is to request a chargeback from their financial institution. If it’s charged back as the customer requests, it’s at a loss for the merchant.

It’s tough to fight

Finding a strategy to minimize the effects of this type of chargeback can be difficult because there is nothing you really did wrong, and therefore, not much you can change to make them go away. While it’s a challenge to oppose a chargeback and get a positive outcome, it is possible. You’ll need to throw as much documentation as possible at the case to state your case for the legitimate completion of the transaction. Cover the basics, such as documentation of the transaction and delivery, especially tracking numbers and documentation from the delivery company. From here, branch out with real pictures of the product compared to the pictures that are posted online, and anything else that adds legitimacy to your case.

A pound of prevention

The best way to reduce chargebacks, by far, is to prevent them. Here’s how:

• Communicate, communicate, communicate: If you sell online, your website is the first line of defense for chargebacks. GREAT photos and product descriptions are essential to helping the customer understand what they’re getting. A generous returns policy that really makes it easy for the customer can also help by lowering barriers of returning, so that the average customer isn’t tempted to turn to the bank instead.
• Raise your customer service game: in the end, great customer service is what will save you. Every representative for your company should be trained on how to be the face of your company, and empowered to actually help people in as many ways as possible.

Creating a culture where chargebacks are less likely takes time and effort on a variety of fronts. As Moolah aims to be the best credit card processing company for your needs, we lead with education. In the end, you probably won’t be able to prevent all chargebacks, but if you’re doing your best to serve your customers at every step of the relationship, odds are, you’ll minimize them, and you’ll be winning over return customers in the process.