A chargeback occurs when the amount of the original charge that was credited to your business checking account is reversed. Wells Fargo Merchant Services has created this tip sheet to assist you in managing this sometimes costly and time consuming process. Below you will find the most common steps that can be taken to help prevent chargebacks.
Common Reasons for Chargebacks
- The card was fraudulent.
- Cardholder disputes the quality or receipt of merchandise.
- The amount charged to the card was incorrect.
- Processing errors were made during the transaction.
- Proper authorization was not obtained.
- Business did not fulfill a retrieval request.
Although chargebacks cannot always be completely avoided, there are steps you can take to help prevent them. The more you know about processing procedures, the less likely you might be to do, or fail to do, something that could result in a chargeback.
Procedures for All Businesses
- Make sure that the business name you provided to us that will appear on the cardholder's statement is a name that your customers will recognize. Many chargebacks start when a customer does not recognize a charge on their statement even though it may be a legitimate one.
- Respond promptly to retrieval requests. Both customers and card issuing banks may request copies of sales and credit drafts. Once a request is initiated you need to respond within 12 business days. Sales drafts should be accessible to authorized employees for 180 days after the initial chargeback notification after which they should be stored long-term in a safe and secure location.
- Always get an authorization.
Procedures for Retail Businesses
Make sure you fully comply with the transaction requirements issued annually by Visa®, MasterCard® and Discover®, most importantly:
- Have proof the card was present by making sure you swipe all cards through your terminal.
- Get a signature from the cardholder and compare that signature to the back of the card. If the card is unsigned, request a photo ID that has a signature, and have the cardholder sign the card. Otherwise, don't accept the card.
- Get an imprint whenever a card has to be manually keyed into a terminal. Be sure that all of the transaction information shows up on the imprinted copy including the amount, business name and location, and the cardholder’s signature.
- If the credit card is declined when swiped through the terminal, do not continue to try and get an authorization. Instead you should request a new form of payment from the cardholder.
- Verify that the number on the screen matches the embossed number on the credit card.
- Obtain an authorization number for the full amount of the sale — do not break the sale into several smaller amounts.
Procedures for Internet and Mail Order/Telephone Order (MOTO) Businesses
Take the following precautions that are unique to your business:
- Use the Address Verification System (AVS) to ensure that your customer is providing you with the correct billing address.
- Provide us with a local or 800 number that we can include on your billing statement. Supplying a telephone number for your customer will help prevent a chargeback from occurring. Your customer can contact you directly with questions and you will have a chance to rectify the situation or be able to issue a refund to the customer before they dispute a charge.
- When sending merchandise to a customer, use a shipper that will be able to provide proof of delivery to the full billing address should there be a dispute. For very expensive items, request a signature for the merchandise to be released to the buyer.
For more help with chargebacks please call 1-800-451-5817, 24 hours a day.