Simple Steps to Avoid E-Commerce Chargebacks

If you’re in ecommerce, you’ve probably been the victim of a credit card chargeback at some time. For online merchants, the chargeback may appear to be an irritating cost of doing business, but the reality is, chargebacks are largely avoidable and unnecessary.

A chargeback happens when a credit card transaction is disputed by the cardholder (or the cardholder’s bank). There are multiple reasons why a customer might file a chargeback, and some of them are legitimate. But in the cases where a chargeback is actually warranted, it is usually the sign of a deeper problem that merchant isn’t properly handling, such as not honoring a justified refund request.

What merchants don’t understand is that most chargebacks are actually not legitimate claims. Many times, purchasers are deliberately filing fraudulent claims in order to get merchandise without paying for it, what is called “cyber shoplifting.” These chargebacks can be disputed, but the process is complex. It is much better to not get chargebacks in the first place.

But there are many cases where chargebacks are the result of customers turning to their banks for help before they even talk to the merchant. In other words, you might have been perfectly willing to work with the customer on an issue, but the chargeback was filed before you even knew there was a problem.

Research has shown that customers often resort to chargebacks because returning the merchandise was too much of a hassle. We believe your Spilled Milkshake Designs ecommerce website should provide outstanding usability and maximum functionality. But we’ve also learned that certain design elements can be added or tuned to help counter headaches like chargebacks.

Obviously, you want to avoid any type of return when you can (total merchandise returns accounted for more than $260.5 billion in lost sales for U.S. retailers last year), but they will still happen. When policies and expectations are clearly and obviously stated, however, there is a far greater chance your customers will feel comfortable coming to you with an issue. That’s why we suggest all customers opt to incorporate these elements into their websites:

  • Prominently displayed return/cancellation policy – It’s not enough to simply have a return policy, even a good one: every visitor to your site should be able to find your policy easily and immediately.
  • Room for detailed product descriptions/pictures/video - The more realistic your presentation of products or services, the less chance a customer will say “That wasn’t what I expected!”
  • Fair, well-designed shipping policy – Again, this needs to be realistic, informative, easy to read … and easy to find. Rules let consumer know about what to expect at checkout.
  • Clear contact information on every page – Customers who wish to contact you should find clear, obvious instructions on how to do so … on every page, ideally at the top and bottom.
  • Transparent billing practices - Make sure to inform your customers when they’ll be billed and charged, and how the charge will appear on their credit card statements. This information should be located near the checkout form.
  • Space for CVV2/CVC2 - Having the unique number from the back of the card can reduce fraud, particularly with card-not-present transactions. All our sites allow for this on ordering forms.
  • Status tracking – Whenever possible, e-merchants should provide order status/tracking, complete with shipment updates and tracking numbers to protect against claims of non-delivery.

Chargebacks will continue to happen, but the risk can be reduced if your website follows some simple but effective steps to ensure transparency, accuracy, and customer satisfaction. As we said, the best way to deal with chargebacks is to prevent them whenever possible. That’s why at¬†Spilled Milkshake Designs, we pride ourselves in being able to develop sites that optimize the customer experience. If you’d like some help creating or establishing a web store that delivers revenue instead of headaches, talk to us today.