When someone disputes a charge on a credit card, it is called a chargeback. The problem is that while there are some good reasons to dispute some charges, the majority of chargebacks are due to fraud or theft. These can instances can cause a lot of problems for retailers and other merchants. They lose the cost of the sale, of course, but the real problem is that they are both charged a fee and too many of these can cause problems with the credit card processor. Most retailers who are familiar with the credit card chargeback process do whatever they can to prevent needing to go through it.

1. Pay attention to the policies of your credit card processor. There is a different process for taking credit card payments that is set down by the different processors to prevent theft and fraud. For purchases made in person, they most likely require merchants to check an identification card, the signature and to look at the security code. Newer systems with a chip mandate the card be inserted and not swiped in the appropriate equipment. For merchants who sell goods and services on the internet or over the phone, some processors need other information to be inputted such as the billing zip code, a digital signature may be required and some require the use of MasterCard Secure Code or Verified by Visa. Following the processor’s rules to the letter is one way to prevent chargebacks and avoid the credit card chargeback process.
2. Make sure your customer’s know what to expect on their bill. There are a lot of times when an business’s name does not appear as customers expect it to on their credit card statement. If you are part of a larger company and that is the name that will be on the statement, there may be a problem. It makes a lot of sense, they do not recognize the name because they were not expect it. They see the strange name and initiate the credit card chargeback process. If you have a descriptor that makes sense, you will save yourself some hassle and problems.
3. Provide great customer service. When the credit card chargeback process is started, you should be notified. Sometimes customers receive and item and it not what they expected and they call their credit card company. If you get a notification like this, make this an opportunity to provide good customer service. Reach out to your customer and see if there is a way you can work things out. Even if you are not able to resolve the issue, the fact that you reached out may make a difference and you look good to the person and improve your reputation.
4. Know what fraud looks like. It is not always easy to spot fraud but there are things you can do to protect yourself. For purchases that are made in person, check the signature or identification. If you take credit cards over the phone or online, get the billing zip code. If a person has stolen the credit card they may not know it. Also, when purchases have one billing address but are being shipped elsewhere, that may be a sign that fraud is afoot. There are times when people are buying gifts and that is the reason for the difference but if you are not sure, verify. Most customers appreciate it when merchants are diligent in this way.
5. Make sure your employees can spot fraud. Once you are able to spot fraud, make sure the people who work for you can, too. You should make sure they know how to spot in person and for the transactions online and over the phone. Give them all the same tools you have to make sure you are not the victim of fraud.
6. Know how to pick your battles. The more chargebacks you have, the worse it looks for you. It is important to fight back when you think you can win. If you have a large purchase that is being disputed and you think there may be fraud involved. There are companies out there that can help but this is not a remedy for every chargeback.

You cannot prevent all chargebacks but you can prevent some.