As a group, online shoppers are carelessly trigger-happy about requesting chargebacks, according to Monica Eaton-Cardone, co-founder of Chargebacks911. The reason? According to Eaton-Cardone, issuing banks dealing with online merchants have for years simply rubber-stamped such requests with little or no investigation. For the average consumer, getting a payment reversal from the bank seems infinitely easier than calling the merchant and sorting through the problem.
"Consumers making card-not-present purchases have experienced fighting charges and getting them reversed, so they do it without thinking," she said. "It's so easy, they don't understand there's a consequence [for the merchant]. A lot of revenue is lost not fighting illegitimate chargebacks."
That is where Chargebacks911 comes in. Eaton-Cardone said the company acts as an advocate for the online merchants and as a mediator in any chargeback dispute. Chargebacks911 investigates each chargeback request and, when requests appear unnecessary or illegitimate, works to correct the issues.
Because banks are so accustomed to approving chargebacks, work done on behalf of new clients usually entails getting chargebacks overturned, which is a difficult process that leaves a mark on the merchant's record. "Merchants are guilty until proven innocent – you have to prove that the chargeback was wrong," Eaton-Cardone said. "On top of that, once a chargeback is filed, it stays on the merchant's record no matter what, even if it's reversed."
However, fighting chargebacks can turn the tide in favor of the merchant, Eaton-Cardone noted. What begins as an effort to overturn chargebacks morphs into the rejection of many chargebacks before they go through. And banks see particular merchants are fighting its chargebacks and winning many disputes, so they become more inclined to flag new chargebacks for review instead of rubber-stamping them, Eaton-Cardone said.
"We help the merchant uncover a lot of hidden revenue, and also to repair a negative reputation they didn't know they had at these issuers," Eaton-Cardone said.
The first step to investigating a chargeback is calling the purchaser. Eaton-Cardone said most customers, when questioned directly, will admit to making the purchase in question. Sometimes customers will request chargebacks because they see information on their statements, such as merchant location, that doesn't match their records, and they assume legitimate purchases are fraudulent.
"Sometimes the customer just expects a refund," Eaton-Cardone said. "We'll ask them, 'Why did you request the chargeback?' And they'll say, 'Because I hate [the product] and I don't want it anymore.' And we have to say, 'Look buddy, the bank isn't a place you go to and just get a refund.'"
If the customer continues to push for a chargeback, Chargebacks911 may expand its investigation. For example, it will call up tracking data to address a customer's claim that a shipment never arrived. Or it will triangulate calls with the merchant and customer to determine if a product is actually defective, or if the customer is misusing it or struggling to figure out how it operates.
Even many purchasers who have legitimate claims can be steered away from filing a chargeback. For example, a customer who receives a defective product in the mail can be connected with the merchant to receive a refund, a replacement product or a store credit of similar value.
Eaton-Cardone said chargebacks cause merchants to lose revenue from returned purchases, incur fines levied by their acquirers, and risk being shut down by their acquiring banks if their chargebacks exceed 1 percent of their total sales.
Eaton-Cardone said merchants working with Chargebacks911 commonly see declines of up to 80 percent of their chargebacks. She added that the company provides merchants with daily and quarterly reports and is flexible in its billing, including offering pay-by-performance models that charge a percentage of what a merchant saves in chargeback costs.
"We try to gear things toward sustaining long-term relationships. You can make more money with merchants that grow with you," Eaton-Cardone said.
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