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Insights and Expertise

StreetSmarts SM

Wanted: A fair fight against chargebacks

By Allen Kopelman • Free drinks: People know most bars don't run tabs,
Nationwide Payment Systems Inc. so they close out multiple tabs with identical totals
and claim they were duplicate transactions to get
ow could someone enjoy a good meal and out of paying for drinks. Businesses need to avoid
charge it back the next day? Shocking as it charging customers the same exact amount multi-
may seem, this happens every day. Why ple times, which could inadvertently flag the card-
H would a card-issuing bank rule in that per- holder bank to issue a chargeback for duplicates.
son's favor, even with proof the customer paid at the table
with an EMV card and manually added a tip? • Reason codes: People use random reason codes,
hoping merchants will not rebut bogus claims that
meals were unauthorized, canceled, damaged, de-
Ecommerce merchants have robust, automated tools fective, double-billed, overpriced, paid by other
for mitigating chargebacks. It's time to extend the same
courtesy to retail and hospitality merchants faced with means, unshipped, partially received, not suit-
able for intended purpose, or served in absentia to
escalating disputes by people who try to reverse-engineer
their purchases. Here are some examples: people who cleaned their plates while they weren't
there.
• Buyer's remorse: Restaurant, bar and nightclub
patrons get home and say, "I just dropped $400 • Incorrect tip adjustments: When a tip is wrongly
adjusted or is more than 20 to 25 percent of the
for dinner and it wasn't that great," or "How did I
spend so much at the bar last night?" transaction, restaurants lose money on tips that
were already paid to staff due to mathematical er-
• Caught red-handed: Big spenders are reprimand- rors or generous tips that exceed floor limit. This
ed by a spouse for a large bill or going to an adult issue can be avoided by adjusting tips at the time
entertainment venue or by a boss for spending of sale to authorize the total amount including tip.
$1,000 on dinner on a corporate card when they Time to start winning
didn't even close the deal.
I try to tell merchants that the days of sending receipts
• Friendly fraud: Children mistakenly or intention- to the bank are over. It's a mistake to send in receipts
ally use a parent's card or compulsive shoppers without a letter of explanation that clearly addresses the
buy and buy and pretend they weren't at a store or issue and helps the chargeback department understand
never received an item. Merchants are required to the situation.
present a bill, EMV receipt and proof of delivery,
even when issuers can clearly see that a card was These letters must be short and to the point because
presented onsite at the point of sale. chargeback departments deal with thousands of disputes
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