Your merchant processing provider is the final arbiter in any chargeback decision and at its sole discretion will uphold the chargeback or rule in your favor. While you are likely to prevail if you have proof of authorization, you will still be assessed chargeback fees, and have to take the time to gather documentation and defend your case. Thus, your best course of action is to do everything possible to prevent Chargebacks, so you'll never have to worry about defending them.
So as with most business matters, maintaining good customer relationships is the single most important thing you can do to protect yourself. If customers call you first, you can refresh their memory about authorizations, or if a mistake was made you can correct it. Even if you end up refunding a transaction that you think is valid, it's a smart move to do it yourself before the issuing bank and your merchant account provider get involved. Taking preemptive action will save you chargeback fees, protect your processing record, and hopefully enhance customer satisfaction.
The following are some important steps you can take:
Follow all the credit card authorization rules to properly authorize all one time and recurring transactions. (See Authorizing Credit Card Transactions.)
Tell your customers how the debit will appear on their credit card statements so that they will recognize it when they see it.
Make sure your customer remembers the authorization and the details of the authorized charge—this is particularly important when debits are part of a recurring payment schedule. Steps you can take:
Always send a receipt for transactions. (ReceivablesPro can do this for you automatically with a single setting—see Email Preferences and Templates in Chapter 8.)
Always send a pre-notification email in advance of transactions that are part of recurring billing schedules. (ReceivablesPro can do this for you automatically with a single setting—see Email Preferences and Templates in Chapter 8.)
Always provide a copy of recurring billing authorizations to your customers.
Always notify customers of any change in a recurring billing schedule. (ReceivablesPro can do this for you automatically with a single setting—see Email Preferences and Templates in Chapter 8.)
Remind your customers to tell joint account owners about the authorized charges.
Always provide a timely response when you receive a Bankcard Retrieval Request.
This request is generated when one of your customers requests a copy of a receipt or authorization for a transaction. (See Retrieval Request Letter below) It comes to you directly from your merchant processor. A sample of the letter you will receive is provided below. It is critical that you respond to the request in the time frame indicated in the letter. If you do not, the transaction will be automatically deemed a Chargeback, even if it was properly authorized. (You are required to keep proof of authorization for 2 years.)
NOTE: You can always print a copy of the transaction details from ReceivablesPro.
Encourage your customers to call you first if they have any questions about a charge. Institute a reasonable refund policy and quickly acknowledge and remedy any errors you may have made.