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How to Avoid or Prevent Over the Phone Transactions of Credit Card Chargeback for Small Business

May 4, 2014
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How to Avoid or Prevent Over the Phone Transactions of Credit Card Chargeback for Small Business


For merchants(small business,debt collection company,check cashing places etc), chargeback are inevitable specially for collection agency ,mail order company,telephone order company or any company that take order or service over the phone while physical credit card is not present. It is a very common term in US and it is usually faced by many.  Chargeback means the reversal of the transaction made with credit or debit card. Charge back is hard to manage because of the dispute that may occur associated with the malfunction of the process.Lots of time mistake happens in merchant’s part which cause the chargeback.Sometimes customer are unhappy with the product or service that cause the chargeback. Most of the time the fraud happens in chargeback when customer gets the product or services with the intention of initiating a chargeback later to get free product or service.The sad part is the burden of proof falls on the merchants.Small business owners have the hardest job because with their limited time in hand,they have to spend time proving the valid transaction.The key to get rid of these situations is prevention.


Prevention is the best tool for a merchant to fight against this kind of scenario. The cost of chargeback has higher rates so the merchant need to enforce preventive steps. Whatever the business you are running, you have to consider all of these things in order for you not to be in more serious situations in the future.The merchant processing company will charge you a stiff fee every time you get a chargeback and if you get too many chargeback they will close your credit card processing account.In any scenario of chargeback,you not only lose your original money of the product or service ,the transaction fee,sometime the product itself,you also your business reputation to the merchant processing company and the stiff chargeback fee.For collection agency,a good debt collection software will some of the features in their software to avoid or minimize  chargeback. Take a closer look at these steps:


Customer-related chargeback


  1. DBA that is easy to recognize – you can reduce related chargeback if you have an easy to recognize DBA on the billing statement of the customer.  It is important that your business web address should match your DBA. Majority of the times,customer makes a chargeback because they don’t recognize the name of your company on their credit card statement. So if your legal name is different from the DBA  name,let the customer know at the time of the check out that they will see a different name on their credit card statement.
  2. Contact information provided – you should provide the customer with your contact number or the number of your customer service in order to avoid credit card chargeback.  You need to also make sure your credit card processing company has your correct business phone number which will show up on customer’s statement.
  3. Policies of stores / business  – You should provide all the policies governing the transaction on your checkout page. Or, if you are making transaction over the phone, might as well as, the disclaimer spill so that you can get rid of disputes in case of chargeback.
  4. Open communication with customer – this is the most effective way to avoid chargeback. If it possible, communicate with your customer from purchase to delivery.
  5. Periodic or recurring billing – If your business is implementing a recurring billing like a subscription for service or product, you have to act immediately when they requested to cancel a particular subscription.

Actually, there are a lot of other reasons about credit card chargeback and you have to be very vigilant on how to avoid these things.If you are a collection agency, by using good debt collection software like LEAH debt collection software,latitude,impact,cubs,collect!,ontario, your chance of minimizing this scenario is really high. Apart from that, you can also avoid unsatisfied customers where in time if you cannot control it could severely affect your business operations negatively. It comes in a negative impact.


Nowadays, it is very important not to have unsatisfied customers because the social media is on. They can spread a word-of-mouth by posting it in social media sites and your business reputation is at stake. They can do that in a form of a review or testimonial in your business page.  Keep in mind you can always hire a debt collection agency to collect your money. Most collection agency knows the law and have legal expertise / legal department  to collect your money if the customer intentionally did a chargeback to keep your product or service.


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