Avoiding Chargebacks

What is a chargeback?

When a cardholder has an issue with a charge on their credit card, they can contact their bank to dispute the charge. The bank then makes a chargeback or inquiry. The cardholder can be one of your customers or someone who believes that their card was used in your store without their permission.

What are the common causes for chargebacks?

1. Fraudulent orders, and
2. Unfulfilled orders stuck in the warehouse for more than three weeks.

How much money do we lose on chargebacks?

We can lose money via a chargeback in various ways. The most common are:

1. Shopify, and/or bank fees usually can range from $8 to $20,
2. The cost of the shipped item, plus
3. The dollar amount of the order. 

For example:

Do we have any examples of fraudulent orders with chargebacks?

• O#33077 This order’s risk level was too high to be covered by Shopify Fraud Protect
• O#16018 This order was covered by Shopify Fraud Protect

Do we have any examples of unfulfilled orders stuck in the warehouse with chargebacks?

• O#33367 Initially this was flagged by Shopify as a High Risk potentially fraudulent order. Tyler and Miguel decided to capture the payment and forcefully leave this order in the warehouse to test if it was a fraudulent order. It turned out to be a fraudulent order. The losses were minimal on this particular order since it was a planned test. We were only charged for the chargeback fee. 
• O#33753 Customer reached out several times via customer service email requesting cancelation and refund. The SOP failed. The fulfillment officer fulfilled the order without knowledge of the escalating situation. The customer initiated a chargeback at the same time that the order was in transit to him.

Can we avoid chargebacks? 

YES, we can.

How can we avoid chargebacks?

From the customer's advocate side there are various ways to avoid chargebacks:

1. Use the pending ticket option and wait for the customer to reply back via the same message thread. This will allow the customer advocate to measure if the customer is happy with the initial msg.
2. Use the merge ticket function in the case that the customer opens multiple customer service tickets. 
3. Leave notes on the comments section on the Shopify order. We like to call this breadcrumbs or trail. This will help the fulfillment officer asses if the order is ready to be shipped or if there is a potential chargeback brewing. 

From the fulfillment side there are various ways to avoid chargebacks:

1. Avoid shipping High-Risk fraudulent orders! If it's a HIGH-VALUE ORDER call the customer, reach out via email, and use the testing method explained in O#33367 of this document. 
2. When fulfilling the order open a window for Shipstation and another one for the Shopify order.