Chargebacks Can Kill Your Online Business – What You Need to Know

By Rafael Lourenco, Vice President of US Operations, ClearSale

When you think of threats to your online business, you probably think of price-cutting competitors and negative customer reviews. There’s another threat you may not know much about: chargebacks. Card companies allow customers to make refund requests to protect them from fraud, but 86% of chargeback requests are “friendly fraud.” That means the customer bought something and then claimed they didn’t make the purchase or never received the goods. The merchant is left holding the bag.

If you think this is rare, think again. Friendly fraud costs retailers more than $11 billion per year and it can cause small businesses to fail, often before the owner knows there’s a problem. What exactly are chargebacks, and how can you fight them?

When can a customer request a chargeback?

Each card company allows chargeback requests for dozens of reasons. For example, Visa’s Reason Code 83 indicates the customer claimed “fraud in a card-absent environment,” while Reason Code 30 is for claims of merchandise not received. There are other reason codes that fraudsters abuse, and unless you can prove that their claims are false, your business will suffer.

What happens after a customer chargeback request?

If you get a chargeback notice or a request for more information from your acquiring bank


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