Why E-Commerce Merchants Are Afraid to Dispute Chargebacks

Why E-Commerce Merchants Are Afraid to Dispute Chargebacks

Recently I read an article about e-commerce merchants who didn’t dispute chargebacks.

Never dispute any. At all.

Absorbed them. Paid whatever fines, did their best to remain under the 1 percent/100 per month threshold and washed their hands of them until the next month.

After the first few graphs I asked myself, ‘How are these people still in business?’ It’s a pretty dangerous gamble these days, especially considering the major credit card brands collective tolerance for such is diminishing.

But reading on a bit more, I began to understand why e-commerce merchants didn’t bother. And, considering the amount of blogs we put out to encourage merchants to fight, fight, fight, these merchants’ ideology made sense.

One reason e-commerce merchants won’t dispute chargebacks

Discounting misguided priorities or laziness…

E-Commerce merchants might be hesitant to dispute chargebacks for fear of receiving negative reviews, even friendly fraud chargebacks, let alone legitimate ones.

Compared to storefront owners, e-commerce merchants need to be customer support rock stars, simply to make up for the fact that they don’t get the benefit of developing personal relationships with their customers. When online shopping, most consumers will consult reviews of companies before purchasing from them. Too many negative ones will turn customers away.

Thus, an e-commerce merchant must reciprocate for that disadvantage by offering outstanding customer support.

My chargeback dispute experience

About three years ago, I received a call from my credit card issuer regarding a suspicious purchase made. The call came within the hour of the purchase – I marveled how my issuer was right on top of my account. It was a Dell desktop computer which cost more than $1,500, bought online and shipped to the midwest. I told the agent that it was a fraudulent purchase, that my account had been compromised, likely the result of a rogue online website where my credit card information was purchased.

The agent removed the transaction from my account, voided my credit card and began the process to send me a new one. But the situation wasn’t over.

Two weeks later, the agent called back saying the large retailer from which the Dell desktop was bought predictably argued that the transaction was legitimate, that it was indeed me who had made the purchase. The agent gave me the impression she was siding with the retailer, until I asked her to compare my home address to where the computer was shipped.

With that, I proved my innocence and won the agent over. Had I been deemed responsible for the purchase, truthfully, I’d have taken to the reviews sites for both my credit card issuer and the retailer.

Is it better to remain in the good graces of banks or consumers?

It’s a fair question and a delicate balance. Our answer is both. A recent study by Shopify produced some very telling numbers – including that customers who had a positive experience are much more likely to leave a review than a customer who had a negative experience.

Disputing chargebacks can be a fulltime job, but Instabill’s satellite site, Instabill.org, is a free online guide to help merchants navigate the chargeback process and see it from the consumer side as well.

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