The Telegraph reported this week about the nature of chargebacks and how they may be used by consumers wanting to regain unauthorised funds online. Chargebacks offer a vital tool to customers if a merchant is unable or unwilling to refund an unauthorised transaction. They can occur as a result of processing errors or problems with card authorisation, but also through fraud.
Many consumers who ask for a chargeback are approaching their banks rather than online retailers because of issues with the chargeback process or receiving poor customer service from merchants.
The Telegraph report highlights the chargeback dispute process through the eyes of the consumer. One consumer explains how they contacted their bank after paying for some materials which were not suitable. The bank quickly responded and negotiated with the company at fault in order for the problem to be resolved.
Another consumer also spoke of contacting their bank after wanting to regain funds via the chargeback process. In this case the bank did not hear back from the merchant, meaning the money remained in the consumer’s account.
Whilst chargebacks may be a useful tool for consumers to use, the drawbacks for merchants can be widespread. In order to deter consumers from going directly to their banks for a chargeback, merchants should ensure their customer service is highly responsive. By ensuring high standards of customer service, consumers are more likely to go directly to their merchant, saving both time and money.
The growing number of chargeback instances has been fuelled significantly by the rise in identity theft and subsequently unauthorised payment activity. In order for merchants to protect themselves and their customers, they need to be aware of this growing trend and responsive to any suspicious activity.
If customers are more aware of the chargeback process, they will not feel the effects of being hit with higher costs from merchants having to cover the chargeback fees required from banks. Further, if merchants implement high levels of customer service they will be able to alleviate excessive and unnecessary chargeback charges.
