Most common reasons for chargeback requests

Jennifer Blake Posted on October 08, 2020

What is a chargeback? 

If a product hasn't been delivered or is of a sub-par quality or, a customer can file a chargeback. It bypasses the customer service process of the merchant. Instead, the customer’s bank or credit card company will return the money to the customer by taking the money directly out of the merchant’s bank account. 

The customer or cardholder must have a provable claim, and the merchant’s bank must OK the chargeback for it to go through. This is to reduce illegitimate chargebacks. 

 

Legitimate Reasons For Chargeback Requests

  • Product not received / fulfilment issues
    • When a product has not been received or only part of an order has been received
  • Product not as expected
    • The product is damaged or not as advertised
  • Have been charged more than what was promised
    • Sometimes the merchant can make a genuine mistake and charge for a product more than once, or charge incorrectly when items come as a set where items can be bought individually
  • Unhappy with customer service
    • If a customer has received treatment they believe to be unacceptable, they will request a charge back on the grounds that they no longer want the offending business to have their custom
  • Cancelled subscriptions
    • When a customer has subscribed to a magazine or box, then decide they no longer want the subscription (or they are charged despite informing the merchant they no longer want this product or service, they request a chargeback with the bank.
  • Purchase not authorised
    • This usually occurs When a customer sees a transaction on their bank statement that they do not recognise. The card may have been stolen and used to purchase goods and/or services fraudulently.

 

Illegitimate Reasons For Chargebacks

Friendly fraud’ is when a customer uses the chargeback system to attain a refund, rather than contacting the merchant directly. This can happen both accidentally, when a customer does not recognise a merchants name, and intentionally, when the customer intends to steal from the merchant for gain or profit.

Intentional friendly fraud

Intentional friendly fraud includes customers that purchase a product with the intention of requesting a chargeback, or get buyer’s remorse. They want their money back, but they also want to keep the purchase, so Instead of arranging a return, they file a chargeback. This is disastrous for the merchant, who incurs not only the product loss, but the value of the product, delivery costs and a chargeback fee on top. 

  • Example: A customer has bought something online and they later work out they cannot afford one or more of the purchases. They don't want to part with the item, so they contact their bank for a chargeback.

Accidental friendly fraud

Accidental friendly fraud is when a customer flags up a purchase as illegitimate when it is legitimate. The most common reason this occurs is because products and services are charged on credit or debit cards under a trading name, instead of a name that the customer recognises, which leads the customer to file a chargeback request. 

  • Example: Your child is given the use of your credit card and the child buys something (with or without your permission). Later, you see the transaction on a bank statement which you either forgot about or do not recognise and so contact the bank for a chargeback.

How We Help

Although the chargeback system was designed to help prevent the merchant from stealing from the customer, there is little that has been done to protect the merchant from the customer.  Payment help provide a service that helps merchants to minimise friendly fraud by helping their customers to check unknown or unfamiliar merchants that appear on their bank statements. When a customer checks a payment, they can identify the merchant and determine whether the transaction is legitimate. Delivery tracking can also help merchants identify intentional friendly fraud.

Contact us to learn more about minimising chargeback requests and costs.