Top 5 reasons why your customers may file a chargeback

There are various reasons that customers can file a dispute with their card issuing bank; they could have been charged two times or maybe over-charged for some items, they might also have received damaged goods or misrepresented services, or they could just be trying to cheat the system with the motive to make purchases for free.

Some causes for chargebacks are more common than others; however, to effectively prevent chargebacks, it is useful to know when chargebacks are most likely to happen. Here are some of the common reasons that the customers can file a chargeback:

Items not as described

When buyers receive their items but find that they do not match the exact description on the merchant’s website, they may submit a chargeback. The cause might be that the item was damaged, that the client received the wrong colours, or that the customer believes the quantity is considerably different from what the product listing states.

Subscription issues

Customers are more likely to be required to provide credit card information when signing up for free trials, but they frequently fail to cancel such trials before they expire. Customers may not know how often they would be billed with recurring subscriptions, and they may even forget what the subscription is for after a while. When these recurrent charges appear on their credit card account, it becomes easier for customers to settle the issue by filing a simple dispute with the credit card company rather than seeking assistance from customer service.

Innocent Mistakes

Chargebacks can occur as a result of human error, and in these situations, a customer may really make an honest mistake by disputing a transaction that is actually valid.

Dishonest customers

While some customers make honest mistakes, others know how to take advantage of the situation, with many even placing valid purchases to later file disputes. On one hand, some customer’s may experience from buyer’s remorse after making a high-priced purchase,  but others, who have missed the return window for a goods, will still want a refund.  Whatever the cause of the dispute, some customers consider a chargeback fraud to gain funds that are not theirs. 

Card not present fraud

Fraudsters compromise an individual’s sensitive financial information and then use the bank account or payment card information to conduct fraudulent purchases, which accounts for a substantial number of chargebacks.

It’s critical to understand what’s generating your chargebacks so you can fight and avoid them from becoming severe issues. Chargebacks may cost merchants considerably more than simply the transaction amounts lost, and when you include in marketing expenditures, customer acquisition costs, transaction fees, cost of products, and other factors, chargebacks can easily cost more than twice as much as the losses they experience.

In conclusion, chargebacks are a constant, looming threat that businesses will always have to learn to prevent; otherwise, they are bound to face losses larger than their profits. Chargebacks can happen for several reasons, but a smart enterprise will always be aware and prepared to face them without compromising the company.

For safe transactions, payment data storage, and chargeback monitoring, high-security payment gateways like PayPound are advised. We recognize that reducing the risk of chargebacks from customers is challenging, but not insurmountable.

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