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Chargebacks And Drop Shipping

Chargebacks And Drop Shipping

Chargebacks are a huge problem for many businesses. They can actually destroy your business completely if you let them. In case you don’t know exactly what the term means, a chargeback is when a customer goes to their credit card company or bank and asks for a refund. You may wonder why they don’t just

Chargebacks are a huge problem for many businesses. They can actually destroy your business completely if you let them.

In case you don’t know exactly what the term means, a chargeback is when a customer goes to their credit card company or bank and asks for a refund.

You may wonder why they don’t just come to the merchant directly and ask for a refund, and that’s a great question.

Sometimes they do, and they don’t get their refund for whatever reason. It might be because the merchant outright denies the refund. Sometimes it’s because the item is outside the return window. Whatever the reason, if a customer wants a refund and that refund is denied, there is a good chance they will initiate a chargeback.

So, what happens when you have a customer that initiates a chargeback?

Their bank will begin an investigation that will usually include asking you
for proof that the item was delivered, which means you will need to present
tracking information for the item.

Sometimes the bank will rule in the customer’s favor without even conducting an investigation. In this case, the money will be removed from your account
by your billing company, and you will lose that money as well as the money
you paid for the product.

As long as the customer received the product and it was in good condition,
submitting a chargeback without returning the item is fraud, so it’s
important to make that clear to the customer in the nicest, most
professional way possible. Don’t make accusations or threats. Just politely
remind them that keeping the product AND receiving a refund is fraudulent,
and that you would like for them to at least return the merchandise.

If the product was especially expensive, you may have to take legal action.
This could be costly, but if you can prove your case and win, they will have
to pay you legal fees and court costs.

Just remember that this kind of thing should be reserved for the most
egregious cases, because you will upset the customer and not only will they
never buy from you again (which could be a good thing in this case), they
could tell others what happened and make those people less likely to buy
from you as well.

The best course of action is simply to do your best to cut chargebacks off
BEFORE they happen. This may mean accepting returns outside the return
window occasionally or making exceptions to some of your rules.

Why should you do this? Because you want the customer to at least return the
product to you. This way, you might lose the money they paid for it, but you
will receive it back and you can sell it again.

Plus, being cordial and bending the rules on occasion will inspire loyalty
in some customers, which results in more purchases down the line.

 
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