Chargebacks: Faxes may not be enough

[GordonH]

Hello
As some of you may know we get all our customers to fax back a form stating they will not dispute the transactoin as unrecognised at any point inthe future.
This would then be sent to the card company if they claimed they did not recognise the transaction at a later date.

I just got this from our bank which suggests thi smay no longer work:

I have been provided an update by our processing bank with regards to the status on the above transactions. Unfortunately they have advised me that the
signed authorisation has unfortunately been rejected. This is due to Visa and
Mastercard regulations where the Card Schemes will only accept a signed letter
from the cardholder dated after the dispute has been raised stating that they
did authorise the transaction and that the dispute had been raised in error.


In other words a customer cannot sign an advance contract stating they will not disupte it as unrecognised in the future.

Looks like there is very little we can do now to stop card holder fraud (customers claiming long after the priginal upurchase that they did not authorise the transactoin in order to get free services).

[Chicken]

Maybe it's the wording on the authorization? Thing is, consumers do need protection against unauthorized transactions. If you understand that, and reply back to your processor with your needs, maybe you can come up with something. Obviously, it would be nearly impossible to get customers to sign an authorization and fax it to you every month (I realize this).

The typcial in-store, "I agree to pay..." signed authorization probably doesn't work for reoccurring charges, which is part of the problem. Even though a customer may authorize you to charge their card this month, and next month, and the month after that, but it doesn't mean they authorize you to continue charging their card beyond the time they say, so there has to be a stop mechanism to prevent a provider from saying, "Look, they authorized the payment!' -when the customer has requested that the account be terminated 4 months ago.

What it probably comes down to is that the vast majority of customers are honest, and will pay for services they use, and there has to be some heavy protection for the consumer against fraudulent use of their credit cards. It is a cost of business to deal with the clients who aren't honest and your pricing must take this level of fraud into account, and file it as a loss come tax time.

[GordonH]

I agree with you, but the problem we have is resellers using the service for 12 months or more, then their busines fails and they tell the card company they did not authorise any of the payments.

Each incident costs us a lot of money, but its the principal of the thing rather than the money that gets me.
I just feel ripped off personally.
I know I shouldn't, but I do.

I need to cut back on the coffee.
It was a bad mistake buying areal coffee machine for the office.

[markblair]

Isn't there a limit to how long someone can wait before they can do a chargeback? I know with my credit card company, I have up to 30 days to process a chargeback or I basically agreed to the charge. I don't know how someone could use a service for 12 months and then say it wasn't good enough. That's like eating the entire burger at a restaurant and then complaining that the food was terrible.

[Cow]

We recently had a run-in with a customer we actually bought from another company. Needless to say, this Professor charged us back but instead of going through the normal venues, we requested that she called her bank, cancel the chargeback and do all the paperwork herself. In the end it worked out fairly well and I'm glad she cooperated.

Others may not be so lucky ...

[GordonH]

With pre authorised transactions there is no limit of 6 months on chargebacks.
If the last payment was within 6 months then all of them can be charged back.
We have had 26 months worth charged back before at a cost to us of over $2000.

Its getting less frequent than it used to.

Normally when a customer does not recognise a charge we can get them to fax us saying they are no longer disputing it.
The chargeback usually still goes through but we are able to appeal it.

Where we had to use the inital faxes from the time of purchase was when it was a true cardholder fraud, someone using that loophole to try and get out of paying over an extended period.

[Chicken]

Originally posted by markblair:

That's like eating the entire burger at a restaurant and then complaining that the food was terrible. ...a year later!

[tranz]

We just had a client do this, on a $7K sale!

Guy told me to order what he needed for his SAN. A Qlogic SanBox 2 FC swtich. It was ordered on his behalf and drop shipped directly to him. He used it for over a month. He calls the company that it was purchased from. They inform him that it was purchased for him by me with his authorization, he agrees, says everythig is fine and hangs up.

He then has the unit pulled from his dc, boxed up and sent back to the vendor.

The vendor has refused to take the unit back as it has been opened and used.

We are both waiting to see if a large chargeback is coming around the corner.

[GordonH]

I notice that in the UK customer not present chargebacks have risen 29% in the past year.

[linux-tech]

Hrrm, this is completely different from what I was told, actually. What i was told was that faxes are the ONLY thing that a bank will accept as proof that the owner did actually order the product, or service.

As far as a limit, I agree. If the user's been charged for a year, 6 months or anything else, then they have no way to legally say "I didn't authrize that charge". How many actually overlook day to day charges on our bills? I know -=I=- don't.

With the progression of the internet, most banks have an online section for their members, where they can view transactions in real time, so there's no excuse for not knowing about it 6 months later. Hell, in most cases, you can find about it as soon as the auth. is charged, which helps the "fraud" process.

It's almost like Visa/MC WANT people to quit taking their cards here, really. I mean, admittedly, they need to look out for their customer (I'm all for that), but the merchant is just as much their customer as the end user.

I've actually been investigating call back verification where the individual has to wait for a call then personally give their name, authorizing the charge. Maybe that'll help, but I don't think anything will satisfy Visa/MC , and they're always going to screw their internet merchants.