I had a customer basically STEAL $150 worth of merchandise. Perhaps the kid stole the parents card or someone had buyers remorse, I really don't know. Either way, I am now out $150 of merchandise, and then Shopify slaps $30 ($15x2 chargebacks from same person) fees on ME because someone stole a card. Why am I getting penalized for something I didn't do, and what other ways can I avoid this? Am I supposed to call every customer on the phone and confirm the order before shipping??
I contacted the customer via email and phone. The call goes to a voicemail that sounds like a 10 year old, and of course, no response to the email. I received two different messages regarding the reason for chargeback: "Item received isn't as described" and "fraudelent use of card".
So which one is it?? If the item truly "wasn't as received", I would have offered an exchange or refund had I just been contacted by the customer.
I got no notification from Shopify that the transaction could be potentially risky at the time of purchase. Is there another layer of security I should be going through?? I am tired of kids stealing their parents cards and charging, only to leave me with the bill. This isn't the first time this has happened. The last time was a few months ago with a kid in Brooklyn, NY who's parents didn't win their chargeback dispute once they found out their kid stole the card.
Someone please tell me how they combat chargebacks and how $15 fees from Shopify is even remotely justified?
I'm not too sure how things work in America.
I have had an issue with this before and stock not returned (Our tiems can range from £30 to £3000) I requested for the police to investigate and turned up at the property that received the goods and the user did actually have the product and was using it daily.
We had the money refunded back to us via PayPal.
Chargebacks are always the worst situation a merchant can be in. Shopify, like all businesses, is legally required to transfer the funds to the credit card company involved until they make a determination as to who is in the right. Additionally, the credit card company charges $15 for the chargeback investigation, which is initially charged to the merchant. Typically I recommend the following to try to best combat them:
1. Reach out to the customer first, preferably through email. Often times customers simply don't recognize the charge on their credit card bill. If this is the case, they can contact their bank to redact the chargeback. Try to get some confirmation from them that they've actually done this.
2. If step one fails, try to get as much information as possible about the situation: shipping confirmation, billing/shipping info, any information the customer has sent to you, etc. Try to include as much of this info as possible in your response to the credit card company. They only allow for a certain number of character and don't accept attachments. If you do have further information that can be utilized, tell them you can provide the evidence upon request. The credit card companies only accept one response, so try to make the best of it!
3. The credit card companies hold the right to hold the funds for 90 days before making a determination, even if the customer redacts the chargeback. Once a determination is made, the funds are transferred to the winning party and the losing party is charged the $15 investigation fee. This means that if you win, you will get the funds back and the customer will be charged the $15 fee!
Chargebacks are never fun. Shopify tries to provide as many tools as possible to our merchants to be able to combat them, but it's ultimately the credit card companies that make the verdict. We have a full guide on how to best prepare yourself here. I'd also recommend adding the free app Fraud Filter to your store.
Hope that helps!
Geoff | Shopify Guru
I completely agree that this situation can be supremely and often there no reliable ways to handle disputes particularly of the chargeback variety. Instead of having to go through your card or bank or subjecting yourself to something like this where you are relying on something unreliable to come through for you. I would suggest that you look up preventative chargeback measures you, yourself can take. If this doesn't or hasn't made a difference then go ahead and PM me or respond to this thread and I can give you some solutions or ideas that I have done myself and hopefully that can help you in preventing and solving these chargeback disputes.
This is the big area where Shopify payments has a long way to go to compete with PayPal in terms of merchant protections. The fraud filter is very permissive and I always cringe to see payments come in via Shopify payments rather than PayPal with the VASTLY superior seller protection scheme.
I suspect the only reason Shopify payments option appears AT ALL on many small merchants’ sites is the fee penalty for NOT having it alongside your external gateways such as PayPal. Their fees are not lower than PayPal unless you’re on a higher-tier plan, and even then the minuscule processing fee discount is probably overshadowed by the first fraud purchase that slips through and has no seller protection. But for now, the extra percentages racked on to an external gateway prop it up and keep it in use.
Shopify is way out of the industry norm on this. I had someone order a book and it was delivered. I have proof of delivery from the post office. Shopify has a fully automated system that they use for chargebacks and effectively they don't get involved. As a result I lost the case and was charge their punitive $15 penalty fee. Their support in this area is comical, the support agents have no clue what they are talking about and their responses don't make any sense and are contradictory.
I also sell through eBay, Amazon and another website run through Bigcommerce where I use paypal as my merchant processor. In all instances if you have proof of delivery you always win a dispute when the customer says they haven't received an item. Shopify believes they are best in class with their payments platform but they are way out of synch with the rest of the industry.
This is something they need to fix and not give cute responses to on their forum or when you ask for help.