We received chargeback in our shop. We use Shopify Payments.
We have ALL the Fraud Prevention options selected in admin.
The customer claims their card was stolen and was used to purchase items fraudulently. They filed a claim and we lost. The $160 + fees was charged back to our account. My question is why is the small shop responsible for this charge. We did everything by the book, we have all the Fraud Prevention options supplied by Shopify selected. Why isn't the issuing Credit Card company responsible for this?
How do we further dispute this chargeback? I don't understand how we are responsible, and if we are what options do we have to prevent this from happening?
Hi Red Stick Spice,
Chargebacks are an unfortunate reality in the current credit card processing system. They can take place within 180 days of the purchase (though generally happen within the first month or two) and they are quite hard to dispute. More often than not, the card issuer will side with the consumer with no further recourse available to the merchant.
Though we advise our merchants to be cautious and verify certain transaction details prior to shipping their product (see: http://docs.shopify.com/manual/more/shopify-payments/fraud-prevention), the reality is that there is no fool-proof method for preventing fraudulent transactions.
You may want to consider shipping your products exclusively to the AVS-verified billing address of the cardholder (as opposed to an alternate shipping address). This will significantly increase your odds of winning the chargeback, should the customer claim the transaction to be "fraudulent". That being said, I would advise that you consider the potential loss in legitimate sales as a result of not allowing your customers to select a different shipping address.
You may also want to consider checking out some of the fraud screening applications available in our app store. They may provide additional insights that could be helpful.
With all that said, I wish I had an easy solution for you. But unfortunately, chargebacks are a difficult reality that merchants are forced to factor into their business decisions.
Hi there Red Stick Spice, not quite
In the case of accepting a credit card the third party consumer (who owned the card, and was defrauded also) would be the person getting money back, not the banks or Shopify. Chargebacks don't make the banks extra money and it negatively influences the Shopify platform.
We do not make any money when our merchants have chargebacks filed against them, and it doesn't serve our goals at all. We are very interested in preventing chargebacks and making them easier to respond to when they do arise. I would suggest adding one of the fraud screening apps from our app store.
It is the merchant vs the consumer that is liable for fraudulent sales. Rather than have the consumer (who originally had their card, and money stolen) and merchant (you, who sent physical goods) both loose to the fraudulent situation the credit card company by default selects the merchant to repay the cost.
The funds that were taken back by the credit card company were returned to the customer originally defrauded (in fact, the customer would have been paid back the moment they called in about the fraud )
It is not fair, and it is the result of a fraudulent use of the card. It is however a risk you must take on as a merchant when accepting credit cards and choosing to accept this form of payment.
I am having a very similar issue where the payout was scheduled for today and now it is nowhere to be found at all on the Dashboard. The only place it shows is when the original transaction was done and it states payout 2/14/14 but no "pending" payout is being displayed. At this point, I have already mailed the product and would like quicker response from Shopify on the status of the payout so that I can stop the shipment if the order is not valid. If this will in fact be a chargeback, I hope Shopify is not lackadaisical on payout issues so as to minimize losses on stores using their ecommerce and Shopify Payments, This should be handled as a priority issue so I can stop the shipment and will not have to suffer a monetary loss. PLEASE HELP!!!
Chargebacks are unrelated to the time of payout so this would not be related. The chargeback can happen months after the shipment and is a feature of all credit cards and credit card transactions. If a chargeback does occur an email is sent and a notification appears above the order within the Shopify Admin to make it easier to respond in one place.
For your shop the funds do appear in the back-end and should be paid out in the next 48 hours. Feel free to email the payments support team directly any time for updates firstname.lastname@example.org
Thank you very much, Massaad, for your quick reply and feedback regarding my particular issue as well as differentiating between payouts and chargebacks. It is this type of support that solidifies why I am happy to use Shopify's eCommerce! Have a great day.
Another reason that Shopify should have Amazon Payments. They are the industry leader when it comes to ease of use regarding fraud protection. I'm guessing Shopify doesn't have them because they feel Amazon Marketplace is a competitor? That seems to be the only answer. But then why does Shopify offer PayPal? eBay is a Marketplace competitor as well.
The fraud is rampant. I've received chargebacks on half of my orders. I could restrict orders so that the billing and shipping must much, but that would severely limit sales. Stripe has covered the costs each time, which I appreciate, but having Amazon Payments as a payment option would be huge. If they don't get a deal done soon, I may leave and go to a shopping cart solution that integrates with Amazon Payments.
Time to step it up...
Hi there Bootz, we would be open to the integration - but like all gateways in Shopify it would require an integration to be built by Amazon for our open-source system ActiveMerchant first http://activemerchant.org/
We have not had extensive demand for the gateway but we're always keeping an eye on their payment options and anything that would help our goal of making commerce easier.
There is not much extra benefit however from the fraud or transaction fee perspective. Their starting rate is on-par with Shopify Payments basic rate, with the difference being we will allow you the choice to upgrade to a lower transaction rate, while Amazon will only provide this once you have proven volume (by application only).
The Chargeback process at Amazon works very similar to the way it does with Shopify Payments and there is just as much fraud risk: https://payments.amazon.com/help/Amazon-Simple-Pay/Resolving-Disputes/Chargeback-Process
Unfortunately chargebacks are a feature of the credit card, not the gateway, and even with PayPal there are similar restrictions to prevent you from removing the funds before a certain time limit. If a customer processes a chargeback on Amazon you must reply with a very strict time limit to this unauthorized payment.
I understand that chargebacks are a reality, and that it goes against me every time - but what I don't get is why I get charged a $15 chargeback fee even AFTER I have taken the hit for all the product. Its like I am getting my hand slapped for doing nothing wrong.