Charge Back Issues

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I'm a shopify partner and I've built and launched a number of shopify stores and recently I've launched one, it's not even 3 months old and it's had 4 charge backs totalling £750+. Each one of these charge backs were done after the goods were dispatched, and signed for. The thing is, all of these charge backs passed the fraud checks. The only thing they failed on were that the shipping address was not the same as the billing address.  All of the addresses were UK based.  My client is furious because this is becoming a regular occurence.  I understand if the IP address didn't match, or if there's a good few signs that the transaction is fraudulent as shown in the fraud analysis area, but in all of these cases the only thing that failed was the different addresses.  How on earth can we prevent this from happening when people WILL want to buy items for friends and family and have these items sent directly sent to them. My client's last order was exactly like this, a lady purchased an item for her cousins who lived a few hundred miles away from her. I asked my client to put it on hold and to request proof of address (drivers license etc), to verify that she did indeed purchase the items and that it wasn't some random person using her card. Thankfully she understood, and everything went ok.  She was about to request a charge back as she didn't see why buying an item and sending it to a different address was a problem.

 

I'm not sure what to do in this situation, I may end up losing a client due to this issue.  I'm running 5 other websites, on magento and woocommerce platforms, NONE of them have any chargeback issues. It always seems to be Shopify.

 

Can someone shed some light on this situation.  If the fraud analysis is doing it's job, how on earth do we contest it when we do get a charge back?  For all I know, these people are genuinely buying the item and saying they never recieved it. The bank will always side with their customer.  What's the answer??

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Shopify Staff
Shopify Staff
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Hi, @kaysingh.

Sophia here from Shopify. Welcome to the Shopify Community!

I'm so sorry to hear that your client has received several chargebacks within a few months of starting out. Chargebacks—though a reality of accepting credit cards online—are never pleasant to handle, so I'm sure it's been frustrating to see four of them show up in a fairly short timeframe.

While we can't guarantee the outcome, the good news is that the bank won't always side with the customer. In order for the bank to consider settling in your favour, sufficient evidence is required. The reason for the chargeback will be noted on the order details in the admin, and you can submit tailored evidence to the customer's bank depending on what that reason is. Shopify does submit evidence about the transaction on behalf of the merchant if they're using Shopify Payments, but it's best practice to check whether additional evidence can be submitted in order to increase the chances of resolving a chargeback.

I'm glad that your client contacted the customer in the case of the recent order where the address didn't match. Even if there's only one fraud indicator on an order and it's marked as low risk, it can still be a good idea to reach out to the customer just to be safe. If a chargeback does occur and the customer has responded prior to that, the conversation can be submitted to the customer's bank as additional evidence. Ultimately, it's up to the merchant to decide whether or not to fulfill an order, regardless of the risk level determined by the fraud analysis.

To add a layer of security against users placing repeat fraudulent orders, your client can take a look into using Shopify's Fraud Filter app or one of the third-party fraud protection apps in the Shopify App Store. I recommend sharing these three documents with your client so they can review all of the details about chargebacks and fraud prevention:

 


If you have any questions about what I've mentioned here or anything you come across in our Help Center, please let me know and I'd be happy to help.

Sophia | Social Care @ Shopify
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I just opened my Shopify a couple of months ago, I made only 14 sells so far, and today I received a chargeback for a $129 order. out of ONLY 14 orders... the fraud analysis was marked 'low', the only thing was, she provided a shipping address that was different from her billing address. but same last name. 

 

I see your response everywhere saying "Chargebacks—though a reality of accepting credit cards online blah blah.." but I've been selling on Etsy for years, over 4500 orders, I've shipped to buyers who provided shipping addresses that were different from their billing address, and not one chargeback, never had any issues.. is this a thing on Shopify?? from reading the community posts it seems like it is... why is this happening?? I'm a tiny business making custom outfits by hand to order, I can't take this loss, plus you charge $15 fee?? I'm considering closing the shop or setting it up to only accept PayPal, this is unreal, I don't understand why this would be happening seeing all the posts about it, I should have done more research before signing up to Shopify. 

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Shopify Staff
Shopify Staff
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Hi, @Osivd.

I'm sorry to hear that you've received a chargeback on your store. Have you reached out to the customer yet? If not, I strongly recommend doing so to see if they're willing to contact their bank and resolve the chargeback. Sometimes the reason for a chargeback is as simple as the customer not recognizing the charge on their credit card statement. In that case, you can edit the customer billing statement to ensure it's recognizable as coming from your store.

 

While it's possible that chargebacks may be more likely to occur on independent store's websites as opposed to marketplaces, chargebacks exist everywhere that credit cards are accepted online, and that includes Etsy and PayPal. Your customer has a right to file a chargeback regardless of where your products are being sold online.

I do hope that your customer responds to your contact and is willing to sort this out with you. If you don't hear from them or they prove to be uncooperative, be sure that you've reviewed the necessary evidence to provide to the customer's bank based on their specific chargeback reason. If the chargeback is settled in your favour, the chargeback amount and the chargeback fee will be refunded to you. Please let me know if you have any questions.

Sophia | Social Care @ Shopify
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I had the same issue. Not even 20 orders in as a new shop and we get an order that Shopify marks as Low and ends up being fraud. Then we don't even win the charge back, making it seemingly our fault entirely and Shopify still collects its fees and a $15 penalty - doesn't quite seem right does it?

Does Shopify have a comprehensive guide to teaching its platform users how to deal with potential fraud? Simply reaching out to the customer and asking "Did you order this?" does not really seem to be an answer as a fraudster is likely not dumb enough to put in the person's email address that they are ripping off. And clearly Shopify's fraud meter doesn't exactly do much either. Appreciate some help on this @Sophia , especially if Shopify is not going to take on any risk on behalf of its customers and levee a further fee when fraud occurs.

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Shopify Staff
Shopify Staff
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@JK26 wrote:

I had the same issue. Not even 20 orders in as a new shop and we get an order that Shopify marks as Low and ends up being fraud. Then we don't even win the charge back, making it seemingly our fault entirely and Shopify still collects its fees and a $15 penalty - doesn't quite seem right does it?

Does Shopify have a comprehensive guide to teaching its platform users how to deal with potential fraud? Simply reaching out to the customer and asking "Did you order this?" does not really seem to be an answer as a fraudster is likely not dumb enough to put in the person's email address that they are ripping off. And clearly Shopify's fraud meter doesn't exactly do much either. Appreciate some help on this @Sophia , especially if Shopify is not going to take on any risk on behalf of its customers and levee a further fee when fraud occurs.


Hi, @JK26!

Thank you for sharing your experience here. I know chargebacks are tough to deal with, and I'm sorry to hear that this one was lost. I hope I can provide helpful information for you here in case another chargeback comes up going forward.

The chargeback fee, while processed through Shopify Payments, is collected by the customer's bank, not Shopify. This fee is refunded to you if you either win the chargeback, or if the cardholder's bank decides to return some but not all of the disputed amount to you. The Chargebacks and inquiries document in the Shopify Help Center details the reasons for a chargeback or inquiry as well as the ways in which you can potentially resolve them. There is also a document on preventing chargebacks and inquiries, which is a good checklist for ensuring that your store is set up to minimize the risk of chargebacks. Please let me know if you have any questions about the information in those documents.

I came across a case recently where the customer's partner filed the chargeback when they saw an unfamiliar charge on their shared card statement. They hadn't asked their partner about the charge first, but the store owner was able to sort it out with the couple once they were in touch. Sometimes it is just an honest mistake, and in those cases, the customer can contact their bank to resolve the chargeback. Of course, some orders are legitimately fraudulent, but you won't necessarily know unless you attempt to contact the customer.

Can you tell me a bit more about the order that was marked as low risk? Which indicators were flagged, and was there any communication with the customer either during the fulfillment process or after the chargeback was received?

Sophia | Social Care @ Shopify
 - Was my reply helpful? Click Like to let me know! 
 - Was your question answered? Mark it as an Accepted Solution
 - To learn more visit the Shopify Help Center or the Shopify Blog

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