Chargeback Dispute

JoJoKwong
New Member
1 0 0

A customer initiated a chargeback against an order that had already been shipped in July 2020 which was claimed to be a fraud.

1) Is there any protection for the Merchant given we lost both the product cost, shipping cost and admin cost?

2) Why Shopify charge more on top of the order amount (Excess loss)?

3) Any local representative from Shopify merchant can talk to?

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Jason_Beacon
Shopify Partner
188 6 32

Hi @JoJoKwong 

Sorry to hear about your chargeback issue, Chargebacks are rather quite common in the eCommerce space if you do not know how to deal with it, it can hit you quite hard.

 

1) Is there any protection for the Merchant given we lost both the product cost, shipping cost, and admin cost?

Shopify does officially provide chargeback protection, but it's not cheap. It can be up to 2% per transaction. You can try to fight the chargeback case and if you win, you will get back your money and will not be charged a fee.

2) Why Shopify charge more on top of the order amount (Excess loss)?

Shopify does not actually charge you this fee, rather it's the banks that charge this fee to Shopify which passes this fee to you when a chargeback case is opened. 

3) Any local representative from Shopify merchant can talk to?

If you are a Shopify Plus merchant, I believe you should have a direct contact number to a Shopify representitive. Otherwise, you can ask your questions here and the community would be willing to help you with whatever questions you have. 

Decrease fraudulent orders, stop chargebacks and expand globally with Beacon.

https://apps.shopify.com/beacon
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dylanpierce
Shopify Partner
146 3 54

Jason did a great job answering your questions, I just wanted to provide a little more background.

Banks are the ultimate issuer of credit cards, so when a customer files a chargeback they do so with their bank - not Shopify directly.

Most of Shopify's protections are available pre-fulfillment, including their free app Fraud Filter.

I definitely understand your frustration here, how can you be held responsible when Shopify is the platform and the credit is issued by the bank. Unfortunately since you are the closest interaction with the customer directly, the burden of proof that the customer is legitimate & authorized to use that credit card is on your shop.

But losses from chargebacks don't have to be a cost of doing business. There are many apps in the Shopify app store that will help you determine if an order is legitimate or calls for additional investigation before you fulfill and risk a chargeback.

It's a bit of a rude awakening for merchants when they realize that it's up to them, not Shopify to determine fraudulent orders. And it's even more important when Shopify's new policy is to freeze your payout funds for 120 days if your chargeback rate goes over 1% (https://community.shopify.com/c/Shopify-Discussion/Shopify-reserve-25-of-my-fund-due-to-chargeback-r...)

Happy to answer any other questions about increasing your bottom line by preventing fraud!

Dylan

Founder of Verdict - Anti-Fraud Apps for Shopify
  • Blockade - Easily block countries, IP addresses, VPNs
  • Real ID - Verify your customer's real IDs easily & securely
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tailgatenj
New Member
3 0 0

I am having the same issue, where I shipped the product to the customer and the bank sided the fraud with the customer.  

I cannot find a way to speak with Mastercard.

Anyone have any success with this when the customer ignores you when they have your goods?

 

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Jkwong
New Member
1 0 0

Nothing we can really do as a merchant. Shopify has built-in fraud analysis which uses machine learning algorithms to help bring suspicious orders to your attention. And there are different apps to identify fraud account, and this can help to prevent encountering the same issue in the future.

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