How can I effectively handle a chargeback?

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In recent times, we have experienced an increase in chargebacks from customers. 

 

The general workflow for these customers are as follows: Customers place an order, we produce our good and ship. All orders are shipped with a valid tracking number and all goods are also insured. Once the package for each customer is shipped, we capture the order amount. We believe this is all done "by the book". 

 

Now, for all chargebacks, we have noticed that these "customers" are receiving their goods and then file their chargeback. What we do is that we dispute the chargeback with valid evidence that the goods have been shipped and received. Primarily, we contact the customers asking them to retract their chargeback since they obviously have received their goods (according to valid and official tracking information). 

 

Still, what happens is that we have lost all claims and chargeback responses. Statistically, this should be "impossible" to actully lose every single chargeback for goods that are sold, sent and received by a customer.  Even if we were an "evil" company with fraudulent intentions, one might believe that at least one chargeback should had been ruled in our favor. All this has led us to believe that this is all constructed by design to not be in our favor as sellers. We challenge Shopify to read and respond to this message promptly as it seemingly is not only us who is affected by this. 

 

The situation has also arrived to a point where filing any chargeback responses are pointless. In fact, we stopped filing any chargeback responses. Obviously, they will not be ruled in our favor anyway. Why even bother? These chargeback responses take time and energy, likely something that the fraudsters are aware of too. 

 

The very least Shopify could have done is to enable us as sellers to toggle this kind of functionality on and off. We who are in charge of our own store can select how we handle potential claims from customers and have it clearly stated in our terms and conditions. It will not be a "hidden secret". It is not the right or power of Shopify to "auto-enable" this kind of "functionality" that is obviously disastrous to us and other sellers. We did certainly not ask for this "functionality" and it should therefore be an option that can be enabled by each shop/seller. 

 

Again, we challenge Shopify to respond to this and they are also welcome to look at our cases. We also urge other sellers to post their experiences with Shopify's chargeback system to build a case where these matters are taken seriously.

 

(We have also tried to contact Shopify by any means and obviously speaking to a human being is not possible.)

Reply 1 (1)

JoesIdeas
Shopify Expert
2266 207 600

It's the credit card company that the customer uses that makes the decision, unfortunately.

 

When I ran a store we lost most chargeback cases (and 100% of them were standard order procedure where we shipped the product and the "customer" received it). I think we won 1 or 2, it was always a surprise and mini victory, but in the end we realized that chargebacks almost always favor the "customer" regardless of them being criminals or not, and chalked it up as part of doing business online.

 

The problem is that the banks do not care about your business, they just collect the % fee and don't care about being fair, because you don't have many options so they know you'll keep using their payment system. You could of course do PayPal, Bank transfer, or check (haha maybe not these days), but it would create a friction point for your customers, likely resulting in more damage than the occasional chargeback.

 

I don't have a solution, litigation and change of policy at financial institutions would need to happen, but sharing my point of view that what worked for us was to just accept the occasional hit and consider it a tax of being able to sell to a worldwide audience, and use each attack to motivate into how could we improve our business to reach more customers and grow to the point these chargebacks are a tiny % of issue.

 

Good luck, sorry to hear people are stealing from you, truly breaks my heart that people do this kind of thing.

• Creator of Order Automator (automate tagging, fulfillment, Amazon, notifications + more)
• Shopify developer for 10+ years, store owner for 7 years
• I also make guides like Shopify Automation Tips and How to Deal with Fraud / Chargebacks