Chargebacks Are A Fraud Against Store Owners

TAJL16574893
Tourist
3 0 1

We all may have to consider moving to a different platform that will take these scam "Chargebacks" more seriously- even knowing how incredibly expensive that would be.  After providing evidence that a customer was 1. Following us Instagram 2. Signed up for our email list and 3. Using our products (software instruments) on Instagram, the customer issued a chargeback and received a full refund PLUS we were charged a $15 fee.  And of course they get to keep the product.  (The customer claimed they didn't authorize the purchase)  This is happening more and more, almost once a week now.  We've found customers bragging on virtual instrument forums online about how to get our products for free "Just issue a chargeback!".  And it's working.  We've lost every single case no matter what evidence is provided.  WE EVEN HAD A CUSTOMER SAY THEY NEVER MEANT TO OPEN A CHARGEBACK, and guess what?  The chargeback still went through after showing the email from the customer.  Shopify may be too big to care at this point (seeing as how they've gotten rid of customer service all together).   There is no justification for this.  

Replies 6 (6)

TAJL16574893
Tourist
3 0 1

Update (it's only been three hours), another chargeback from a customer that did one three months ago.  Hard to blame him.  Who would want to pay when Shopify gives it away for free?

JoesIdeas
Shopify Expert
2117 190 561

It's not Shopify, it's the banks.

 

The only way I've seen to mitigate this is to cancel high risk orders, maybe even medium risk orders.

 

I know for sure that can help with some chargebacks, and the people doing repeat scams.

 

Another idea: If you're getting from the same customer, tag them and then cancel any orders if they order again.

 

I hate chargebacks, I used to run a store for a few years and got frustrated about chargebacks, but eventually just decided they're an expense for doing business online and work that expense into the pricing of your products.

 

I wish banks would use logic to determine if it's legit or not, because they are permitting people to commit fraud with no consequences, there definitely needs to be some legislation to change this (maybe that's where Shopify could jump in and help, try to improve the law / system for all merchants, but who knows how you'd even approach that or propose that to their decision makers).

 

• 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
TAJL16574893
Tourist
3 0 1

Thank you Joe.  I appreciate you taking the time.  A few notes- NONE of our chargebacks were from high or medium risk orders.  Not one.  100% low risk orders.  Also, Paypal has it's own seller protection program, which protects store owners like us.  When we provide the same proof to Paypal that we submit through Shopify, they will usually go ahead and send us the money.  It takes 3-4 months, but at least they're doing something.

 

I do like the idea of tagging customers and trying to block them from purchasing again.  That might be the best we can do.  Leaving Shopify would cost us more money than we are losing currently to chargebacks.  It would be a bad financial decision.  But it really takes a toll on morale and mental health to see people stealing from our store regularly, and THEN WE ARE FINED $15 FOR IT.  It's a kick in the teeth. So we weigh the money vs the anger and frustration that it brings to let scammers scam us week after week.  It's a tough one.  Thanks again.

JoesIdeas
Shopify Expert
2117 190 561

Wow none from medium / high risk orders, dang that makes it really hard. I'm sorry to hear people stealing from you, that frustrates me just hearing it.

 

Good to know about the PayPal situation, I wasn't aware.

 

I hope you're able to find a solution or at least mitigate this. I would like to see Shopify create a project to investigate better solutions and use their power to make action happen.

• 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

DebNed
Visitor
1 0 0

I agree with you about the chargebacks. The issue we have is that the customer contacts us and we issue a partial or full refund. Then the customer files a chargeback through Shopify. We have gotten dinged for the refund, the $15 fee, and the full amount of the original order. Shopify chargeback system doesn't recognize a refund issued by the seller on the order. When I spoke to someone at Shopify she said that my reference above is correct and there is nothing they can do once the chargeback has been filed. So as the seller we really don't get a chance to dispute the chargeback all we can do is accept it or wait for it to go through. I once processed a refund for the remaining amount on the order thinking the Shopify system would recognize that we had refunded the order in full. Guess what happened? I lost twice. What was refunded by us and the total amount of the order via the chargeback. The PayPal system recognizes a refund issued by the seller so customer can't receive back more than they paid. 

Buntiform
Tourist
27 0 3

If you’re facing a lot of chargebacks and shopify’s anti-fraud tool isn’t detecting these, have you considered looking into 3rd party plugins like IPQS?