Fraudulent Chargebacks

[silentdub]

What steps can a business take to help prevent chargebacks. Considering a good standing business providing honest and quality repair services, what can be done to help prevent chargebacks?

In several scenarios this year, work is performed, customer agrees and pays with a credit card then simply files a dispute stating the "product was not as described" and out of four cases now, the bank simply sides with the cardholder and we are left unpaid. I am about to discontinue credit card sales and maybe take debit only.

What steps can I take to help prevent customers from committing fraud?

State of Delaware

 

[Just Blue]

What steps can a business take to help prevent chargebacks. Considering a good standing business providing honest and quality repair services, what can be done to help prevent chargebacks?

In several scenarios this year, work is performed, customer agrees and pays with a credit card then simply files a dispute stating the "product was not as described" and out of four cases now, the bank simply sides with the cardholder and we are left unpaid. I am about to discontinue credit card sales and maybe take debit only.

What steps can I take to help prevent customers from committing fraud?

State of Delaware

Cash only.

 

[Bali Hai Again]

Cash only.

Cash only.

And good luck with that.

 

[Zigner]

What steps can a business take to help prevent chargebacks. Considering a good standing business providing honest and quality repair services, what can be done to help prevent chargebacks?

In several scenarios this year, work is performed, customer agrees and pays with a credit card then simply files a dispute stating the "product was not as described" and out of four cases now, the bank simply sides with the cardholder and we are left unpaid. I am about to discontinue credit card sales and maybe take debit only.

What steps can I take to help prevent customers from committing fraud?

State of Delaware

Perhaps a better-crafted customer acceptance form will help you convince the CC company that the chargebacks are not valid.

 

[PayrollHRGuy]

Perhaps a better-crafted customer acceptance form will help you convince the CC company that the chargebacks are not valid.

This!

 

[adjusterjack]

You cannot "prevent" anybody from doing bad things to you. You can only address them and seek remedies afterwards.

Credit card companies don't automatically side with the buyer. You should be given an opportunity to dispute the charge back. Read your contract with the credit card company to make sure you know how to do that.

If you are selling on eBay and using PayPal, they are rife with that kind of fraud and you risk this continuing to happen.

If a chargeback goes through, your option is to sue the buyer. Unfortunately, you would normally have to sue the buyer where he is located and that could be expensive if you are selling to people in other states.

I don't really have a solution for you, other than to screen your customers better. If it is any consolation, you are not the only vendor experiencing this problem.

 

[Bali Hai Again]

You cannot "prevent" anybody from doing bad things to you. You can only address them and seek remedies afterwards.

Credit card companies don't automatically side with the buyer. You should be given an opportunity to dispute the charge back. Read your contract with the credit card company to make sure you know how to do that.

If you are selling on eBay and using PayPal, they are rife with that kind of fraud and you risk this continuing to happen.

If a chargeback goes through, your option is to sue the buyer. Unfortunately, you would normally have to sue the buyer where he is located and that could be expensive if you are selling to people in other states.

I don't really have a solution for you, other than to screen your customers better. If it is any consolation, you are not the only vendor experiencing this problem.

This is unfortunately correct. Not only for vendors on eBay but for buyers as well. Some years ago I was at Newark airport and left my iPad on. Shortly thereafter I saw a $500 charge to my bank account and the item purchased was a super duper gig drive shipped to the Florida panhandle. I got the fraudulent purchase reversed from my bank and PayPal but it was not easy to do that. Never did hear if they caught the crook!

 

[quincy]

What steps can a business take to help prevent chargebacks. Considering a good standing business providing honest and quality repair services, what can be done to help prevent chargebacks?

In several scenarios this year, work is performed, customer agrees and pays with a credit card then simply files a dispute stating the "product was not as described" and out of four cases now, the bank simply sides with the cardholder and we are left unpaid. I am about to discontinue credit card sales and maybe take debit only.

What steps can I take to help prevent customers from committing fraud?

State of Delaware

Have you noticed any common factor in the customers who are seeking chargebacks?

Is yours a product or a service business, or both? Do you have your customers sign a “satisfaction of service/product” form when collecting final payment?

 

[zddoodah]

What steps can a business take to help prevent chargebacks. Considering a good standing business providing honest and quality repair services, what can be done to help prevent chargebacks?

Conduct business honestly and charge a fair price.

customer agrees and pays with a credit card then simply files a dispute stating the "product was not as described" and out of four cases now, the bank simply sides with the cardholder

One would need to review all of the documentation you submitted against the chargeback, but one way to deal with this would be to have the customer sign something accepting the product.

What steps can I take to help prevent customers from committing fraud?

That's like asking what you can do to prevent being in a car accident. Sometimes it'll happen no matter what you do.

 

[silentdub]

Thank you for all of your feedback. The repair services are provided in both parts and labor. We've actually had 3 this year. To my understanding before someone can dispute the charge the bank requires them to contact the company first to try and work it out. As we have a 2 year 24,000 mile no eagle warranty, neither of the 3 ever called us. Just paid, left and then filed a dispute. We've never once turned someone down for warranty coverage so hence the reason I feel that some people are simply getting repairs performed and just deciding not to pay afterwards. We don't do mail orders or ship products, we area brick and mortar facility and some people just want to take advantage. We now make them sign the estimate and invoice, also have wording on the paperwork but I guess we need to seek an attorney to help is better define the wording. Does anyone have any links or samples of wording to help prevent this type of activity?

 

[quincy]

Thank you for all of your feedback. The repair services are provided in both parts and labor. We've actually had 3 this year. To my understanding before someone can dispute the charge the bank requires them to contact the company first to try and work it out. As we have a 2 year 24,000 mile no eagle warranty, neither of the 3 ever called us. Just paid, left and then filed a dispute. We've never once turned someone down for warranty coverage so hence the reason I feel that some people are simply getting repairs performed and just deciding not to pay afterwards. We don't do mail orders or ship products, we area brick and mortar facility and some people just want to take advantage. We now make them sign the estimate and invoice, also have wording on the paperwork but I guess we need to seek an attorney to help is better define the wording. Does anyone have any links or samples of wording to help prevent this type of activity?

We cannot provide wording for you. Sorry. That gets into the practice of law and exceeds the scope of this forum.

You will want to contact an attorney in your area who can personally review the documents you currently use and help you tweak them to give you more protection.

Even then, you might find you have to sue to recover your costs (parts, labor). With a solid signed contract in place, you have a better chance of winning in court.

 

[silentdub]

Thanks, already contacted an attorney. Also contacted the top 3 credit processing companies. Square was fine when we were small with a few transactions a week, but they don't offer debit and are not much help.

 

[quincy]

Thanks, already contacted an attorney. Also contacted the top 3 credit processing companies. Square was fine when we were small with a few transactions a week, but they don't offer debit and are not much help.

You were smart to contact an attorney. Good luck.

 

[adjusterjack]

The repair services are provided in both parts and labor. We've actually had 3 this year.

How much money did each involve?

To my understanding before someone can dispute the charge the bank requires them to contact the company first to try and work it out. As we have a 2 year 24,000 mile no eagle warranty, neither of the 3 ever called us. Just paid, left and then filed a dispute. We've never once turned someone down for warranty coverage so hence the reason I feel that some people are simply getting repairs performed and just deciding not to pay afterwards. We don't do mail orders or ship products, we area brick and mortar facility

Should have told us that at the get go.

It gives you a distinct advantage if they are all local people.

Just sue them each in small claims court. You don't need a lawyer to do it. It's a simple breach of contract lawsuit. You did the work, they didn't pay.

The small claims limit in Delaware is a whopping $25000.

We now make them sign the estimate and invoice, also have wording on the paperwork

Probably won't prevent the die-hards from scamming you. As a precaution make copies of both sides of the credit card and their driver license.

With the security code from the back of the card, you may be able to charge the bill again after the charge back. But before you do something like that make sure it's not going to have legal or criminal consequences.

If it's vehicles you work on get photos of the car, the VIN and license plates.

 

[bcr229]

Even then, you might find you have to sue to recover your costs (parts, labor). With a solid signed contract in place, you have a better chance of winning in court.

The small claims limit in DE is pretty high and businesses are not required to have an attorney represent them. Obviously it's a hassle and time away from your business to go but depending on the size of the chargeback it might be worth it.
https://courts.delaware.gov/help/proceedings/jp_startcivil.aspx

A tactic I've seen recommended here is to fill out the small claims paperwork and mail a copy to the deadbeat before filing. Sometimes that can get you paid without going to court.

Of course, winning in court is one thing, enforcing the judgement is usually more work and expense.

Finally, I don't know how well networked you are with other local mechanics, but in my industry we have a loose coalition where we privately share info on deadbeats and other problem customers who are more trouble than they're worth. Sure we're competitors but we also collaborate, and I've managed to get two other vendors paid what they were due when I told the deadbeats I would cut them off otherwise.