Managing Disputes Through COVID-19

COVID-19 has impacted retailers and merchants in striking ways. What seems to have come on fast and furious, this illness is impacting business in numerous ways. The economy has come to a screeching halt for many industries, and retail sales have fallen, reducing sales for many merchants. There’s also an increasing number of chargebacks occurring as consumers look for ways to slow their spending. Disputes have become a large and growing problem for many in the industry.

As a merchant, what can you do to protect yourself and your business from these disputes, including unwarranted chargebacks as well as losses from requested refunds? In difficult times like this, it is critical to look at all of your options. Here’s how to professionally handle this worrisome situation.

Determine the Validity of the Chargeback

By far, the first and most important step to take is to understand your rights and requirements. Is the chargeback valid?

It’s important to remember that Visa rules, for example, don’t allow cardholders to simply cancel an order – even if the good or service has not been provided. There are clear steps that the individual must take to receive a refund. Of course, regulations (such as TILA/Regulation Z as well as the EFTA/Regulation E) will often favor the consumer over the merchant. The bottom line, however, is the chargeback must be seen as a valid one based on regulations but also on policies in place.

Verify the Refund Before Issuing a Chargeback

Issuers have the requirement of checking to see if a refund has been provided before they credit a cardholder’s account. This does not always happen in the simplest (or even the most efficient) manner. Before issuing a chargeback, it’s essential for the merchant to take this simple verification step to ensure there’s clarity here.

The merchant needs to verify that no chargeback has been initiated if the merchant plans to issue a refund. If the chargeback is in place, it is also important to verify no refund has been issued as well. This may seem like a simple step, but in fact, it is a common concern.

Push for the Refund

Both Mastercard and Visa have indicated they are working with merchants to find a solution to the increased number of chargebacks being applied. That is, they are there to help you in these types of cardholder disputes. They are also working to monitor situations where excessive – invalid- chargebacks are occurring.

Nevertheless, with a simple conversation, it is possible to encourage the cardholder to request a refund for their product rather than a chargeback. This is critical not just for the savings potential for merchants, but also because a large number of chargebacks could lead to a dispute monitoring program, which could mean higher costs and fees.

Times Are Difficult But Solutions Exist

If you are facing chargebacks and increasing disputes, reach out to your customers. Work out solutions, when possible, to reduce the number of chargebacks and work with Visa and Mastercard to learn more about their efforts to protect you.

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