New Bad Review? A Chargeback May Be on Its Way

Sydney VaccaroChargebacksLeave a Comment

New Bad Review. A Chargeback May Be on Its Way
Bad reviews and chargebacks can go hand-in-hand whenever a customer feels the customer service was bad, or the experience was not what they expected.

Every merchant, no matter how diligent, has hiccups at times. Those operational hiccups can result in a bad review and a chargeback. In this post, we will dive into what merchants can to prevent bad reviews and chargebacks—and what to do when they occur.

What is a Chargeback?

A chargeback or a dispute is when the card network demands a transaction reversal. This process is meant to serve as a form of consumer protection from fraudulent activity committed by both merchants and individuals. When a cardholder issues a dispute, they do so through their issuing bank. If the issuing bank thinks that the cardholder's claims are valid, they will approve the chargeback.

At this point, the transaction amount will be taken from the merchant account and refunded back to the customer. The only way merchants can gain the amount back is by responding to the cardholder's claims with compelling evidence in a dispute response.

There are four reasons a merchant receives a dispute:

  • The merchant made a mistake, such as charging the customer twice, or the cardholder never receiving the product. In these situations, the cardholder has a valid reason to dispute the charge.
  • Chargeback fraud is when a customer maliciously disputes a charge in an attempt to get their money back from the transaction, while still retaining the goods or services they received.
  • Friendly fraud is when a cardholder mistakenly disputes a charge. This could stem from an unclear merchant descriptor, a family member making unknown purchases, or simple forgetfulness.
  • True fraud is when a fraudster gets a hold of credit card credentials and successfully uses them at a merchant's site or store. The actual cardholder disputes the fraudulent purchase, their card account is closed, and a new card is issued to them. Because of Zero Liability Guarantees, merchants are responsible for the fraud loss because they accepted the fraudulent purchase.

How Do Bad Reviews and Chargeback Correlate?

If a customer has a bad experience with your customer service or product, they may look to other channels to get their money back. For example, let's say that a customer made a purchase and did not review your return policy. They waited past the time limit to return the product and now cannot get a refund. The customer reaches out to customer service, who reminds them of the return policy. The customer service representative states they are unable to give the customer a refund.

The customer feels wronged, even though the merchant did nothing wrong. So the customer takes out their frustration with a bad review that says the customer service was "unhelpful" and then turns to their issuing bank to dispute the purchase in an attempt to get their money back.

Bad reviews and chargebacks can go hand-in-hand whenever a customer feels the customer service was bad, or the experience was not what they expected.

How to Prevent Bad Reviews and Chargebacks

Preventing bad reviews and chargebacks are equally important. Objection Co shared these bad review statistics:

  • Ninety percent of consumers read online reviews before visiting a business.
  • Ninety-seven percent of shoppers say reviews influence their buying decisions.
  • Nearly two-thirds of people see online search as the most trusted source of information about businesses – that's a higher level of trust than any other online or offline source.

Disputes can also be highly damaging to merchants.

  • Chargebacks were a $31 billion problem in 2017, and merchants bore nearly two-thirds of the cost.
  • For every dollar disputed, merchants incur $1.50 more in costs.
  • Merchants need to keep their dispute ratio below 1%, or they are at risk of losing their merchant account.

To prevent both bad reviews and customer disputes, merchants should have exceptional customer service that is engaging and easy to access. An essential piece of customer service is making sure your customers know you are happy to work out any problem. Not only will this give customers the confidence to shop with you, but it will also avoid a customer turning to bad reviews or the dispute process. Merchants can make their customer service accessible by:

  • Putting your customer service contact information wherever possible. Put it on every email, on the footer of your website, send designated emails, have an online chat available, do everything you can to make it evident that your customer service is there to help before customers have a problem.
  • Communicate clearly and continually with your customers from the get-go. Make sure your return policy, terms of service, and how to get a hold of your customer service is communicated at check out. Then reinforce the message that your customer service is here and happy to help with your other communications.
  • Put your customer service phone number or email into your merchant descriptor. If a customer has any confusion about the purchase or may question if it is fraudulent, putting the contact information encourages them to reach out to you instead of the bank.
  • Actively monitor all channels that customers may try to reach out to your customer service. Now this includes closely monitoring your social media pages. Comments and direct message is a way customers reach out, expecting to have customer service follow up with them. If they are ignored on a platform they see you are actively posting on the customer may feel like your customer service completely disregarded their problem.

If you can take care of any problem a customer has with great customer service, they won't feel a need to write a bad review or dispute a charge.

What to Do When You Receive a Bad Review

Curtis Boyd is the CEO of Objection Co explains two ways merchants can handle bad reviews:

Stay Proactive and Respond to Bad Reviews

All merchants will receive negative reviews. It should be an expected part of business. Boyd suggests merchants should "remain proactive in the feedback process by taking the time to respond to bad reviews authentically and quickly." Customers want a human and genuine response. Bad reviews can be an opportunity to repair a customer relationship and create a good impact on future customers when they know you are proactively taking care of issues.

Go Through a Review Removal Process

Removing negative reviews is a necessary part of controlling your online business reputation. Boyd advises, "The removal process isn't always warranted, but it's always worth looking into whether removal is an option. If a review violates the platform's Terms of Service, content guidelines, or community standards, you can submit a removal request. The process varies depending on the platform, but the end result is the same: a better aggregate and a better reputation for your business."

What to Do When You Receive a Chargeback?

When a merchant receives a dispute, they have two options. The first is to accept the chargeback, which tells the parties involved that the merchant is not going to respond to the dispute. By accepting the dispute, the merchant will not have a chance to regain the transaction amount. The other option is for merchants to create a dispute response document to disprove the customer's claims by presenting compelling evidence.

Each chargeback will have a reason code attached to it. The reason code will explain to the merchant what the cardholder's claims are and what evidence is needed in the dispute response to regain the transaction amount. Responses are the most powerful when they contain compelling evidence as directed by the specific card network rules and regulations. Every dispute is unique, which means that necessary compelling evidence can change based on the reason code, type of transaction, your industry, and other factors.

Leave a Reply

Your email address will not be published. Required fields are marked *