What Causes Debit Card Chargebacks?
When e-commerce transactions don’t go right, customers want recourse. But when refunds or exchanges aren’t possible, many customers turn to chargebacks.
While many merchants are familiar with credit card disputes, they may not realize that debit card transactions are just as vulnerable to these expensive, time-consuming chargebacks.
Whether a customer uses a debit or a credit card to make a purchase, the reasons they file chargebacks are often very similar. Here are six of the most common causes for debit card chargebacks – and practical steps merchants can take to avoid chargebacks altogether.
1. Merchandise Not Received
This chargeback occurs when a customer pays for an order with their debit card but claims the goods never arrived (e.g., the package is lost in the mail or is marked as delivered but wasn’t).
2. Item Not as Described
A customer makes a purchase based on the pictures and the description on a merchant’s website. But when the item arrives, the real thing doesn’t match the online description at all.
3. Incorrect Billing
The amount withdrawn from the debit card doesn’t match the invoiced amount. The merchant may have billed the customer the wrong amount, or technical issues between the bank and the merchant could have resulted in a case of double billing (also called duplicate processing).
4. Fraudulent Transactions
One of the most common reasons for chargebacks is because customers have been victims of fraud and their debit card has been used to rack up purchases without the cardholder’s authorization.
5. Refund Not Issued
Chargebacks may also happen when a customer returns a product for a credit or an exchange and the customer doesn’t receive either a refund to their account or a new item.
Problems during the authorization process can also lead to an account being charged — even if the transaction was declined and the order wasn’t accepted.
6. Transaction Not Recognized
Sometimes a customer doesn’t recognize a transaction based on the information their bank statement provides. In some cases, it’s because the company name on the statement differs from the name of the company with whom the customer did business. Because the customer sees an unfamiliar charge and company, they dispute the transaction.
These chargebacks can also happen when a customer orders an item that’s on backorder and isn’t charged for the item until it is in stock and ships. If there’s a long delay, the customer may forget they even placed the order, leading them to question the legitimacy of the transaction once it hits their statement.
Top Tips to Prevent Debit Card Chargebacks
While it’s not possible for merchants to eliminate their chargeback risk, it is possible for merchants to limit their exposure by following these best practices and processes.
- Eliminate confusion by including the company’s web address — rather than their name — to make it easier for debit card holders to recognize purchases.
- Review product descriptions and photos online and ensure they aren’t misleading or confusing customers.
- Adopt a flexible return and exchange policy that encourages customers to pursue merchant-issued refunds over forced chargebacks.
- Notify customers well in advance of any recurring charges that will be posted to their debit card.
- Make it easy for customers to cancel recurring subscriptions.
Another way merchants can avoid the time, hassle and expense of chargebacks is to implement the right fraud protection solution. The ClearSale solution includes robust tools to help you minimize the financial and reputational effects of fraud on your e-commerce business. It also offers a 100% chargeback guarantee that covers any transaction that turns out to be fraudulent and results in a chargeback.
Contact the fraud analysts at ClearSale today to see if our approach is right for your business!