Chargebacks: The Silent Killer
If you sell your products online, you're vulnerable to "chargebacks" -- disputed credit card charges. Buyers usually win disputes. Visa and MasterCard have threatened fines and account termination for sellers whose chargebacks exceed either 1% of transactions or 2.5% of monthly sales. How can you thwart chargebacks? Here are some tips from the experts.
- Ship only to credit card billing addresses. California Computer Center's monthly chargebacks dropped from seven to three after it stopped shipping to third-party addresses. CEO Kaveh Jabeli believes the remaining chargebacks come not from scammers but from "frustrated" customers.
- Beware of certain shipping destinations. Jabeli says that the Nigerian city of Lagos is "known for fraud."
- Display strict return policies. Michael Lee, CEO of MSL Computers Inc., in College Point, N.Y., charges a 15% "restocking" fee for returns.
- Take American Express. Merchants report that fighting chargebacks with Visa and MasterCard can be nightmarish, since it means massaging two banks: yours and the customer's. AmEx, by contrast, handles disputes directly. "AmEx opens a case and acts as a mediator," notes Jabeli.
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