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Dealing with a chargeback on Lightspeed Payments

Occasionally, you may face a chargeback—a return of money to a customer when they question a transaction and ask their card-issuing bank to reverse it. Chargebacks can happen for quality issues, merchandise not received, duplicate processing, or other reasons.

If a customer who paid with Lightspeed Payments filed a chargeback against you, the Lightspeed Payments support team would contact you to discuss your options. You can either accept the chargeback or dispute it. To dispute the chargeback, collect evidence and send it to the issuing bank. The customer’s bank reviews the case and makes a decision. If the case is won, the disputed amount will be returned to you. If the case is lost, money will be returned to a customer. Regardless of the outcome, you will be charged a $15 fee per chargeback.

Chargeback reasons

Any chargeback is very likely to fall under one of the following reasons:

  • Authorization: An authorization was required but not obtained, or an authorization request received a Decline or Pickup response, and the transaction was completed anyway
  • Consumer Dispute: Chargebacks initiated by the cardholder in regards to product, service, or merchant issue (for example, shipped goods were not received).
  • Fraud: Fraudulent transactions
  • Processing Errors: Disputes including Duplicate Charge, Incorrect Charge Amount, and other similar situations

You can dispute a chargeback with evidence that supports the legitimacy of the transaction. For each of the reasons, you may need to provide specific evidence to win the dispute. The Lightspeed Payments support team will help you to understand a reason for chargeback and recommend what evidence to gather.

Disputing a chargeback

Before officially disputing a chargeback, try contacting your customer directly to discuss the matter and attempt to resolve the situation without banks getting involved. If you're able to arrive at an agreement with your client, have them send you an email confirming the agreement. If that doesn’t work, your next step can be disputing the chargeback.

To fight the chargeback on Lightspeed Payments:

  • After you receive an email from the Lightspeed Payments support team regarding the chargeback, gather evidence in support of the legitimacy of the transaction. Depending on the chargeback reason, evidence may vary. For example, signed delivery form, proof of undisputed transaction history, your company's return policies.
  • Supply evidence to the Lightspeed Payments support team.
  • Your evidence will be submitted to the appropriate parties on your behalf. Evidence must be submitted by the given deadline or you will automatically forfeit the dispute.
  • Once the customer’s bank (issuer) receives your evidence, it will review them.

If the evidence is compelling enough, you win the dispute and have the chargeback overturned. To help you win the dispute, the Lightspeed Payments support team will guide you with recommendations on what kind of evidence to supply. Some common examples include:

  • Transaction details, such as payment amount, transaction time, authorized amount, card brand, etc. They can be found in the Payment details on the Finance page
  • Proof that the transaction in dispute has already been refunded
  • Proof that your policies and terms and conditions were conveyed to the customer

Accepting a chargeback

While disputing a chargeback is a good idea if you have compelling evidence to submit, you may find a chargeback is filed against you that is difficult to contest, or you may decide that the amount in dispute is not worth the time and effort to fight for. In that case, you can opt to accept the chargeback and absorb the cost of the disputed funds. To do so, simply inform the Lightspeed Payments support agent in reply to an email regarding chargeback that you do not wish to dispute the chargeback. After that, they will communicate your decision to the relevant parties.

Best practices for a chargeback prevention

Lightspeed Payments has its own methods to detect fraud and prevent chargeback. For instance, comparing the billing and shipping addresses of a customer. In case of any suspicious customer, Lightspeed Payments will cancel the payment. Lightspeed will also deal with the banks and processors on your behalf, and advise you on how to resolve the issue.

To ensure your store is protected from fraud and risk of a chargeback, you can implement some techniques along with the Lightspeed Payments security methods. With the appropriate precautions, it's possible to reduce chargebacks considerably.

Here are some tips you can use to protect your online store.

To prevent fraud:

  • If you ask for a phone number, call it to verify customer identity
  • Email the address associated with the order to verify customer identity
  • Search for the email address or customer name online and social media
  • Check if multiple orders use different billing addresses for the same shipping address
  • Look up the billing address on Google
  • Review high value orders, or if there are multiple orders by the same person in a short time span

To minimize a risk of a chargeback:

  • Improve customer service by prominently displaying essential contact information
  • Replace IVR phone systems with 24/7 human support teams
  • Reply to emails promptly, and regularly check social media accounts
  • Provide clear terms of service and legal information
  • Fulfill cancellation requests quickly and completely
  • Make sure customers understand shipping rates
  • Ensure customers know when products will be shipped—and when they should be delivered
  • Use delivery confirmation for large purchases
  • Write accurate and detailed product descriptions
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