Top 5 Ways Contractors Can Reduce Chargeback Risk

A chargeback occurs when a customer files a complaint with their credit or debit card provider. This usually happens when a consumer sees what they perceive to be fraudulent transactions on their statement, or feel they are being charged for services that were not delivered to their satisfaction. Some consumers may be too quick to jump to the chargeback as a way of resolving a dispute, and others may be confused by what they were billed for and by whom.

The card issuer investigates complaints, and will charge back the amount of the original transaction, along with a fee. However, during the course of an investigation, the card issuer may find that the charges were legitimate, and no chargeback will occur. The funds involved will usually be held, pending the outcome of the investigation.

With all this in mind, it is in the best interest of all merchants to comply with the needs of the complaint investigator in a timely manner. During this inquiry, there may be information requests from the acquiring bank. A merchant who is prepared for such incidents will be able to respond with facts and documents that back up those facts, and hopefully wrap the complaint up quickly. The following five tips will help generate great documentation and lead the way towards resolving in the merchant’s favor.

• Swipe cards whenever possible, and take imprints when it isn't – A swiped card is assurance that the card is in the hands of the cardholder. If communication to the authorization network is not possible, the merchant should try and get an imprint of the card using a knucklebuster device. Wireless terminals are excellent to allow swiping from remote sites.
• Detailed invoices or contract- the more detailed the better. When trying to prove that services were performed goods delivered, merchants should make sure that the scope of work has been signed off on by the customer, using as much detail as is possible and relevant.
• Signatures on everything – Each signed item goes a long way to building a case. For example, getting a signature on a receipt and then foregoing getting a future change order signed could lead to disputes down the road.
• Getting a final sign off - Have the customer sign off that everything was done as described and to the customer’s satisfaction – perhaps even take some pictures of your work.
• Make sure that the contract has all of the billing information not just the job site – This can clear up those situations where charges can be unclear on a consumer statement. By having all the details on file, it can lead to funds being released faster.