A credit card chargeback occurs when a credit card holder disputes a charge on their account and requests a refund from the issuing bank.
Chargebacks are typically a result when the cardholder (your client) believes the goods or services they purchased were not as described, the dollar amount charged was different than what was agreed to, or if you don’t have permission from the cardholder to charge the card.
The issuing bank will then investigate the dispute and, if necessary, reverse the transaction and return the funds to the cardholder's account.
Why firms need to prevent chargebacks
Aside from the loss of time and client revenue, your firm will be responsible for paying a chargeback fee. This fee is $30 for every chargeback.
Additionally, a reputational hit could be a result of chargebacks. Financial institutions may consider disputes when deciding whether to approve a loan request or help your firm with payment processing in the future.
What to do when you receive a chargeback notice?
If you receive a Chargeback notice from your clients’ card-issuing bank, don’t worry! Follow these steps:
PracticePanther will attempt to notify you via email if a chargeback notice is received. Check your inbox and spam for any emails from compliance@practicepanther.com regarding a chargeback. Reply back to our email or contact us as soon as you receive the chargeback notice.
Your firm will be requested to respond to the card-issuing bank within 7-10 days. If you do not respond within the appropriate time window you will forfeit your opportunity to dispute the chargeback.
Obtain all documentation available to prove the charge is legitimate, including signed authorization forms, proof of payment communication, or documentation describing proof of work or services provided by your firm. Documentation may be redacted as necessary as long as the essential pieces of documentation are provided.
PantherPayments offers chargeback assistance at no additional cost and our team will work with you to collect and submit evidence in response to the chargeback.
Dispute your chargeback with confidence. If you maintain accurate records and a professional attitude with the card-issuing bank, it will reflect positively on your firm.
How to prevent credit card chargebacks
In the event of a client chargeback, the best defense is a good offense. These disputes are best handled by doing everything you can upfront to avoid them in the first place. Here are some tips:
Make your firm’s payment dispute process accessible and easy to understand
Have an FAQ page for your firm’s payment policies and systems
If clients can’t figure out how your firm processes payments, they might use a chargeback for an unwanted or mistaken purchase. Collect complaints or questions your clients consistently raise and provide answers on an FAQ page that’s easy for them to find.
Provide multiple ways for clients to reach you
Similar to an FAQ page, clients are more likely to dispute a charge if they find it difficult to reach you to answer their questions. Have email auto-responders and chatbots in place to provide 24/7 customer service on your website. Also ensure your contact forms, email, and phone number are displayed prominently.
Make the refund process easy
The easier a refund is to complete, the less likely a client will resort to a chargeback.
Get authorization and keep proof of work documentation
During the onboarding process, have your clients sign a credit card authorization form and always keep some proof of services rendered. If you don’t have a client and 3rd-party credit card authorization form in place, utilize our templates provided below to get started:
Credit Card Authorization Form (linked below)
3rd Party Credit Card Authorization Form (linked below)
Prioritize positive client experiences
Happy clients are less likely to request chargebacks. These strategies will go a long way in fostering stronger relationships with your clients:
Simplify the onboarding process
Be crystal clear from the start about what clients can expect from you and what they will be charged for in exchange.
Clearly communicate recurring payments
While recurring payments are convenient for firms and clients, they tend to have greater chargeback risks. Clearly communicate with your client when a charge hits their account and make it easy to adjust their recurring payment schedule if needed.
As part of our service, PracticePanther is available to support your firm in its efforts to win a chargeback dispute. We are also happy to review your chargeback process and make recommendations to avoid potential client dispute situations. Our goal is to help you and your clients have a positive payment experience.
Please note that the decision about who prevails on the chargeback is made by the credit card company and your bank, not the PracticePanther or PantherPayments team. It is also important to note that chargebacks and all related communication from the PantherPayments Compliance team are time-sensitive and require your prompt attention in order for our team to begin work on your behalf.
If you have any additional questions regarding chargebacks, please contact us at compliance@practicepanther.com.