There are lots of money making ideas floating about – especially since the invention of the internet. There are new and improved ways to earn a buck or two springing up every day.
It doesn’t matter if you are selling eBooks on your blog or used clothing on eBay, there is one very important thing you need to know about.
Do you know what chargebacks are? Probably not. How about this phrase – credit card refund? That sounds more familiar, right? Maybe you have even filed one yourself.
A chargeback is a form of consumer protection. It is a near fail-proof escape route for anyone who makes purchases with a credit card. It was originally intended as a safety precaution and a way to encourage trust in the credit card process. If cardholders didn’t want to follow through with their transactions, they could file for a refund – a chargeback.
Customers file a chargeback for a variety of reasons. They might be displeased with the customer service they received when attempting a product return. The product or service might not live up to their expectations. Or, the transaction might have been made without the cardholder’s authorization.
What it Means to You
Chargebacks are profit stealers. If you are selling something and accept credit cards as a form of payment, you are a potential victim.
Each time a chargeback is filed, you will lose out on…
- The original transaction fee
- The purchased item or service (few people are courteous enough to return the item)
- The profit from the sale
- An additional $25-$100 in chargeback fees
What to do about Chargebacks
Unless you are operating a full-fledged business, you probably won’t have to worry about chargebacks resulting from shoddy customer service. That leaves just two things to watch out for.
First, make sure all your products and services are top-notch. Don’t charge money for an eBook you won’t bother reading yourself. Don’t try to sell stuff on eBay that is a notch above trash. If you only provide the best, customers won’t be able to find anything to complain about.
Second, be on the watch for fraud. Friendly fraud is, unfortunately, becoming more and more popular. And even worse, this type of fraud is nearly impossible to detect. An example of friendly fraud is customers who received the product or service, but claim otherwise. They steal from you and unless you have proof that the product arrived in one piece, there isn’t much you can do.
Real, honest-to-goodness fraud is much easier to detect. And if you can detect it, you can prevent it. Check Visa’s website. The company has a very thorough list of possible indicators of fraud. Be on the lookout out for suspicious behavior. Also note the additional tools that can help block potentially fraudulent orders.
It doesn’t matter what money making scheme you have embarked on. Any person who sells goods or services needs to be aware of chargebacks. Taking the necessary steps to prevent them is the only way to hang onto your hard-earned money.