Chargeback Procedures and Fraud Prevention

Oct 14, 2013

A chargeback is the long-drawn-out version of a refund. The easiest way to deal with one is: Stay on top of a request from a customer and send them a refund. They have up to six months to ask for their money back before they go for the chargeback, but it just is so much simpler to take care of the situation before it gets out of hand.

It can take months

A chargeback can take a long time, and if you just take a few steps with the customer to verify why they want the refund, you can prevent it from growing into a monster of a nightmare.

  1. Did they forget they made the purchase?
  2. Was the product damaged?
  3. Did they just need something else that went with the product that wasn’t included?
  4. Do they need to send something back and get a new model or something different that will work better?

Once these are answered, you can better assist the customer with their endeavor. Take care of your customers and they will take care of you.

As for the chargeback

These are the procedures for the chargeback and how it happens.

• The cardholder will contact the bank that issued their card.

• The bank researches the customer’s request to see if it is valid.

• If the evidence is insufficient, it is denied and the cardholder has to pay the bill. The request ends right there.

• If the evidence is sufficient, the customer will be given a temporary refund, and the bank goes after the processing bank for the money it is owed.

• Now the merchant’s processing bank begins to research what has happened.

• If they decide it is valid, they will accept the charge.

• They will notify the merchant of the reversal going on and will take back the amount that the customer paid.

• The merchant either accepts the refund taken from them, or they produce documentation that it is not a valid issue.

• If the merchant’s bank decides that the documentation proves that the customer should not have a refund, then the customer is once again charged for the purchase.

• And of course, if it is not found sufficient enough evidence, then the merchant will have to lose that money. That is when the chargeback process completes itself.


Fraud prevention is a tough thing for everyone. It horrifies the customer when they have been ripped off and it terrorizes a business merchant. Even someone one as innocent as a collection agency merchant account can have the same issues. Here are a few steps to prevent fraud.

  1. Use an address verification system that will ask the customer to verify the address that goes with that credit card.
  2. Make certain that the three-digit code on the back matches the one the card has.
  3. Have an email verification system. Most of the new cards require an email upon signing up with their application.
  4. If you are suspicious of the purchase at all, then look up their IP address and match them to the customer.
  5. When in doubt, call the card owner.

Never be shy

Fraud and chargebacks are hard on a business. Take the time to work on these subjects before they become a problem and help prevent them the best you can.


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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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