There are a myriad of reasons why consumers ask for credit card chargebacks (sometimes called "charge backs"). Some of these reasons are legitimate; for example, a person may detect a credit charge error. Or perhaps a customer dissatisfied with a product or service they've paid for may ask for chargeback services. However, a good number of return credit card charges are due to fraud.

As a business owner, there's a lot you can do to control chargebacks. Some of these things result from just doing good business. Other things may be less obvious but are easy to implement. When thinking about these business strategies, consider the following areas:

1. The main reasons for credit card charge backs

2. Measures that may be taken to prevent credit card chargebacks

3. Charge back solutions services

Action Steps
The best contacts and resources to help you get it done

Know the top reasons for credit card chargebacks

The top four reasons for chargebacks are, according to Vantage Card Services, stolen cards (24.7%), counterfeit cards (23.1%), MOTO fraud (mail order/telephone order), Internet fraud (20.8%) and lost cards (14.9%). Skimming (theft of credit card numbers during a legitimate transaction) and identity theft account for most counterfeit cards, so the major reasons for all chargebacks are fraud.

I recommend: Companies like CDGcommerce and National Merchant Bancard provide online merchant services, including fraud protection and chargeback defense.

Learn easy-to-follow chargeback solutions

Authorize every card and if you receive a 'Call' message during the process, call your authorization center. Always obtain the cardholder's signature and ID, and be sure to disclose your return and refund policies during the transaction. Obtain proof of the card by swiping it or imprinting it on the receipt. And do be certain the transaction details are readable on the receipt, including the cardholder's signature, sale amount and your merchant name and location.

I recommend: PreCharge and Key Marketing Enterprises are two of many businesses designed to provide fraud screening for your mortar and brick business transactions.

Purchase preventative charge back services

There are additional ways to prevent fraud, which not only protect you but also encourage your customers to make purchases with confidence. For example, the major credit card companies offer programs you can use on your business' website that make fraud less likely. You can also hire a company to provide fraud screening for your business' transactions.

I recommend: All the major credit card companies offer fraud programs; the version from MasterCard is called SecureCode and the one at Visa is "Verified by Visa." To search a database of customers who may abuse chargeback services, check out Chargeback Protection.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  One reason consumers ask for chargebacks is they don't recognize the merchant's name on their credit card statement. It's simple enough to ensure the business name showing up on a customer's bill is the same as the sign over your door or on your website's home page. Save yourself some frustration and expense by attending to this small detail.

If you accept credit cards, there's a chance customers will dispute charges that appear on their bill. When that happens, the credit card issuer will take back any payment made to you while the investigation is underway. If the credit card company decides against you, the amount will be permanently charged back.

Customers commonly dispute charges when they have been victims of fraud, meaning someone else obtained their credit card and placed an order with it. To limit this risk, you should take steps to verify that the person making the charges is authorized to do so.

But buyers also dispute charges when they are not satisfied with the goods or services received, or simply don't recognize the charge when they view their bill.

To limit the risk of chargebacks, you should:

1. Verify all credit card transactions.
2. Ask for photo identification.
3. Have a clear return policy.

Action Steps
The best contacts and resources to help you get it done

Make sure each charge is authorized

If you accept cards at a brick-and-mortar location, compare the signature on the back to the signed sales receipt and check to make sure the card hasn't expired. Get an authorization number before completing the sale. Electronic verification systems, based on information in the card's magnetic strip, allow you to confirm the card's validity at the time of purchase. If you accept cards online or over the telephone, use an address verification service.

I recommend: There are many credit card services companies that will verify transactions. BuyerZone, EasyStoreCreator, CardService International and PreCharge can help you locate solutions.

Make sure customers know who you are

If a buyer purchased an item under one business name, and something else entirely appears on the statement (a parent company, for example), a chargeback could follow. People are often confused about charges when information on the statement does not match what they remember.

I recommend: Make sure credit card companies use the same brand name for your business that customers do. Also, consider having a toll-free 800 number appear next to your company name in the billing statement, so customers can call you with questions, rather than dispute the charges with the credit card company. You can obtain an 800 number from a host of companies, including AT&T and Sprint.

Spell out your return policy

If you have a clear return policy, customers will be more likely to deal with you on returns rather than complain to their credit card companies.

I recommend: Include return instructions on the invoice and on your company's Web site. "The Return Policy: The Forgotten Fundamental of Online Sales" will give you guidance on setting up a policy.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Don't accept expired cards.
• •  Don't charge customers until you have delivered goods.
• •  Keep proof of delivery.
• •  Respond promptly to inquiries by credit card companies.

Credit card chargebacks are intended to protect consumers. Federal Reserve Regulation Z offers reversal rights to credit card holders in the United States of America. Credit card chargebacks allow individuals to get their money back when they pay for a service and are ultimately not given the service for which they had already paid. Credit card chargebacks are considered to be the last line of defense for credit card holders against those merchants who would take advantage of them. There are a number of reasons for requesting a credit card chargeback, including technical errors, clerical errors, quality complaints and fraud.

Still, when applying for credit card chargebacks, applicants need to be aware of credit card chargebacks laws and regulations in order to ensure that they approach the venture in a legal manner. To do so, businesses should:

1. Understand how federal laws govern credit card chargebacks.

2. Follow proper protocol and steps regarding credit card chargebacks laws and regulations in order to legally obtain credit card chargebacks.

3. Make sure to meet the criteria necessary to ensure the return of your money on your credit card.

Action Steps
The best contacts and resources to help you get it done

Educate yourself on the federal laws regulating credit card chargebacks

Federal laws are designed to protect all citizens in the country. There are a number of federal laws designed to assist consumers with credit card chargebacks.

I recommend: MyBusinessTravel.com discusses credit card chargebacks laws and regulations as governed by the federal government of the United States of America. The US federal government ruled that a person or business' credit card company is required to provide a chargeback to their consumers in certain situations, primarily in the event that the client makes a purchase with their credit card for a particular service, which fails to be delivered. DATCP.com discusses how, as credit card holders, individuals have certain state and federal rights which dictate the ability to receive a refund, granted in the form of credit card chargebacks, in certain financial situations.

Proceed in a legal manner to try to obtain your credit card chargebacks

It is important to try to obtain credit card chargebacks in a legal manner. Businesses need to pay careful attention to credit card chargebacks laws and regulations in order to ensure that they are within their rights to receive credit card chargebacks and refunds.

I recommend: Wisconsin.gov clearly illustrates how one must proceed when trying to legally obtain credit card chargebacks and remain within the defined credit card chargebacks laws and regulations. For example, a written request must be submitted to the credit card company within 60 days of a disputed charge showing up on one's bill. State.NY.US offers information on proceeding with a claim for credit card chargebacks, even if you initially were denied your request for a chargeback.

Meet the criteria for receiving refunds as defined by credit card chargebacks laws and regulations

The credit card chargebacks laws and regulations also spell out the criteria which needs to be met by individuals and businesses who want to pursue credit card chargebacks. It is important to make sure these criteria are met prior to beginning an application for credit card chargebacks.

I recommend: There are certain criteria which must be met in order to be able to legally request credit card chargebacks. For example, CA.gov discusses how credit card chargebacks must be in excess of fifty dollars and the transaction cannot have taken place with a merchant more than 100 miles from one's home. MrsMicah.com also discusses how individuals and businesses must allow the merchant up to 30 days to refund you the money, prior to continuing your attempt to file for credit card chargebacks.