September 17

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Chargebacks Can Be Unfair But Here’s How You Handle Them

By Jaimie VanSickle

September 17, 2020


Before we get started, let me just state this isn't a Virtual Assistant vs Client thing.  This is a business-to-business challenge.  We all face this same challenge as business owners regardless of which role in the business we work.  We're all in this together. I happen to be an Online Business Manager so this is my side of the story, but the advice on how to protect your business from these pesky chargebacks is important and relevant for all of us business owners.

What is a chargeback?

To keep it simple, it’s a reversal of a credit card payment from the bank.  Think of it like a forced refund that the consumer (your customer) has requested from their bank.

And guess what?  When they request it, they get their money back. Whether it’s fair or not.  That’s because chargebacks are designed to protect the consumer.  

The good news is, it doesn’t end there.  You can dispute it and many times even win them.  I have worked with chargebacks on behalf of my clients for years.  So I know how to approach the tricky situation.  

Well, it happened to me! 

After 10 years in business, I recently had my first chargeback. I can honestly say, I was ticked!  I was mostly ticked because it was unfair of the client to do this, as I knew for a 100% fact that it was indeed a fraudulent approach for this client to get their money back.  She was essentially stealing it back.

I had bent myself over backwards for this customer.  She was only paying for 2-hours a day for management support.  That is what her retainer was set for.  Yet she was consistently consuming 6-7 hours a day of my time.  She was texting me at 10:30 at night, and trying to track my every move I made throughout the day.  She wanted me to work weekends and holidays...and NONE of this was in our verbal agreement, and as an Online Business Manager, you can bet it never would’ve been...and at a 2-hour a day budget...uhm no.

This went on for 5 weeks.  On the 6th and final week I put in well over 30-hours for her, and I still wasn’t able to keep her happy.  I did this last and final week just to ensure that If I did DO EVERYTHING I could, would I be able to maintain this relationship and workload?  

That final week of putting in over 30-hours meant ¾ of her retainer was used in the first week of the month.  There was no way I could go on another month like this.  So I politely resigned with a super nice and fluffy email to her.

At first everything went well, I agreed to stay on the remainder of the month to get her through one last project, even though I knew I’d be eating my shorts on it.  She had clearly stated in an email that she agreed she was using too much time and didn’t have the budget for someone of my caliber.  

I was at first relieved that we could find a mutual agreement to off-board the relationship.  I wanted to ensure I did everything in my power to ensure a smooth transition and to break the relationship off on a good note.

But then she decided she wanted her money back.  Well, once I explained the terms and that she agreed upon them, aside from the fact she used her time up, she threatened to do a chargeback on me.  I knew that was going to yank the money that I worked VERY hard to earn, right out of my bank account, and that I was going to have to either accept it, or work hard to dispute it and hope I won the battle.

I’ll be honest. I didn’t handle the situation live on the spot very well.  I don’t even remember what I said, but it wasn’t nice.  Later that day, she emailed me her refund request.  I kindly offered her a $500 refund for the ¼ of her retainer she didn’t use.  She declined the offer, and chose to submit the chargeback, and a few days later that money was removed from my bank account, whether I liked it or not.

But I was a smart girl.  10 years experience in this business, and fighting other chargebacks on behalf of other clients, I had a few weapons in my arsenal to properly fight back. So I rolled up my sleeves and decided I was going to dispute her chargeback.  

You can protect yourself against chargebacks!

The process starts before the sale even happens.  Here’s how:

  1. Clearly state your sales terms, in very simple language, right on the invoice or order form.  This isn’t the long language version.  It’s simple, short, and sweet...and in their face on the order form so they can’t miss it.  In my case, I use Infusionsoft and put the terms “No refunds. Cancel at any time. No long-term commitment.” on the order form itself.
  2. Use your business email address for all conversations between you and the client. Only use their assigned email address for communications between you and the client’s front-facing customer communications.  Why? This chic is a great example why.  At first I didn’t understand why she was so adamant that I use her email addresses, but as soon as things went south, she kicked me out of that email address and I didn’t have access to the very same communications that I may have needed to dispute the chargeback. (This tells me she was probably experienced in issuing chargebacks.)  Of course, I knew enough to put certain key communications on my email servers so this couldn’t happen.
  3. Keep good records, and don’t be afraid to pull them.  When I had to submit my chargeback dispute, I had an entire “post-mortem report” of our relationship for the past 6-weeks. I was able to include screenshots of texts, and audible recordings from Voxer, and emails.  These screenshots proved that I was holding up my end of the bargain and that I was indeed performing my duties to the fullest extent while working relentless hours over and beyond what should’ve been expected.
  4. I used the term “friendly fraud” in my dispute letter with the merchant.  A little research can go a long way.  Friendly fraud is when someone purchases a product or a service and then purposely does a chargeback, knowing the process is in depth for the business, so they get their money back and get the service or item for free.  This was indeed what she was doing.
  5. I proved she had paid a prior invoice, so this was an agreed upon recurring transaction with her approval.  Even though she cleverly switched cards for her second payment to hide the first transaction from her merchant, it wasn’t enough.  You just gotta know what to look for, and what to report in the dispute.

Whew! I spent hours on the dispute process, writing up that post-mortem report, pulling all my backup, screenshots galore, and then writing up the dispute. This is why some people don’t fight chargebacks, especially if they’re small ones.  

Well, this wasn’t a small one and it was worth the fight.

Things I could’ve done better with.

Of course, having a contract never hurts.  For me, I don’t do contracts or agreements.  I mean, heck, this was my first official “chargeback” in 10 years.  It’s important to understand there’s always a cost of doing business.  My cost comes in here.  It’s really less of a cost and more of a risk, but in 10 years, I’ve only had this one hit.

However, the contract/agreement could’ve been all I needed and could’ve saved me about 2-weeks worth of work and 4-weeks worth of pacing the floors waiting for that money to come back to me.  But I find contracts can actually open the door towards many other problems, so I’m not keen on them.

Don't Underestimate The Power of Checkboxes

The other trick, especially if you’re selling a product and running Facebook ads to it, (because you get all sorts of crazies through that process), is having a checkbox on the order form that is not “pre-checked” that states the shorter version of terms with a link to the longer version of the terms.  This piece is 100% secure proof on chargebacks.  They cannot process their order without first selecting the checkbox that says they’ve read and agree upon the terms of this sale.  

This little checkbox is definitely important if you do lots of program or product sales, or membership sales.  It will cut down on your chargeback disputes by an immense amount since all you need to do is submit that little handy piece of information on the dispute and they can’t do anything more to fight it.

So how did it end for me?

I know the process is designed to protect the consumer and I know I was going to have to work diligently and timely to work this dispute to my favor.  I knew there was a big chance I’d lose the battle, but with all my clever experience and documentation, I knew I had a leg to stand on.

And believe it or not, I won the dispute.  My money was deposited back into my bank account after about 4 weeks. Boom!

I guess the proof was in the pudding.

Live and learn.  It’s all par for the course in business.

Have any more questions on chargebacks?  Need to discuss how to best fight yours?

Let’s talk!

About the author

Jaimie VanSickle

Jaimie VanSickle, owner of J VanSickle Company, has been serving business for over 10 years. Jaimie has worked with over hundreds of clients, and has managed some of the larger online business infrastructures within the online and digital marketing industry. Jaimie’s extraordinary talents in both process development and business operations management has led to her becoming known as one of the top consultants in her industry. Advanced knowledge in all facets of online businesses, coupled with superior technology skills, helps Jaimie and her team bring all the moving pieces together seamlessly to meet the needs of business owners from around the globe.

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