Show & Tell – The Keys to Minimizing Chargebacks for Direct Sellers

credit card MG.jpgChargebacks and the direct selling industry often seem to go hand in hand, and at a minimum, they can lead to fines, higher rates and/or higher and longer term reserves which negatively impact profitability; or, if deemed excessive, they can lead to shut down of your merchant account.  However, in many cases chargebacks are completely avoidable or at least manageable if you do a little show and tell.

Show Your Pricing

One tactic that is prevalent today is the large, brightly colored “Sign-Up” or “Buy Now” button and the tiny, light gray text at the bottom of the web page that outlines the pricing terms.  While this approach may increase initial sales, (one school of thought is that many people use online bill pay and don’t regularly check their credit card bills anyway) be aware that it will likely also increase chargebacks because customers aren’t aware that they are entering a subscription agreement with ongoing monthly billing.

Once customers discover what has transpired, they feel deceived and are usually furious. While some may attempt to contact you first, others will immediately seek restitution via the credit card company.

One of the best ways to avoid chargebacks in this instance is to clearly display the total amount the customer will pay throughout the checkout process and if you have an option for a subscription service with automatic billing, be sure customers know which billing option they are choosing.

Show Your Terms

Any major terms and policies should be readily visible on your website. Such terms are typically a requirement of establishing a merchant account for a reason – the level of consumer complaints.  Some common terms and policies that should be readily visible are:

– Shipping and handling fees

– Return policy (return window, restocking fees, product buy back, etc.)

– Order cancellation policy

– Exchange policy

Although it can take time to develop policies that make sense for your business model, and these policies may evolve with experience, a good way to minimize chargebacks is to have clear, readily accessible policies on your website. At the very least, they can help in your dispute of chargebacks when they occur.

If you receive repeated chargebacks for the same issue, you should review your policies and their visibility.

Tell Your Customers What’s Happening

If you don’t have the inventory you thought you would, if you couldn’t ship when you thought you could or even if a problem arises that you didn’t anticipate and have no set policy for, it’s important to talk to your customers.  Few things anger customers more than unanswered phone calls and emails – no one likes to be ignored.

So, if there is a problem or misunderstanding, when customers contact you be sure to respond promptly (and instruct your distributors to do the same), and remember that it’s often not that a problem occurred, but how the business responds to the problem that ultimately defines the customer’s experience.

Wendy M. Yurgo

President & CEO, Metrics Global, Inc.

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