With all of the consumer fraud and protection technologies put into place, merchants often feel like their interests are neglected when it comes to credit card chargebacks. When a consumer falls victim to credit card fraud, the merchant is usually the one who suffers. After all, consumers are well protected from credit card fraud. The more merchants know about credit card processing procedures, the better protected they are against credit card chargebacks. The good news is that there are many times when a chargeback isn't the fault of the merchant.

Preventative Measures

There are many preventative measures merchants can take to avoid credit card chargebacks:

• Deposit payments in a timely fashion.
• Ensure all printed receipts are legible by replacing printer paper, ribbons, and cartridges regularly.
• During payment processing, hold on to the physical credit/debit card and examine it. Verify that the expiration date is accurate and compare the signature on the back of the card to the one on the customer-signed receipt.
• Never accept expired credit cards.
• Always get a magnetic stripe reading of credit cards and make sure the cardholder signs for his or her purchase.
• Never process a transaction where the authorization request was denied.
• Don't repeat processing on a declined request.
• Don't enter transactions multiple times.
• Disclose refund and return policies at the time of purchase.
• Rapidly respond to any retrieval requests.
• Use the Address Verification Service, Card Verification Value, Card Verification Value 2, and Card Identification for card-not-present transactions before accepting payment.

Preventing Disputes

Although not all credit card chargebacks can be avoided, merchants can take extra precaution to avoid chargeback notices from a credit card processing company. These precautions include:

• Making sure the company name and information is stated on a customer's bank statement, as a common reason for credit card chargebacks is that the customer doesn't recognize the name printed on his or her bank statement—even if it is legitimate
• Providing visible customer service contact information to customers so they can contact the merchant directly for any disputes
• Placing fraudulent notices and policies on their websites to discourage fraudulent cardholders from using their sites
• Specifying shipping, return, and refund policies on merchant receipts in-store and on their website to avoid any confusion
• Never shipping to an address that does not correspond with the card's billing address
• Sending a confirmation email for all online and over-the-phone transactions

Understand Reason Codes

Merchants are provided with rejection reasons when they try to process a card. They should familiarize themselves with the reason behind the rejection and work to resolve it. Common reason codes for credit card chargebacks include:

• Duplicate Processing (Reason Code 34/82): The transaction has already been submitted once. Enter payment transactions once and avoid entering them again.
• No Authorization (Reason Code 08): The issuer did not authorize the transaction. Show the denial to the customer and never process a transaction without authorization.
• Cardholder Doesn't Recognize the Transaction (Reason Code 75/63): The cardholder doesn't recognize the merchant's name on his or her bank statement. Avoid this by using a recognizable name. Present proof of purchase and the customer signature to avoid a credit card chargeback.
• Fraudulent Transaction (Reason Code 37/UA): The cardholder has disputed the charge and stated it is a fraudulent charge. Provide a copy of any signed receipts and include proof the card was present at the time of purchase to dispute back. Always obtain a copy of the card and signature for disputes.
• Fraudulent Card-Not-Present Transaction (Reason Code 61/UA30): The card was used fraudulently over the phone or online. Always follow the proper card-not-present procedures to avoid this, and never use a card that doesn't meet verification specifications.
• Card Issuer Doesn't Have Requested Copy (Reason Code 79/01/TF): The retrieval request wasn't fulfilled in time. Merchants run the risk of credit card chargebacks if they do not respond to retrieval requests in a timely manner.

It's important for merchants to be vigilant and proactive to protect their companies from credit card chargebacks. They can minimize extra processing fees and credit card fraud if they take the necessary preventative measures to avoid disputes.