Although retrieval requests and chargebacks are a natural part of credit card transaction processing, this doesn't mean there's nothing you can do to mitigate their numbers. We're here to help by providing a list of preventative measures you can take as a Lightspeed Retailer to help reduce their occurrence.

Why is it important to take preventative action?

Your chargeback rate (or chargebacks-to-transactions ratio) is typically calculated with the following equation:

The equation can vary slightly from one card network to another, but every card network will track this metric in some form or another. If your chargeback rate begins to exceed a certain threshold (which, again, can vary slightly from one card network to another), you're in danger of being considered a high risk merchant. If your chargeback rate is not brought back under the threshold, card networks may cease to do business with you, making it impossible to accept card transactions.

Preventative measures

There is no foolproof method to prevent all chargebacks, but we've compiled a list of some good practices to get into.

Card present transactions

• Use a clear billing descriptor.
  • A billing descriptor is the information that appears next to a charge from your shop on your customer's bank statement. Your billing descriptor will be established by the Lightspeed Payments team to be descriptive and easily recognizable, preventing confusion.
• Do not complete the transaction if the authorization request was declined.
  • If you receive a decline, do not repeat the authorization request. A not-authorized transaction can easily return as a chargeback.
• Print or email informative sales receipts.
  • Make sure your sales receipt clearly identifies your store, location, phone number, and what items were purchased. This will help jog a customer's memory of their purchase and provide them with a means of contacting you if they have questions.
• Clearly disclose your policies and terms and conditions.
  • Ensure that your sale/return policies and terms and conditions are not only readily available and actively communicated, but easy to understand and cooperate with. So long as working with you as a merchant to resolve a situation is easier than filing a chargeback, customers are unlikely to seek a resolution without you.
• Require proof of identification or signatures from your customers
  
  • By confirming a customer's identity and/or requiring a signature when a customer picks up their layaway, special order or shipment/in-store pickup, you'll have evidence to prove that a sale is legitimate. If you check a piece of identification, do not keep that information once their identity is confirmed. As for signatures, collect them on individual slips for each order rather than collecting them on a single list for all orders. This prevents customers or fraudsters from seeing the names and orders of other customers while they sign.
• If delivery of a product is delayed, advise your customer in writing.
  • Offer an alternate product or to cancel the transaction if need be.
• Train your employees.
  • Make sure your employees understand and consistently practice the preventative measures above that apply to them.

Card not present transactions

Be wary of:

• multiple transaction attempts coming from the same IP address but different cards.
  • A fraudster could be testing various cards to determine which work.
    
• buyers who appear overly concerned about shipping details and shipping speed.
  • Fraudsters worry about shipping because they fear the goods will not leave the warehouse before the real cardholder detects the fraudulent transaction on their card.
    
• orders that are repetitive.
  • For example, many purchases for the same item, but in various colours or sizes. The items are perhaps being purchased for resale. 
    
• transactions with the same shipping address, but different cards.
  • Even though this is not sophisticated fraud, fraudsters may still attempt this tactic. Always check shipping addresses and card addresses as a rule.
    
• transactions using the same card for different shipping addresses.
  • This approach is similar to the one above, except that a fraudster may have shared a card number or may be shipping to various locations.
    
• several orders using slightly different credit card numbers.
  • A fraudster may have purchased a list of credit card numbers and is systematically testing them.
    
• transactions attempting progressively smaller dollar amounts.
  • Issuing banks have sophisticated fraud controls. Some of these controls will decline suspicious transactions above certain thresholds. A fraudster may try to purchase an item at a lower dollar amount in an effort to figure out what these thresholds are.
    
• a customer who has problems providing personal information.
  • Especially on phone orders, this should raise suspicion.
    
• multiple cards being used on the same order.
  • This is also similar to the scenarios above where a fraudster might be trying to determine which cards work and what their purchase limits are.
    
• larger than expected orders.
  • Trust your instincts if something feels wrong.
    
• cards with the incorrect expiry date.
  • If a transaction repeatedly has different and wrong expiration dates, a fraudster might be trying to guess this number. This is a clear indication that they do not have the original card in their possession.
    
• customers who are indifferent to shipping prices.
  • A fraudster is primarily concerned with shipping goods as fast as possible and trying to avoid detection, thus high shipping prices do not deter them (they’re not paying for them anyway).
    
• in-store pick up orders.
  • By confirming a customer's identity and/or requiring a signature when a customer comes in-store to pick up their order, you'll have evidence to prove that a sale is legitimate. If you check a piece of identification, do not keep that information once their identity is confirmed. As for signatures, collect them on individual slips for each order rather than collecting them on a single list for all orders. This prevents customers or fraudsters from seeing the names and orders of other customers while they sign.
• customers who are indifferent to company policies.
  • A fraudster does not care about refund limits, or exchange or return policies.
    

If you're concerned about your chargeback rate and have already carried out the preventative measures outlined above, please don't hesitate to contact our Lightspeed Payments support team to discuss your options and what else might be done to reduce the number of chargebacks being filed against you.