 Chargebacks versus refunds and how to prevent both of them. Hey guys, this is JR Fisher. And one of the things that got me more than anything was when I got a chargeback. Oh my God, when I had to refund money. I mean, what we all want ultimately, right, is to sell somebody our products or services and them to be totally happy and then us move on to the next customer or sell them more of what we have. Unfortunately, sometimes we have chargebacks. Sometimes we have refunds. And you think about it, if you're selling a physical product and they send it back to you, that's gonna cost you money. And if you gotta send them out another product, that's gonna cost you money. So, and then the other bad part is chargeback. I'm gonna define what both these are in just a second. But more importantly, at the end of this video, you're gonna know how to prevent these things. It's gonna save you so much time, money, hassle, knowing how to prevent these things. But we wanna first define what the difference in a chargeback and a refund is. Okay, let's talk about refunds first. This is gonna blow your mind. According to a retail survey, returns, refunds have cost the retail industry $350 billion a year on average, $350 billion. Now, a brick and mortar store is around 9% refunds. But selling online, it's a 30% refund rate. 30%, it's unheard of, it's crazy. Can you imagine 30% refunds? Now, not all of us have 30% refunds. We don't have hardly any refunds, almost zero. But it's because of certain things we do. So, what I wanna do is share with you in this video the things you can do to prevent these refunds because they are costly, man. Refunds are very costly. And then we're gonna get to chargebacks and talk about those in just a second too. But what are the some of the reasons that people will refund? Well, maybe they don't get their product on time. Maybe they got sent the wrong product, okay? Maybe that product wasn't exactly as described on the website, so they're dissatisfied with the product. Maybe they got the product and it had defects or it was broken or it was damaged, something along those lines. Maybe in the case of clothing, it didn't fit right. The fit wasn't right. So, what we wanna do is we wanna kinda stamp out all these problems that are gonna cause these refunds. We don't want them to occur. We don't want refunds. We don't want them. I don't have them. I don't want them. I don't like refunds. Now, some of us have instituted refund policies. Within 14 days or 30 days or whatever it is, I'll give your money back based on certain criteria. If it's defective, if it's damaged, whatever it is. But some companies say no questions asked. I know I buy a lot from Amazon and I don't wanna tooth their horn. But I mean, I don't worry about buying anything from Amazon because I can get it to my door and never have to leave the house, look at it and say, no, I don't want it and send it right back and it's not a hassle. So depending on what your policy is, is gonna determine your refund. Now let's talk about charge backs for a second because charge backs are really a whole lot worse than what you think they are. Charge backs are very dangerous. So let's talk a second about the difference in a charge back and a refund. Now, a refund primarily is customers dissatisfied and they contact the seller and they say, hey, I want my money back or I want a replacement or something like that. But the actual transaction of the refund stays between the seller and the buyer, okay? So that's great. Now, a charge back is entirely different. A charge back is different because they don't necessarily contact the merchant. They may have contacted the merchant for a refund but what they do is they contact their bank, the issuing bank of their credit card, the payment form they used and they say, hey, I dispute this charge. I don't like this product or I never got the product. It never showed up. I never consumed the product and that's what's called a charge back. Now, if you have a lot of people doing this to your company, if your charge back rate is even over 1%, you are in risk of losing your merchant account. And what does that mean? That means you won't be able to take credit cards. You can't take payments. So it's super important that we don't get charge backs because charge backs can pretty much put us out of business. We don't want charge backs ever, ever, ever. Now, for the most part, I think charge backs are legitimate. I think people, when they're dissatisfied with a merchant they can't get satisfaction, they go to their bank but there are a lot of fraudulent ones now. A lot of people have figured out they can order a product, they can order a service, they can consume the product or service, they can go back to their credit card company and say, I never got this. I don't know what you're talking about. I never even purchased this item. I have no idea what they're talking about. And as soon as they do that, the bank, for the most part, is gonna say, okay, we'll send you out another credit card. Somebody must have stolen your credit card. We'll just charge back that amount to the seller. And we don't want that happening. So I think it's really important that you know who you're selling to. That is critical. And there are certain stop gaps that you can do, certain security measures you can do. We have those instilled in our website so that they kind of automatically do these things for us, but there are a lot of things that you can do too. Now, sometimes customers will contact you to get a refund and then immediately file a charge back. Now, you wanna make sure that you figure out what the status of that charge back is, because if you refund that customer and the issuing bank is gonna charge you back, you could have a double refund. We don't want this happening. But the best way to really prevent charge backs is to treat your customer right. And you know, some people are gonna commit fraud. They just are. I mean, we have fraud committed against us. But bottom line is, if somebody contacts you and they're dissatisfied, take care of them. Take care of them. Replace the product, refund their money, do whatever you have to do. It's gonna cost you a whole lot more if they go to their issuing bank and they want to do a charge back. It could cost you your merchant account. So initially, if they contact you, you're gonna wanna make them happy, whatever it takes to make them happy. Now, what I wanna do is walk you through some steps you can do to prevent refunds and charge backs. And if you do these steps, it's gonna help you a lot. So the first one, number one is make your contact information easily accessible, okay? On every one of your web pages, on every one of your invoices, whatever it is, make sure you have a phone number. You have an address. Make sure you answer the phone, okay? Like if you get a message in people, wow, people, they don't wanna wait. If they call you in the morning and you haven't called them back by the afternoon or evening, they may contact their bank the very next day and start a charge back. So if you're gonna put your contact information there, make sure you contact them back very quickly. And what I like to do is I like to respond to them in the medium that they responded to me. So if they send me an email, I'm gonna respond to them via email. If they call me on the phone, I'm gonna call them on the phone, okay? If they put in a support ticket, I'm gonna respond to them via that support ticket. I think a lot of people say, well, this guy called me but I sent him an email. Well, maybe he doesn't check his email very often. He called you because that's how he wanted to contact you. However they contact you is their form of contact and that's what you have to do. Number two, avoid disputes. Avoid disputes, what do I mean by this? If somebody's not happy, you gotta offer them a refund. You just gotta do it, okay? Now, we have certain stipulations for some of my courses so that people don't, you know, get access to the course and consume the entire course and then want their money back. And I've had people try that but very, very few. But upfront, you know, it's a whole lot easier just to give somebody a refund. It really is, it's a whole lot less headaches. I've seen people spend days or weeks on the phone arguing over 50 bucks or 100 bucks. And I'm like, goodness gracious, how much of your time have you wasted? Just give their money back and don't sell to them again. You know they're a problem customer. If you give their money back, they have no reason to file a charge back against you. So the easiest thing is just do a refund. The next thing, if you're selling from your website, is to have really good PCI compliance. What is PCI compliance? PCI compliance is forms that actually check for fraud. Because most charge backs are caused by fraud. Somebody has stolen somebody's credit card information. If you have good PCI compliance and you stay on top of that and you protect the consumer's data, you're going to have a whole lot less of that, okay? So you want to have really good compliance. And there are a lot of companies out there I won't, you know, I don't back any particular types of PCI compliance companies. But if you just Google PCI compliance, you'll find a lot of people that can help you out with that. Super important that you have that, especially if you sell online. Number four, send confirmation emails to all of your customers. When I say confirmation emails, when they buy something, send a confirmation that they actually bought it. And we have all this automated. We can do that through our system. And whatever type of website you have, you can probably do the same thing. Also send them an email when it ships out, okay? If they buy it today and it doesn't ship for two days, send them another email, you know, that it shipped. Send them another email to make sure they're happy with it. Stay on top of that particular order. And this can all be automated. And I won't get into it in this video, but all this stuff can be automated. If you send out these emails, you're keeping them in the loop. And as long as they're in the loop, they know what's going on, you're going to have a happy customer. Number five is provide a clear transaction description. So when they see that transaction come across on their credit card, make sure they see something they recognize, okay? The name of your company. If you've got ABC marketing and you're selling sporting goods and it's Joey's sporting goods, they're not going to know that ABC marketing is Joey's sporting goods. So make sure you make that clear in that description that appears on their statement. And you have control over that too. What appears on their statement? Make sure it makes sense. Make sure it is related to your company so they know who they bought from. Number six is provide excellent customer service. I can't beat this into the ground enough. If you take care of your customers, you're nice to your customers, you're friendly to your customers. And you're quick to reply to your customers. Like I said in the beginning, you instantly get back with it. If they call me at nine in the morning, probably by 9.15, 9.30, I'm going to call them back. It's not going to take long. That's why we also have a support ticket system, which I would recommend that you do, where they can put in a support ticket at your website. And that way you're going to get an email that says you have a support ticket and we can answer those support tickets very quickly. So that's very, very important too. Also have, within this excellent customer service, have a FAQ area of your website. Frequently asked questions. That can prevent a lot of people calling you and emailing you and complaining because they can get their answers on the website. It's right there for them. Number seven, contact customers. They have suspicious orders, okay? So a suspicious order would be if your average order is $150 and then tomorrow you get one for $8,000, I would probably call that customer. I would want to know who they are. We had a sale this morning for $59,000 and I know who the customer is and we talked to them on the phone and they buy from us on a regular basis. So that didn't raise any red flags for us. However, if you get a huge sale, don't be just super excited about it, call to confirm because that could be a sign of fraud. Number eight, get customer signatures on high dollar deliveries. If you have a high dollar delivery, you want to get customer signatures on those. I think that's super, super important. Number nine, stay away from trials. I saw these happen for years where somebody would get a trial of a product and then each month after that, you would just automatically start billing them. Make sure they opt in for that billing, okay? Make sure they opt in. They know they're getting charged every single month. Make sure it's easy for them to opt out if they want to. If somebody wants to opt out of our billing, we can do it within an hour, okay? So it's not a problem. It sends them a confirmation that they've been opted out. So if you're gonna do these monthly subscriptions, I would highly recommend that they opt in for the paid one. It doesn't just automatically convert over to the paid one. Number 10, use a high-quality payment gateway. We use authorized.net and I'm not recommending them or saying anything. They've been great, I would recommend them. But the point is there's a lot of good ones out there. If you have a high-compliance, PCI-compliant payment processor, you're gonna have a lot less problems than if you didn't, okay? So it's really important to do that. It's gonna cost a little bit more, it'll save you a lot of money, time and hassle. Those are my three things, money, time and hassle. I don't have money, time and hassle problems. So I hope you enjoyed this. I hope this helps you out. When you're selling online, you wanna protect yourself. You don't want refunds and you certainly don't want chargebacks ever, ever, ever. Those are the most terrible things. And if you ever lose your merchant account because you had too many chargebacks, the fees you're gonna pay to get another merchant account are gonna be astronomical, just ridiculous. So stay away from that. Take care of your customers. Do what I told you in these 10 steps and you're gonna have a whole lot less refunds and a whole lot less chargebacks. I hope you enjoyed this video and if you did, do me a favor, subscribe below, hit that button down there if it's red, click it, turn it gray, don't forget to ring the bell. Turn on all bell notifications so you're notified each and every time I go live, okay? We'll just actually say, hey, I'm here live or if I upload a video, we'll notify you of that too. I also have a free course below. It's a $97 course. It's a click and learn course. Click on it, get the course. You don't need a credit card. I appreciate you watching this video. Put your comments below. Tell me what you thought of it. If you've got some problems or you need some help, put that below too. I'll be happy to come through and help you out. Thank you so much for watching this video and I'll see you in the next one. Hey, thanks for watching my video. 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