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Could Disputing Chargebacks Hurt Customer Loyalty?

Posted on 7 July, 2016

Chargebacks can fuel nightmares for businesses. Perhaps the business is at fault, but perhaps theft is to blame. Regardless of the root of the problem, the business needs to dispute the charge. Failing to dispute charges can mean lost money, product, and time, along with a not-so-happy merchant service provider.

However, some businesses resist arguing the chargeback, preferring instead to keep the customer happy. Is forgive and forget always a good idea? Does disputing chargebacks ultimately hurt customer loyalty?

To Dispute or Not Dispute

To Dispute or Not Dispute

Image via Flickr by sovietmole

Over the years, retailers have made customer loyalty a priority. Some businesses will take the blows from clients who take advantage of liberal return policies. Customers may also use chargebacks to get refunds while keeping the products they bought. Individual businesses may have subscribed to the idea that the client who argued the charge would consider the business to be a generous one and spread that word. Unfortunately, that word can also spread among those who aren’t always honest in business dealings.

Businesses still insist on handling the hits even though that process costs them money. Large retailers can absorb the losses, but small businesses may not. Large businesses have trained customers to expect this type of treatment. In turn, small businesses have to deal with customers who argue and threaten to take business elsewhere if they aren’t satisfied. And when customers aren’t satisfied, they can ask their credit card bank to begin refunds.

Dispute or Accept the Chargeback?

Small businesses can’t handle a lot of loss through refunds. Their best course of action is to dispute the chargeback. But some business owners may feel that arguing the chargeback could lead to lost sales in the future. After all, what business wants to earn a reputation for not working with customers when problems arise?

Business owners may have a good reason to dispute the chargeback. Avoiding the dispute may damage the relationship with the merchant service provider and could result in account closure. All of these issues are avoidable with a high-risk merchant account to avoid a break in servicing customers.

Additionally, some business owners may not have thought about needing high-risk merchant account services when opening their business processing accounts. Alternatively, the threat of a closed account is never a good one.

Don’t Worry About Hurting Customer Loyalty

Always argue an unfair chargeback and always resolve ones that are the fault of the business. This kind of customer service speaks for itself. While the internet can make slandering a business easy for a customer, businesses may also experience difficulties in reporting customers who tried to steal items by using chargebacks. Potential customers who look at online reviews for businesses might be able to decide when someone’s not telling the truth.

The best way to handle a chargeback is to work with the customer. Make the attempt to solve the problem by reaching out to the customer first. Find out the source of the problem and figure out whether and how both business and customer can solve the problem. This approach is the best way to create goodwill between the business and the customer. The problem may not get solved in a way to keep everyone happy, but the attempt is important to show that a business cares about a customer’s concern.

Unfortunately, some customers make purchases through fraudulent stealing. In these cases, business owners may have little to lose from both customer loyalty and reputation.

Accept That Not Every Chargeback Can Be Corrected

Naturally, customers can also promote a product they later find to be disappointing. They may feel the business or product has let them down, and they dispute the charge in response. As a business owner, you may reach out, but the customer chooses not to respond, and the business must dispute the charge.

Understandably, a business needs to protect its profitability along with its products and services. Appeasing a nonresponsive customer may not always change the outcome. Writing a chargeback off as a lost cause and disputing the charge could be the best course of action in this situation.

Will disputing a chargeback damage customer loyalty? Not always. The wise business owner needs to take many factors into consideration and handle disputes carefully on a case-by-case basis.

 

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