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What small businesses need to know about chargeback fraud

On Behalf of | Jun 8, 2022 | Business Formation |

Considering their size, small businesses often find it challenging to compete with larger companies in Texas. Something that makes this struggle even harder for small businesses involves chargebacks. A chargeback takes place when one party disputes a transaction and requests their money back. Here are three important things to know about chargeback fraud involving small businesses.

It can cripple small businesses

It’s understandable to think that a chargeback wouldn’t cost a company much money. The business only pays back what the customer paid for, right? No, companies also often have to pay a separate fee every time a chargeback happens. If it keeps happening, excessive chargebacks can contribute to a business going under.

You can protect your company against chargeback fraud

You don’t have to feel powerless when chargeback fraud happens to your business. One of the best things to do in this situation is to respond fast to a chargeback request. Speak with the person who initiated the chargeback and find out why this happened. This isn’t a time to get angry with this customer. Instead, you’re contacting them simply for more details about their chargeback.

Track your shipments

Many companies ship out products to consumers. If you want to prevent chargeback fraud, consider using a program or service to accurately track your shipments. This type of information often helps businesses involved in small business disputes. Without this information, it could be hard to prove a customer actually received an item.

Chargeback fraud is a deceptive act that costs companies a lot of money, especially small businesses. You can help ensure your company isn’t a victim of chargeback fraud by keeping a close eye on every business transaction and tracking each product your company ships out.