How well does Store Policy hold up in regards to Chargebacks?
Im a new member here to sitepoint. I've had an online store for 5 years offering skin care and spa products. I rarely get chargebacks and I have found lots of info on this site already that has helped.
My store policy states the following:
- We will replace or refund defective products within 30 days + reimburse shipping.
- Unwanted products return/echange within 30 days. Shipping not refunded.
- We do not accept returns on opened (seal is broken) or used skin/body care products including cosmetics, as well as opened CDs, DVDs or videos. Item must be returned in original packaging and in resale condition.
There is more policy, but I've kept to the point. Policy is on the website, email confirmation receipt and packing slip receipt. Its also on the page where a customer requests an RA#.
So, most customers in 5 years do not seem to have a problem with this policy. If a customer purchases an item and contacts us being dissatisfied we generally try to accomodate them in some way (store credit) in an effort to put off chargebacks. However I have a recent situation where a woman spent $200 on two skin care kits. After 3 weeks of receipt she requests a return authorization on our site stating item was unused. An RA# was issued. We receive the first kit back opened and half-used. We contact the customer immediately and state we cannot accept the return. We do offer a partial credit for another product she expressed interest. However, she states that she acknowledges the policy on the receipt, but doesn't like it. Doesn't want a credit. We return the products to her.
She then does a chargeback. She's received and used the products. She recognizes our store policy, but doesn't accept it. This seems like customer fraud to me. Our policy is not uncommon and I have seen many big skin care retailers using it too.
My question is what are my chances of the chargeback being reversed? Does store policy actually mean something or will the customer basically get away with anything? Obviously Im upset since I lost $200 on the chargeback and another $150 in products, shipping and chargeback fee. As a small business $350 is a lot to lose. And I'm concerned its setting a precedent for future customers who do not contact us first and just do a chargeback.
Having a customer-centric refund policy is helpful with chargebacks as it makes customers more likely to work with you rather then filing a chargeback. However, if they do files a chargeback your policy is given little to no consideration. If you are an ecommerce business and a chargeback is filed against your business you are almost guaranteed to lose.
Basically thats what I was afraid of...some customers will never be satisfied with anything and some are out to manipulate the chargeback system. Therefore, it doesn't really matter what my policy is about. The fraud will happen regardless. It seems to be a growing trend of customer induced fraud. Isn't there any support for the e-merchant. I'm quite sure this woman wouldn't get away with this behavior with a physical store. If the policy is on the receipt its a contract.
Actually, the reason why retail stores don't have chargebacks issues is due to the circumstances under which the transaction is conducted. If a retailer is able to swipe a credit card through their terminal and have the customer sign the receipt they are protected against chargebacks and here's why. It is assumed that at the time of purchase the these four conditions are all true:
1) The merchant is present
2) The customer is present
3) The merchandise is present
4) Both the merchant and customer are satisfied
It is assumed that if there was a problem the customer would not allow the purchase to be completed. By allowing their credit card to swiped and providing a signature the customer is saying they are satisfied with their purchase and the circumstances under which it occurred. As a result, they cannot claim any of the following:
1) The did not make the purchase
2) The merchandise was unsatisfactory
They can still claim fraud but the merchant is still protected against this (the card issuing bank eats the cost for this).
Internet merchants cannot swipe a credit card or get a customer signature. As a result they can offer any verification about the transaction. Thus no protection.
Not with Visa and MasterCard although it probably would with American Express. With Visa and MasterCard the only time you get real protection is if you have a card swipe or use Verified By Visa/MasterCard SecureCode.