Need help with Credit Card Authorization form to protect against chargebacks

We offer a license-based service where the client purchases 1 or multiple license and pays on a monthly-basis in order to continue using the service.

Currently we make them sign a credit card authorization which indicates:
-number of licenses being activated
-cost per license
-total monthly charge amount
-clearly states that we will automatically renew their service every month unless canceled by email or certified mail.

Now what happens is after they sign the form they decide to either:
-activate additional licenses a few days later through their web account (they can simply log in and purchase more licenses)
-cancel licenses throughout the month

For example, a single license costs $100/month, and the client purchases 3 licenses which comes out to $300. So on the CC form they indicate 3 for # of licenses, and $300 for total charge amount. Then maybe 10 days later they log into their admin and pay for 5 more licenses (which gets prorated based on # of days left in their billing cycle) so when this scenario occurs we currently contact them and ask them to send us an updated credit card authorization form with 8 for # of licenses, and $800 for total charge amount.

Sometimes we run into issues where the client gets auto-billed the following month since they never canceled and they decide to do a chargeback. Or they don’t need as many licenses as they did the previous month and decide to do a chargeback for however many licenses they don’t need. We win 99.9% of our chargebacks because we always have an updated credit card authorization form on file which indicates the amount they get charged for.

The problem we have with this process is that we need to send the client a new credit card authorization form every time they pay for additional licenses or cancel licenses and ask them to update it with the correct number of licenses and monthly charge amount. This way whenever we do get a chargeback we usually just send the bank a copy of the credit card authorization form and that’s all we need to do.

This has become way too much work because we are growing and it requires us to constantly chase after the client to get them to fax/email in an updated form. And if they don’t send it in a certain period of time we suspend their service until they do. However all of this is just a big mess of manual work because it irritates our clients as we are literally stopping their service even if we have given the plenty of warnings and at the same time it takes up too much time for which we do not have the resources for (manpower) to constantly contact them and ask them for an updated credit card form.

So my question and help that I need from you guys is the following:
What language or how can we protect ourselves in a way where they sign 1 single credit card authorization form where it authorizes us to use that credit card to pay for any/all licenses that they decide to activate. I know there are plenty of companies out ther where there is no credit card authorization form to sign and they rebill the customer unless they cancel, however in our case we are dealing with b2b customers and our average rebill amount is over $600/month so it’s not a small-ticket charge. Up until now we have done it our way to protect ourselves as much as possible, but I’d like to know if anyone has experience dealing with such a problem and what your process is like. Is it possible to have 1 single credit card authorization form which we then add to their account for them to log in and use to activate additional licenses at any time? Or are there any better ways of doing this? I would really appreciate any insight you guys might have on this

When we contacted Visa they would not give us a clear-cut answer and Amex told us that our credit card authorization form needs to indicate the exact amount that will be charged every month, which is not true because we fought a chargeback for Amex where we didn’t have the proper amount on the authorization form, but we still won after providing documentation. So more or less no one at Visa or Amex really wants to give an accurate answer because there doesn’t seem to be one ??

I appreciate any help/advice I can get! :slight_smile:

One company that specializes in software sales and allows CC authorization with further billing changes is Plimus. Get yourself a sandbox account and see for yourself if it fits.

I have personally created a tool to fight charge backs in the same manner that a true face to face point of sale system does with a physical signed receipt. The installation of an HTML module will lock the check out lane and force the customer making the sale to literally sign using a mouse. That signature is then stored on a secured server and available for the merchant to access 24-7.

Feel free to try it out at …
http://securedmark.com/demo.php

or contact me at ryan@d3-systems.com

Yes, install this checkout-blocking mouse drawing board and watch your conversion rate drop dead.

Yes, install this checkout-blocking mouse drawing board and watch your conversion rate drop dead.

Well Vassilevsky,
Sorry hear that that feed back. Right off the bat, our software that locks the form values is completely optional. If you (as the site owner) don’t want it, then you don’t have to use it. Secondly, I would argue that the only types of customers that don’t want to sign their are fraudulent anyway. So with that being said, you conversion rate will not be effected.

Vassilevsky, I would ask a question to you… how would you fight charge backs? Especially when you are selling digital products like mp3’s, software, or graphic art. That is exactly the type of users that get great value out of our product. In these situations, there is no tracking number, packing slip, of signature that a product was delivered. Which is why we developed this product, to aide merchants in those situations.

When you compare high quality signature applications available there are not many options. The only other real competitor is http://www.realsignature.com/ and they are specific to an ASP.Net environment and require an ASP.Net program to custom install the software into whatever system you have. Secured Mark, does not. We are completely platform independent and the installation can be done with only a very basic knowledge of HTML. We even support most general installations.

I just observed a person trying to make simple figures with a computer mouse. I seriously doubt this person would manage to draw anything that resembles their real-life signature. Unless, of course, it is a cross or a line or a dot. Even me, with my 15 years of torturing computers, won’t be able to do that.

Regarding fraud, our company sells software online, and our payment processing company does all the screening. If some order happens to be fraud, they send a notification. So far this works fine. No need to make customers be mouse wizards.

I just observed a person trying to make simple figures with a computer mouse. I seriously doubt this person would manage to draw anything that resembles their real-life signature. Unless, of course, it is a cross or a line or a dot. Even me, with my 15 years of torturing computers, won’t be able to do that.

Our goal is to create tools that mimic the real world processes that people use every day. All those pen devices you make digital signatures on the check out lane of your grocery store come out with the same “chicken scratch” looking signature that a mouse at times produces. However, just like those signatures both the real life digital signature and the online digital signature can both be used in cases of charge backs to provide evidence that most people at this point are currently going without. These are standard options for brick and mortar companies to combat these fraudulent charges for years. We are just providing those exact same features to an online shopping experience.

The future enhancements that we will be bringing is client IP logging, geo-tagging of that IP, and even looking up the IP against a list of internet service providers to give you (the merchant) the most information possible to combat a charge back.

Please contact us if you have any other feature would like to see, or that would aide you in these charge back cases.

Very difficult to answer since you have experienced speaking with the card associations and getting an answer out of them is worse than having a tooth pulled without novacaine.

Most of the time, your merchant account provider will help you with your chargeback, but ultimately it is up to the issuing bank since the money is coming from them and they will usually side with their customer.

You might consider selling your chargebacks (google / bing / yahoo selling your chargebacks for some information). One company is CRB Company.

It does sound like your business is growing, which is great and might be time to consider doing more with your electronic payment gateway, or rather look for one that you can take advantage of some (extra) features. Look at some gateways that might store the credit card number on the gateway’s secure website. Then require the customer to accept the new prices, etc. Depending on what the customer tells its issuing bank for the chargeback, you might be covered.

This kind of feature would definitely be interesting, however, what I was wondering: Is there already any processor/merchant service provider/merchant using this feature and if so, has it proven to be effective?

Furthermore, and what would be more interesting to know: Is it considered a valid tool by the issuing bank as a valid document to combat chargeback with reason code ‘fraud’?

Opinions please!

With more and more “touch screens”, I think this
digital signature will become more and more common
…it’s a good idea.