Tales from the Chargeback Crypt (Volume I)
Happy Halloween, merchants! There's no better time of year to reflect on the things that scare us the most, and while there are few things more frightening than a chargeback ratio on an upward trend, most individual chargebacks aren't that scary—especially when you have the right evidence and know-how to fight them and win. With all of our combined years of experience in this industry, it's easy to feel like we've seen it all, but every now and then we encounter a chargeback that makes even our blood run cold.
Gather round the cauldron and we'll share with you our spookiest stories about the chargebacks that haunt our nightmares. Since it's Halloween, we'll be nice and give you a treat, too—tips on how to fight back if you ever get hit with a chargeback like these.
Read on...if you dare.
The Phantom Gas Tank
One night, a truck pulls into a lonely gas station on an old country road. The driver runs his card at the pump and fills his tank. Then he takes a gas canister out of the truck, runs his card again, and fills the canister up for the exact same amount of gas. The next day, he calls his bank, and the gas station is hit with a chargeback—the customer is claiming he was charged twice for a single fill-up.
Premeditated friendly fraud chargebacks like these always give us the willies. No anti-fraud tools will stop the original transaction, so there's no defense you can bring to bear except to fight the chargeback after the fact. Fortunately, like an incompetent Scooby Doo villain, these fraudsters are easy to unmask. You'd just need data from the gas pump or security camera footage. With reliable record keeping, you should be able to stop any double transaction schemes by providing proof that the customer received, and kept, the goods purchased with the so-called "duplicate" transactions.
The Vampire Gamer
Once, there was a mobile gaming company that produced a popular game about dragons and zombies fighting to rule over a wintry medieval kingdom. The game offered in-app purchases, including high-value loot boxes that sold for as much as $100 apiece.
One day a clan of vampires started playing the game, and made a terrible discovery: they could purchase the $100 loot boxes, ask their banks for a chargeback, and get their money back while keeping the loot. The gaming company wasn't tracking these chargebacks, so the vampires could repeat this cycle endlessly, draining the lifeblood out of the game by taking an unfair competitive advantage and depriving the company of its rightful revenue.
Like many victims of bloodsuckers, the gaming company made a tragic mistake by not tracking who was disputing their in-app purchases. If they had, they could have shut down the vampires' accounts the first time it happened. The moral of this story? Don't be afraid to deliver swift medieval justice when you find that a user is taking advantage of your in-app purchases. Your game is better off without them playing it!
The Cursed Diamond
This tale concerns a merchant who bought a diamond that had been cursed by a witch: whosoever attempted to sell this diamond would lose its value three times over. The merchant thought this sounded ridiculous, so she set the diamond in a ring and put it up for sale.
Sure enough, a fraudster bought the ring. He removed the diamond, put a fake stone in the setting, and sent it back to the merchant, requesting a refund. While the merchant was processing the refund, the fraudster called his bank and disputed the original transaction. The fraudster got the real diamond, a refund from the merchant, and a chargeback from his bank, all at the merchant's expense. The curse came to pass just as foretold!
You can't fight every monster on your own—a fraudster this brazen is a job for law enforcement. However, without careful chargeback monitoring, he could have been long gone before the merchant realized what had happened.
Bachelor/Bachelorette Party Brigadoon
It was the wildest, most debauched "destination party" any of the attendees had ever experienced. Champagne was flowing, adult entertainment was hired, huge bar tabs were run up...and the next day, it was like none of it had ever happened. We're not just talking amnesia from a drunken blackout—even the host's credit card balance showed no sign that the party had ever taken place. Did it really happen...?
Of course it did; the host just called his issuing bank the next day and claimed that somebody stole his card and ran up all the previous evening's charges having some kind of insane fraudster party. As with the Phantom Gas Tank, the impacted merchants are in a good position to fight these chargebacks, but it's now their responsibility to gather up all the sordid proof that the cardholder made all these charges himself.
Dr. Jekyll and Mr. Chargeback
A wealthy scientist by the name of Dr. Jekyll attended a high-profile fundraiser for a worthy charity. To the delight of everyone there, he made a huge donation that very night, charging it to his credit card. Unbeknownst to the partygoers, however, Dr. Jekyll had injected himself with a serum that caused a terrible transformation. Whenever he felt buyer's remorse, he would turn into Mr. Chargeback and call his bank to dispute the charge. Needless to say, the charity never got his donation.
Nonprofits can be in a difficult situation with donation chargebacks—is it always worth it to fight a chargeback from a donor who has given in the past and might do so again in the future? There's no easy answer, and that's why we think this is the most ghoulish chargeback of them all.
We hope you don't have too much trouble sleeping tonight after reading these. Just remember, chargebacks aren't so scary when you have an ally looking out for you. When you know how to fight chargebacks and what kind of evidence to use in your representment, there's no reason to be afraid of them.