What are Chargebacks?
A chargeback is a refund payment initiated by either the merchant or the cardholder’s issuing bank, to the cardholder after he/she disputes the transaction or simply returns the purchased product or service.
A chargeback can be obtained by both debit and credit card holders. Regulation E of the Electronic Fund Transfer Act governs the chargeback reversals for debit card holders and Regulation Z of the Truth in Lending Act governs the reversals for credit card holders.
According to Federal Law, card issuers have to offer a chargeback to the cardholder within 60 days from the date of billing. And for cardholders, disputing a possible chargeback can be a strenuous task, as it necessitates their time to dispute the transaction with customer support and potentially provide evidence of purchase.
Let us look at four reasons why the health and fitness industry loses out to chargebacks.
Reasons why the Health and Fitness Industry lose out to chargebacks
Poor Customer service
Having an efficient customer service process is essential for the health and fitness industry. Chargebacks are usually caused by poor customer service due to unmet expectations for refund policy, dissatisfaction with the services and difficulty contacting the right person. Customers may have difficulties getting help from customer service representatives due to long wait times or unhelpful responses.
Having customer support representatives who are knowledgeable and friendly will go a long way towards mitigating customer frustrations, and helping to address any issues that may lead to chargebacks. In addition, providing fast and friendly responses to customer concerns will help build customer loyalty. By optimizing customer service in this way, merchants can dramatically decrease the number of chargebacks they experience.
Unauthorized mail or Telephone transactions
Unauthorized mail or telephone transactions can lead to chargebacks because of their unusual lack of concrete evidence to disprove the claim, which enables customers to dispute the charge.
To ensure the success of any phone orders you accept, it is essential to acquire as much relevant information from your customer. Specifically, ask for their address and CVV2 credit card number.
Invalid Credit Card/Credit Card Processing Issues
Ensure that your system is set up to refuse any credit cards which have expired or become invalid. Also, credit card processing issues, such as incorrectly entered information or unaddressed charge disputes, can often lead to chargebacks. A common processing issue is when a merchant uses an erroneous transaction type and mistakenly bills a credit payment as an expense. Instead of providing repayment, they end up overcharging their customers for a second time.
Friendly fraud, also known as chargeback fraud, occurs when a customer identifies a purchase on their statement that was supposedly unauthorized. However, it is likely the cardholder or someone else in their household made the transaction. This triggers an investigation into the charges and initiates the chargeback process.
Data from the 2022 Chargeback field report states that two-thirds of merchants experienced a rise in friendly fraud cases.
The health and fitness industry has been hit hard by chargebacks related to friendly fraud. To avoid costly chargebacks, have contracts that are both succinct and unambiguous. Additionally, make sure your staff is educated on the terms of each agreement with clients to guarantee there won’t be any unwanted surprises. Last but not least, verify every contract was completed appropriately by matching credit cards and signatures before accepting payment for services rendered.
A Solution to your Chargeback Disputes
A key way for fitness businesses to ensure being a step ahead and successful in winning back chargebacks is to hire a company that specializes in fixing chargebacks. Choosing First Credit Services – An omnichannel debt collection agency providing the largest failed payment recovery, engagement and retention services, late-stage collections and backoffice outsourcing services for the health and fitness industry, is a winning move for your business. Not only does it lower your labor costs and remove the hassle of finding, training, and keeping staff but also allows your core team to stay focused on what matters most – growth!
With over 25 years of experience in catering to the needs of the fitness industry, we provide services and solutions that are tailored-made to your specific requirements.
Through our backoffice services, we offer you Chargeback Dispute Resolution which manages all your chargeback disputes and makes sure that you never miss a deadline. Moreover, hiring us will increase your chances to win the dispute.
If you’re running a health and fitness business and are facing difficulty in dealing with chargeback responses, you know whom to hire. Click here to know more about us.