www.elesclothing.co.uk
has this information for our wholesale customers to keep you in profit. What
are charge-backs?
What
is the rationale behind charge-backs?
Why
are charge-backs such a problem for businesses?
Methods
of protection?
One
of the most challenging aspects of operating a business is trying to ensure
that you not only attain a reasonable degree of security but that you also
maintain it at all times. This can be a task easier said than done and the reason
for this is that criminals are highly adept at exploiting flaws and loopholes
within the system for their own personal profit.
In
many cases, criminals will rely upon the fact that the business will simply
elect to write off the criminal losses that they have incurred during the
course of the trading activity year, whether this due to embarrassment or
reluctance to go through the legal system for the recovery of said debt.
However,
one of the major problems associated with charge-backs is that they do cost the
business money, and when left unchecked, can quickly prove to be a significant
drain upon already limited cash reserves.
What
are charge-backs?
In
essence, a chargeback is a request that will be submitted by a bank responsible
for the management of a consumer’s account for the return/refund of funds to
the consumer that the consumer has paid to the merchant.
The
reason that the consumer’s bank will be involved in the process is due to the
fact that charge-backs exclusively relate to situations where there has been a
transfer of funds from the consumer to the merchant via a credit card or
electronic means.
What
is the rationale behind charge-backs?
Charge-backs
were introduced specifically as a means of ensuring that the consumer would
have some degree of control and power over companies, meaning that in the event
that they suffered an inferior quality of service, or was the unwitting victim
of theft or fraud, they would not be held legally bound to the contract
otherwise entered into.
In
essence, charge-backs function on three primary levels:
They
serve as a potent means of advocating, preserving and enforcing the rights of
the average consumer, by providing them with a legitimate and legal means of
recourse in the event that there is unsatisfactory service at stake.
They
also serve as an incentive upon the corporate sector at large to ensure that
they adhere to basic standards of quality control, as well as ensuring that
they comply with the legislative obligations imposed upon them.
Charge-backs
also encourages companies that have been targeted by criminals such as identity
and credit card thieves to then be more proactive in actually reporting the
crime in question to the relevant authorities, and pursue the case as fully as
they can through the court system. This in turn helps to prevent the silent
victims of crime, whereby this “gentle extortion” is no longer permitted to
continue.
Why
are charge-backs such a problem for businesses?
Many
banks and other financial service providers (such as escrow funding agents,
brokers and online payment systems) will consider the volume and number of
charge-backs which the company has been made subject to as a measure of the
creditworthiness and credibility of the company as a whole.
In
essence, a company that is subject a high number of charge-backs (irrespective
of what the precise reasons or motivation maybe) will be, in the eyes of their
bank or financial service provider, an uncompetitive business entity which is
struggling to stay afloat within the market conditions.
In
the opinion of the bank, the business will either have a security screening
system which is too lax and ineffectual to properly prevent and deter identity
theft, or the customer service department is woefully negligent and failing to
implement the advice and feedback provided by customers.
All
of this then reinforces one salient issue: the business as a whole, will
struggle to remain solvent for much longer. Therefore, in the interests of both
serving as a check upon the power of the business, as well as a reliable
measurement of its ability to deal with external threats, banks and financial
service providers will levy a fee for the reporting of charge-backs.
The
actual manner in which the fees are levied will depend entirely upon the
internal policies of the service provider; some organisations will levy a flat
fee penalty for every single chargeback that is reported, others will permit a
certain number over a period of time before charging the fee.
To
further exacerbate an already difficult and challenging issue is the fact that
consumers who flag their account as being compromised by virtue of identity
theft or fraud are currently under absolutely no requirement legal or
otherwise, to disclose the circumstances of the case, As such, this means that
an unethical consumer can habitually abuse this privilege, thereby receiving a
refund.
There
is also the added pressure of the currency exchange rate fluctuation issue; a
quagmire that is not typically considered with the chargeback process that
takes place. This is of particular concern for international providers and
merchants, because in the event that the consumer should receive a different
value of money than what they paid (whether this be a surplus or shortfall) it
will always be the merchant who is required to compensate the full value of the
difference in the amounts.
Methods
of protection
One
of the trickiest aspects of limiting the effects of charge-backs is managing
the risk of alienating customers who have genuine grievances and concerns; who
have genuinely been the victim of identity theft/fraud.
In
the first instance, the merchant should ensure that they take out a suitable
chargeback insurance policy with a sufficient robust and extensive degree of
indemnification so as to protect the merchant from unscrupulous charges.
The
merchant may also wish to ensure that they block the IP address ranges of known
consumers who habitually sign up and exploit the system for personal profit.
The
merchant may also want to contemplate the introduction of a feedback policy,
whereby the release and refund of funds will be contingent upon the consumer
successfully completing a form explaining the circumstances and reason for the
chargeback request.
Don’t
let charge-backs be an unnecessary drain on the limited resources of your
company: be proactive in challenging them.
We
hope this helps you all,
Keep
selling and making money from buying wholesale women's wear
Team www.elesclothing.co.uk and
www.elesplusclothing.co.uk
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