A chargeback occurs when money is returned to a customer after they dispute a credit card charge. Fraudulent chargebacks happen when a card is used without a customer’s authorization.
Non-fraudulent ones stem from a canceled delivery, an undelivered order, or if there was a problem with the order.
As a restaurateur, you need to learn how to avoid chargebacks, ideally by preventing them from happening in the first place.
1. Prevent fraudulent transactions
One of the best forms of chargeback protection involves preventing fraudulent transactions since these are often the source of disputes. Start by remembering crucial details about your best customers.
When you do, it’s easier to spot anomalies in a well-known person’s information, including incorrect physical or email addresses. Making it a policy to require a signature upon delivery also helps to ensure that the order is received by the right customer.
If someone wants a large number of high-priced foods, has asked for mass quantities, or has many duplicate items, these are often red flags that suggest fraud.
2. Prevent non-fraudulent transactions
Frequently, non-fraudulent chargebacks are filed due to factors such as confusion or frustration, many of which can be addressed and minimized by a conscientious restaurant owner.
For instance, someone might want their money back if they saw a blurry or confusing photo of a product that had no attached description. When you can show a clear picture of your menu items that is backed by a thorough verbal description, the potential for confusion is much reduced.
For every food purchase, provide a receipt. This could be paper or digital. Possessing this proof of payment gives you a record of the transaction that can be used later should a dispute be filed.
Furnishing excellent customer service is another effective anti-chargeback measure. When your team is friendly, responsive, and prompt, they can head off many complaints or questions that would most likely have flowered into chargebacks if left unattended.
3. Manage fraudulent transactions
No matter how careful you are, the occasional fraudster will circumvent your security measures at some point. Guard against it by using strong security precautions, including CVV verification, Address Verification System (AVS), and fraud detection software from your merchant provider.
Look for irregularities in orders and addresses, and demand proof of delivery or pickup. If an order is dropped off contactless, require photo evidence. For all transactions, keep scrupulous records.
Combatting chargebacks starts with instituting preventive measures. However, when they do inevitably occur, your best bet is to use your full arsenal of weapons to protect your business and its reputation.
With a combination of strong prevention before chargebacks occur and deliberate mitigation when they do, you can safeguard your operations.
