Adult businesses are some of the fastest-growing and most popular on the internet. All of this consumer attention can mean big profits for you as an entrepreneur; however, it also has led to an unwanted phenomenon: rising chargeback rates. While you can never totally eliminate these forced refunds from your life, there are strategies to implement that will provide you with chargeback protection and minimize their negative effects.

What are chargebacks?

Chargebacks occur when customers go to their credit card company to dispute one of your charges, requesting a refund without first attempting to resolve the situation with you, the merchant. Although every business must contend with a small amount of these chargebacks, their numbers are disproportionately high in the adult industry for several reasons. They include the following.

• Your clients may be embarrassed about their purchase or regret it because it was impulsive, hoping that a refund will erase the fact that it ever happened in the first place.
• The customer may not recognize the name of your store or website on their credit card statement, prompting them to file a dispute.
• Your client may have received and benefited from a service only to claim that it did not happen as expected or was of poor quality. All of this is often done to receive a full refund while still benefiting from the product or service.

It probably is not difficult to imagine any or all of these scenarios occurring frequently with the clients you serve in your adult business.

Minimizing the effects of chargebacks.

Because you operate in the adult entertainment sector, you are automatically deemed by payment processing providers to be a high-risk business. The likelihood that you experience a higher chargeback rate is one of several reasons why you will automatically be given this designation. As a result, you should immediately apply for a high-risk merchant account — even if you are initially accepted by a conventional lender. That’s because there is a very strong chance that the so-called “traditional” company will learn of the nature of your business and will then close down your account, causing a costly business interruption and a blow to your reputation.

The truth is that even adult industry merchant account providers prefer to do business with merchants who keep their chargeback rates as low as possible. To that end, the following actions can lessen the impact of these customer refunds.

• Make clarity and transparency your highest priorities. Since many chargebacks stem from confusion, do your best to specify all of your procedures, policies and site terms and conditions. That should include thorough descriptions of shipping, returns, and exchanges and should indicate the precise steps customers should take if an issue arises.
• Furnish clear descriptions of your products and services. When customers know exactly what to expect, they will be less likely to file a dispute later.
• Use technology to your advantage. Software provided by your high risk merchant account company should give you modern ways to verify and authenticate each of your transactions. Your processing company might even be using artificial intelligence (AI) to screen each transaction in real time, using established patterns and trends to look for anomalies and alerting you so that you can investigate further. It is far easier to intercept and prevent fraud than it is to deal with the financial and intangible consequences of a chargeback.
• Use discreet packaging to ship products to customers. Much of your merchandise may be very personal, and buyers are more likely to file a chargeback if they believe you have not taken their need for confidentiality seriously.
• Focus on providing prompt, effective and empathetic customer service. As soon as you are alerted to a client’s dissatisfaction or concern, act promptly to address it. Frustration only grows over time, so the faster you can nip it in the bud the less likely the buyer will be to take the next step by mounting a chargeback procedure.
• Email confirmations and reminders. To reduce the chances of customer confusion, remain in touch with them after their purchase has been completed. Remind them of your shipping policies and approximate time frames and reinforce the fact that their satisfaction is your priority. It often helps to also include your contact details in this email so that there is no doubt about how they can get in touch with you if necessary.
• Harness the power of analytics to examine your chargeback history. This will enable you to find patterns and commonalities, giving you the opportunity to make changes in your business practices.

The internet and the numerous security technologies that are constantly being modified to protect customers are making it possible for adult entertainment entrepreneurs to make higher profits than ever. Doing all you can to lower your chargeback rates will save you money and time and could even result in lower fees from your merchant account provider. Begin to implement the above strategies today, and you are sure to reap the rewards tomorrow.