The transaction process typically occurs without a hitch. It comes immediately after the checkout process, which is when customers provide the information needed for the business to fulfill the order. The money required for the purchase flows from the customer’s bank account, or whichever payment method they used, to the merchant. In exchange, the merchant sends the ordered items to the customer.

However, this agreement between buyer and seller could be negated if the former is not satisfied with the products or services they receive. What flows one way could easily flow in the other direction. In short, customers have the power to submit requests to their bank for their purchase to be canceled. If that request is granted, the money is taken away from the merchant and returned from whence it came.

This series of actions is called a chargeback, and it could happen to anyone. Online business owners need to think long and hard about how they treat their customers and how they could lower the chances of chargebacks. Otherwise, any profits they make could just as easily slip from their grasp. Here is some information on different measures you can take to prevent chargebacks.


Chargeback Cause: Failure to Recognize Your Business Name

One of the main causes for chargebacks is a simple misunderstanding. When people review their credit or debit card statements, they see a running list of details concerning their history of transactions. For each transaction, they can see the amount that was exchanged, the date that it occurred, and the name of the recipient. Those first two bits of information are based on hard numbers and therefore more clear-cut. This leaves the last bit as the one with the most potential for causing confusion.

When would-be entrepreneurs register a business name, they may decide to register more than one. They always get a formal name, which includes terminology related to the business structure — “Inc.” and “LLC” are examples. Many also file for a “Doing Business As” name, or DBA for short. It allows them to legally conduct business under a catchier, more on-brand title. The formal and DBA names might be quite different from each other. That does not usually affect the customer except in certain situations, such as the name that appears beside a transaction.

If people do not recognize something that appears on their card statement, they tend to become concerned about the veracity of the transaction. If they simply cannot remember after some effort, they may call their bank first. Finally, if they do not receive a satisfying answer, they may request that they cancel the transaction. Anything unusual related to one’s bank account is fertile ground for fear of invasion and theft, especially when it comes to internet activity.

Prevention Measure: Use a Recognizable Name

One solution to this issue would be to adjust the name that appears on the statement. You could work with your payment processors to make sure that the transaction details will include the more common name for the business. Alternatively, or in addition to this, you could also do more to promote the name of your site. This could mean including it in the URL (if it is not already there), or implementing “sticky” website navigation so that the logo never leaves the customers’ sight. It might even mean just choosing a less generic business name. In short, you must make sure that people will remember your store.


Chargeback Cause: Customers Cannot Reach You

Of course, there are other potential reasons that customers may request a chargeback. Sometimes, confusion over transactions is not about customers forgetting the business name, but customers not understanding their purchase. For example, they may not realize the full price they paid for the order until they check their banking statement. They will have questions.

Alternatively, the chargeback request may be completely intentional. The customer might find themselves dissatisfied with the product after it arrives on their doorstep. It may be damaged, deficient, or in poorer quality than they had hoped. On that note, they may be more disgruntled about the services. The shipment may take too long for their liking, or it might arrive when it is already too late.

Either way, your customers might decide that before contacting their bank, they should first try to reach you. You would be wise not to give up this opportunity. Contacting you like this is an extra action that they would not need to do if they were already inclined to request a chargeback. They are giving you a chance to address their concerns. They might not give you another.

Prevention Measure: Provide Easily Accessible Contact Information

To that end, you should make sure that the contact information for your business is easy for anyone to access. Just about every eCommerce store has a section on their website for this. The page should list any email addresses, phone numbers, and social media accounts that customers can use to communicate with a representative of the business. Beyond simply having that page, you should include the link where visitors can quickly find it, including the header and a sticky menu.

Moreover, your replies should embody the best customer service your business can muster. You or your representative should respond with a genuine answer to their questions and, as much as possible, a solution to their problems. It should also be prompt — you may want to consider investing resources into 24/7 support. All this would demonstrate to customers that the business cares about them and their concerns. That alone can go a long way toward winning them over.

The whole concept of excellent service exists for emergencies like this. It is not only money that is at stake, but also your reputation. Doing it well can ensure that the ordering process goes through smoothly, which makes everyone happy. Doing it poorly can lose you the purchase and the customer’s loyalty — and increase the possibility of a negative review driving even more people away.


Chargeback Cause: Flat-Out Fraud

With the aforementioned common causes of chargebacks, there is usually little in the way of malice. Instead, customers usually want clarity, or a smooth ordering process, or just some help. The business must be willing to help them with any issues they may have, as well as take care of issues on their own end. Communication over chargebacks is just human beings on both ends trying to reach an understanding.

The same cannot be said for the most common cause of chargebacks: fraud. Scammers may make purchases using another person’s credit card information and take the items for themselves. On top of that, you will likely also experience customers who make a purchase, then deny they ever did and request a chargeback. In either case, they are trying to get something without having to really pay for it.

Naturally, people cannot request their money back at will. Banks usually side with the customer in the beginning because of consumer protection laws, but they have to investigate claims before permitting chargebacks. That is why each case receives a reason code, which shows the information on why a customer is trying to cancel the payment. Even then, you still risk missing out on profits for fraudulent reasons.

Prevention Measure: Verify Card Information and Hold onto Order Information

Luckily for eCommerce store owners, they do not have to accept credit card fraud lying down. For starters, you can be vigorous in implanting credit card verification steps during the ordering process. Orders should not be able to be completed without checking that the cards are not expired or nonexistent. This seems obvious, but this sloppy mistake is more common than you would expect.

One telltale sign of fraud is a billing address that is different from a mailing address. Fraudsters with stolen cards want their orders to reach their home rather than the home of the card’s owner. If you notice this, consider calling the bank that issued the card in question. While there are plenty of valid and legal reasons someone might use different addresses, it may be better to be safe than sorry.

Lastly, you need to keep records of each and every transaction. They should include any relevant information about the purchase, including the data that the customer entered during the checkout process. If anyone makes a claim that you know to be untrue, you can defend yourself by wielding these records as hard, undeniable proof.


Chargebacks can happen for many different reasons. Much of the time, the requests come from scammers and would-be thieves. As frustrating as that may be, you cannot lose sight of the very real possibility that the request may be born of genuine misunderstandings. You have to do what you can, not just to protect your business, but to help your customers.

That may be the best part of the different measures we discussed here for preventing chargebacks. Many of the actions you can take may have the additional effect of improving customer satisfaction and providing a more convenient shopping experience.