Capital One and MasterCard made a final ruling in my favor against Batteries Plus Bulbs after the merchant chose to go ahead and accept it, but where did Chargebacks come from?
I wrote yesterday that Capital One and MasterCard ruled in my favor in my dispute against Batteries Plus Bulbs for “service not rendered”, but where did Chargebacks come from?
Before the mid-1970s in the United States, credit cards existed, but they were not widely used or accepted.
Practically anyone who got your card or just the number could charge anything they wanted to it, and you wouldn’t know they did until you got the bill at the end of the month, and there was no way to object to any of it.
This led to massive fraud against cardholders at the time, because merchants would say your total came to one amount and then sneak other charges and fees onto your card later, and they’d slide it through a machine that used carbon paper to make a copy of the raised numbers that the cards back then had on them.
Sometimes more than one billing cycle would go by before people could even see a charge go on their cards, and so with anyone being able to copy and use their numbers, it was often impossible to tell which store had defrauded them or given their card information to scammers, even if they kept meticulous transaction records.
So credit cards were used by few people, for major purchases, and then it was uncommon to even carry them with you.
If you paid in cash, the most that could happen is the merchant cheated you, but the losses would be stopped at the amount of cash you handed them.
The Fair Credit Billing Act of 1974 changes everything.
The card industry wanted more people to accept their cards, and they knew people were hesitant to use them because the losses could be severe and potentially unlimited if they did, so they petitioned the Congress to create the Chargeback procedure in 1974, by law.
Since Chargebacks were created, cards have generally been safer than cash. If a thief steals your card, you dispute the transactions and you’re not liable for the fraud. If you had lost cash, you’d have lost all the cash.
Also, today it is very easy to see what transactions are coming through on your credit cards, in real time, and know immediately if you need to take action on a given item.
With cards, if a merchant bills you and then never sends you the goods, or the goods are shoddy or delivered in an unacceptable state, you have options, and can respond immediately, without going to court, to deal with petty disputes.
Today, credit cards are an excellent way to mitigate your losses as a consumer.
You need evidence, but it’s easier than going to court, and you can get your money back if you persist.
In my case against the Batteries Plus store in Gurnee, Illinois, I filed a Chargeback because I bought a service, the merchant performed it incompetently, and the end result was that the service I paid for was unusable. After a 6 week process of pursuing a Chargeback, the bank ruled for me and the merchant admitted that they couldn’t maintain their case that the “goods and services were delivered in good condition” anymore.
While the Chargeback is a weapon in the consumer’s arsenal that protects them from fraud and underhanded merchants, it must never be abused.
If you file many Chargebacks and the bank rules that they were without merit, they could start sanctioning you.
The reason why I’ve never had to file one before is that I know that they’re intended to be used as a last resort before you have to give up and sue somebody.
You should never go off half-cocked with these. You must be prepared to show the bank the proof.
In this case:
- I tried to get the merchant to repair the product and he made things worse.
- I then tried to ask for a refund to be initiated by the merchant, so that I could have my money back, and he wouldn’t be damaged by losing a Chargeback and dispute fees to his store, and he refused, and openly threatened and verbally abused me over the phone.
- I then had to incur additional expenses to make the product work right, including paying a Buick dealer to perform the exact same service.
- The Buick dealer wrote a letter for me to give to the bank stating that there was nothing wrong with my car, and it would not accept the programming that the Batteries Plus store attempted to perform on it because he did it wrong and sold incompatible parts.
I’ve had to assist in filing Chargebacks for an ex before, but those were different cases, so I already knew generally what the process was.
In his case,
- In 2016, when we lived in the South Shore neighborhood of Chicago, he was mugged. The mugger got away with his phone and his debit card. I filed a chargeback for approximately $46 that the man was able to charge to that card before I could freeze all of John’s accounts. John got his $46 back from the bank.
- John dropped his credit card and didn’t notice when he was paying for a coffee at the airport he worked at (Midway, the Dunkin’ Donuts on the Midway Orange Line station stop.). Later in the day, someone picked it up and went to eat at Uncle Julio’s Mexican Restaurant, and charged $156 to the card. I filed a “stolen credit card” dispute against the transaction and won after providing the bank with a police report where John stated how he lost the card.
- In 2017 (I think) we ordered a Nintendo Switch for John. I found a good price at B&H Photo in New York City. I asked for “signature required” on the invoice so that UPS couldn’t drop it off to be stolen on our doorstep in Roger’s Park. UPS ignored the “signature required” part and dropped it off. It got stolen. I asked B&H Photo to replace it, they told me no. I disputed it and B&H Photo sent Capital One a letter accusing John of keeping the Switch, lying in his statement that it had been stolen, and other things in their “re-presentment”. I appealed the re-presentment with evidence that UPS never required a signature, and Capital One ruled in favor of John. We then bought a Nintendo Switch at Target.
In both cases where I had to respond to a re-presentment, Batteries Plus Bulbs in Gurnee, Illinois in my case, and B&H Photo in New York City with John, my ex, the merchants replied by lying and slandering the consumer.
I don’t know if this is typical or not, but it happened with B&H Photo and Batteries Plus Bulbs.
I think what may be the case is that merchants hate Chargebacks, they just don’t want to lose because there are consequences for losing them that go way beyond being forced by the bank to refund the customer the amount of the dispute, and so merchants develop this “throw mud at the customer even if it’s lies and slander, and see what sticks”.
I’ve heard that merchants end up losing about 4 out of every 5 Chargeback cases. Some are obviously pissed and are willing to get downright nasty about it.
There are things that merchants can do if they want to head off Chargebacks at the pass.
Provide excellent customer service.
“The customer is always right.”
If you refund a small amount of money and go your separate ways when you know inside your heart that you’re wrong and can’t make the situation right, it will build rapport with your customers.
They will come back and spend more of their money at your store and tell their friends to go there because you were a big enough person to admit you were wrong and make them whole again.
On the other hand, if you scream at them, refuse to help, and say you’re keeping their money and don’t come back or you’ll have them charged with trespassing, then don’t be surprised when you get slapped with a Chargeback.
Then when they’re done with that, they’re going to get on all of the review Web sites and make sure everyone knows you’re a crook who cheated them and who doesn’t stand by your products and won’t give them their money back. Which would you rather have happen?
Listen to your customers when they tell you to do something.
If a customer says they want Signature Required on their delivery, then select Signature Required on the delivery.
There’s no use doing what B&H Photo did to us and complaining about it later when something goes missing and the customer can show where they requested Signature Required and also that you sent the shipment without it, and UPS can’t say what happened to it because you wanted to save a dollar or two when you shipped it.
In fact, if you’re smart, you’ll just make signature requirement on delivery mandatory when an order exceeds a threshold in dollar value beyond which you aren’t comfortable risking.
If you own a store that takes credit cards, train your cashiers and waiters to require Photo ID to accept the card, and document which ID it was in your files.
That way, if a credit card is stolen, you don’t have to eat the Chargeback later, and if a customer eats there, pays, and then tries to Chargeback and claim it wasn’t them, you can prove that they’re pulling something on the bank.
In none of my examples, were we at fault.
Had the merchants behaved better and developed and implemented simple effective policies to avoid dealing with pissed off customers and Chargebacks, none of the examples I’ve given would have ever happened.
But I suppose for Batteries Plus Bulbs and B&H Photo, they think it’s easy to be crooked and sloppy and then lie and defame their customers later, in a failed attempt to slime their way out of the resulting case.
And you know what? They lost. So it didn’t work.
The websites offering your business “Chargeback handling” want your money, so they’ll never give you great advice on how to stop it from happening. If they did, your business would have more money because you wouldn’t have so many Chargebacks, and you wouldn’t have to pay them to represent you after you screwed up.
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