Keep Your Money—Avoid Card Disputes (Part 2)

Tuesday, April 28, 2015


Every day the Heartland Dispute Department talks with merchants who want to know why there are chargebacks on their account. Many aren’t informed about the card brands’ rules and regulations or the risks associated with incorrectly running a transaction. In Part 1, we discussed best practices for card-present transactions. Here are card-not-present tips to help safeguard your hard-earned dollars from the risk of disputes.

Best practices for card-not-present transactions:

  • Obtain a valid authorization for every transaction.
  • If you receive a decline, require another form of payment.
  • Obtain positive AVS and CVV matches for every transaction.
  • Ship only to the address that received a positive AVS match when the transaction was authorized.
  • Require a signature on delivery for products shipped.
  • Face-to-face deliveries require imprint and signature. Example: Pizza delivery.

Always ensure, at a minimum, you collect the following details from your customer:

  • The card account number
  • The name as it appears on the card
  • The card expiration date as it appears on the card
  • The cardholder’s statement address
  • Note how the transaction was processed – phone, mail or electronic commerce
    • If you are taking an order over the telephone:
      • Record the time and date of your conversation
      • Make a note of the details of the conversation
    • If you are taking an order through the mail or via a fax:
      • Obtain a signature on the order form
      • Always retain a copy of the written order
    • Obtain proof of delivery whenever possible

Refund and credit policies

  • Mail order—Telephone Order—For proper disclosure, your refund and credit policies may be mailed, emailed or faxed to the cardholder. To complete the sale, the cardholder should sign and return the disclosure statement to you.
  • Internet orders—Your website must communicate its refund policy to the cardholder and require the cardholder to select a “click-to-accept” or other affirmative button to acknowledge the policy.
  • Terms and conditions of the purchase must be displayed on the same screen view as the checkout screen that presents the total purchase amount, or within the sequence of website pages the cardholder accesses during the checkout process.

Refunds: Issue a refund to only the same card originally charged.

  • Do not process a refund on a different card number
  • Do not refund with cash
  • Do not issue a check as a refund

Internet orders with certain characteristics can be tip-offs to possible fraud:

  • Larger-than-normal orders
  • Orders that include several varieties of the same item
  • Orders made up of “big-ticket” items
  • “Rush” or “overnight” shipping
  • Shipping outside of the merchant’s country

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