Chargebacks / Fraud

1. What is a chargeback?

A chargeback occurs when a cardholder disputes a charge on his or her credit card, and the card issuing bank, not ProPay, reverses the transaction. The money is removed from your ProPay Account and is credited back to the cardholder. As the merchant, you are given the opportunity to issue a formal rebuttal to the chargeback by providing any documentation that supports the original transaction. The card issuing bank then reviews the documentation and decides whether or not to honor the original transaction. If it is decided that it was a valid transaction the funds are returned to your ProPay Account, otherwise they remain in cardholder’s account.

If a chargeback is issued against one of your transactions, ProPay's Risk Management Department will contact you with details on how to start the formal rebuttal process of the chargeback.

2. What are the reasons a cardholder may issue chargeback?

According to credit card regulations, cardholders should not issue a chargeback unless it is for one of the following reasons:

•    The buyer never received the item(s) he or she purchased.

•    The item(s) he or she purchased was damaged when it arrived.

•    The item(s) originally listed was different than the item(s) he or she received.

•    The cardholder did not give authorization to the seller to charge the credit card.

3. Is there a fee for a chargeback?

A non-refundable chargeback fee of $15.00 applies for each chargeback. This fee is not refunded, even if the chargeback’s formal rebuttal is successfully and reversed.

4. How can I prevent chargebacks?

Here are some suggestions that may help to prevent chargebacks:

•    Get a signed invoice

Use a receipting system that allows you to detail each item or service being purchased, as well as the customer’s information. Be sure to get a signed invoice for each transaction.

•    Ensuring the billing address matches the address on file with the card issuing bank.

If the billing address for the credit card matches the billing address entered for the transaction, you are less likely to become a victim of fraud. The Address Verification System (AVS) result that is displayed after a credit card transaction indicates how well the addresses matched.

•    Provide the CVV2 or CID when processing transactions.

The CVV2 and CID are three or four digit numbers located on each card. For Visa®, MasterCard®, and Discover® it's located on the signature strip on the back of the card. For American Express® it's located on the front of the card. Enter this number when processing a transaction using ProPay. If the number does not match, the transaction will decline. The CVV2 or CID is a good indicator that your customer has the card in his or her possession

•    Ship with caution.

Ship merchandise with a traceable carrier who can provide delivery confirmation such as the customer's signature upon receipt. This helps prove they received the merchandise. Likewise, a customer who says having you ship to a location other than the billing address provided, especially internationally, is a red flag.

•    Educate your customers.

Inform your customers that your business name (DBA) and evening phone number will appear on their bank statements. Also disclose your return policy with each transaction. On a signed receipt, ProPay recommends putting this disclosure near the signature line.

•    Provide excellent customer service.

Keep your customers satisfied. Shipping items and issuing refunds promptly will help prevent disputes.

These steps, except for matching the address, can be followed for both domestic and international transactions. ProPay recommends that you take the maximum precaution when engaging in international transactions because they carry a higher risk and are more difficult to support if disputed.

5. What are the impacts of having chargebacks?

Multiple chargebacks or a pattern of chargebacks can be grounds for termination of your merchant account. They are also considered when limit increases are requested.

6. What should I do if I receive a chargeback?

Contact ProPay’s Risk Management Department, by e-mailing resolutions@propay.com, if you have not received the automatic e-mail detailing the steps necessary to issue a formal rebuttal.

7. Does ProPay provide fraud protection insurance or escrow services?

ProPay does not provide any insurance or escrow services. We provide tools that you can use to protect yourself against fraudulent transactions, but we do not provide any fraud protection guarantee.

As a merchant, it is your responsibility to document your transactions and to verify your customers' information as you process transactions, including their addresses using AVS and their CVV2 or CID.

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