There ain’t nothing like waking up to PayPal notifications on your phone letting you know that your secret sauce is making you money in your sleep. But if I’m being honest, there’s also nothing like waking up to a PayPal notification telling you that someone has submitted a chargeback on your secret sauce, either. 

You go through a wave of emotions when you get hit with a chargeback. You’ll probably feel shocked, insulted, and if it was a large amount of money you already accounted for, your heart might start jumping to the tune of Thriller. 

Now, instead of calling up the consumer and asking them through tears and snot why they submitted a chargeback, I first want you to turn the questions on yourself. Were you in the right, or is it really you that got some explaining to do? To find out, here are three things to ask yourself when you get a chargeback.  

Do I Have a Policy in Place?

Alright. It’s happened. Someone has gone to their bank and lied on you, saying that you either didn’t give them a service, didn’t give them a product, or simply didn’t do what you were supposed to do.

Do you have a policy in place to prove them wrong? By a policy, I mean the #1 thing I ALWAYS tell business owners is non-negotiable when running their business: contracts. 

You need to have things written down. You need to have contracts that will support you in case of a chargeback or a dispute from a credit card company. If you have an online course or are an online coach, you need to make sure that your policy covers what you will deliver to them and the manner in which you will. It needs to state expectations. You also need a services agreement outlining what happens with the money once someone gives it to you.

Are you running a subscription? You need to have a separate subscription agreement that outlines what happens if a person is not following along in the course, is not doing the work, or is not putting forth the best effort.

• Are they entitled to a refund?
• Do you have a return policy on deliverables?
• A refund policy?
• What time limit do they have to make you aware of a problem?
• What would your dispute process look like?

Your policies should clearly outline any and every question that may come up or reasons that could be used in the case of a customer dispute. 

Do I Have Systems in Place That Protect Me?

The next question you need to ask is if you have systems that protect you, your business, and the money you’re entitled to from that consumer. 

These systems include getting clear authorization from the consumer to charge their card. This could mean having a separate credit authorization agreement where they fill out the information. It could mean having a system in your business where you’re not collecting the information, but they’re imputing it manually/on their own. 

Consumers should have some actionable steps they need to take when it comes to providing authorization so that when you get a dispute, you can go back and show documentation to the individual. You should also be documenting your interactions with every consumer and updates on how you’re holding up your end of the contract.

If you don’t currently have systems, I highly suggest taking an hour a day to sit down and chart your customer journey from beginning to end so that you may spot the systems that are missing. 

Putting systems in place is essential because your merchant provider (i.e., Stripe, Paypal, Mastercard, or whoever the issuing bank is) will reach out to you for documentation when a chargeback is submitted. And if you don’t have it, you’re gonna lose, boo, and we’re not in the business of losing money. 

Am I Delivering What I Promised?

Before I tell you the last question, I need you to know that I’m here to rep my small business owners until the day I die. But I’m also here to hold you accountable. 

So with that in mind, the last question I want you to ask yourself is whether or not you’re actually giving people what you promised. Yup, you gotta look yourself in the mirror for this one. 

Ask yourself if you’re delivering on the promises you gave, and if you are and have a high number of chargebacks, then ask yourself why they are requesting chargebacks. Is it because you don’t have a good communications policy? Then head back to question #2. Did you overpromise and underdeliver? Then, again, head on back to question #2. You see the theme developing here? 

By being honest with yourself instead of immediately going on the defense, you may realize issues in your business you didn’t know were there before. 

Be Prepared

Everyone wants to believe that chargebacks won’t happen to them until it does. And when it does, I want you to be prepared. People lie. And if they lie on you, ensure you have the policies, systems, and compelling evidence (i.e., documentation) to prove them wrong so you can dodge those chargeback fees. Will it guarantee you a win? Unfortunately, no. But it will dramatically improve your chances.  

At the same time, before you call people out their name, ensure that you’re living up to yours. Are you doing what you said you would? If you have even the slightest doubt, then as a business owner, you have to be open to receiving feedback. 

Listening to your customers’ complaints is sometimes the best way to realize weak points in your business that you didn’t know before. So while it may be a challenge, this chargeback dispute may have been a lesson meant to help you improve your business. 

Are you seeking legal support in drafting the proper contracts for your business? Reach out to us at the Anderson Law Firm. 

With a team of experts with extensive experience in drafting custom contracts, we can whip together the legal jargon you need to keep those chargebacks at bay.