How to Prevent a Double Refund & Unnecessary Revenue Loss
One of the most disheartening experiences you'll have as a merchant is the double refund. Double refunds mean double the revenue loss.
What Are Double Refunds?
In a double refund scenario, your customer receives two refunds for the same transaction. These unnecessary refunds usually result from miscommunication and illegitimate chargebacks. It's estimated that 10% of all chargebacks can be involved in a double refund situation.
Chargebacks filed after issuing a refund: The consumer contacts the merchant and requests a refund. The merchant honours the request, but doesn't return the funds immediately. The consumer thinks the merchant ignored the request and files a chargeback. Both the chargeback and the refund are processed, meaning the customer gets twice the amount of money.
Chargebacks filed before issuing a refund: The consumer contacts the bank and initiates a chargeback. Then, the consumer contacts the merchant and expresses dissatisfaction. The merchant provides a refund to try appeasing the customer and avoid a chargeback. However, the merchant is unaware of the fact that a chargeback has already been filed.
Just because you provide your customer a refund doesn’t guarantee against a chargeback. And, it doesn’t prevent the customer from contacting you to demand a refund as well, even after filing a chargeback. This is a double refund...and it happens all the time.
How to Prevent Double Refunds
Preventing double refunds calls for a proactive approach. You need to deploy different strategies and solutions both before and after a dispute.
After a Chargeback
Preventing double refunds is a challenge, but the key lies in attention to detail. You should train your customer service agents to know what to look for in these circumstances. Well-trained customer service agents can identify the situation and prevent additional loss.
Pay close attention to customers who say they just spoke to their bank. This is the biggest clue that a chargeback already exists for the transaction.
Depending on the issuing bank, there are different time limits for resolving disputes before they become chargebacks. One thing is universal, though: if a case number is issued by the cardholder’s bank, it's a clear sign the dispute graduated to a chargeback.
Once a case number has been assigned, fees will be assessed, and your chargeback-to-transaction ratio will take a hit. Even if you beat the chargeback through representment, there is no undoing the damage. That’s why it's important to carefully assess the situation and handle each customer service interaction with finesse.
If a customer indicates he or she did contact the bank, then you need to call the relevant issuer directly and determine the case's status:
- Case Number Assigned: Disregard the refund request. The chargeback already reversed the original transaction.
- Case Number Not Assigned: Tell the issuer a you submitted a refund, and a chargeback is not necessary.
Take note: the bank may suggest an immediate refund to resolve or close the case, even if there is a case number. You should turn down the suggestion. If a chargeback is filed, then action at that point will result in a double refund.
Before a Chargeback
Preventing chargebacks and the subsequent double refund is much easier with proactive action. It's straightforward: simply provide prompt refunds when warranted. We recommend you:
- Let customers know when you issue a refund.
- Estimate when the funds will be available.
- Ensure the credit isn’t processed as a debit.
Double Refunds & Representment
You can fight a double refund through representment. In this case, you simply needs to prove you already submitted a refund.
|a chargeback is illegitimate and a refund wasn’t warranted||deny the refund request, take note of the case number, watch for the chargeback, and dispute it.|
|a chargeback results from a valid consumer complaint||accept the chargeback as a loss.|
|you issue a refund, but the customer files a chargeback anyway||dispute the chargeback.|
Effective Chargeback Management to Prevent Double Refunds
You can mitigate the risk of double refunds. However, you need effective chargeback management, a well-trained customer service department, and attention to detail. Ensuring each component is a time-consuming and labour-intensive task.
You can better utilise resources to grow your businesses. By outsourcing chargeback management, you can focus on obtaining new customers and satisfying existing ones.
Contact The Chargeback Company® today. Get more information and learn how you can stop double refunds, reduce chargebacks, and grow your revenue.