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There is the business side of this to consider. Disputes are expensive--companies are forced to pay significant fees whether they win or lose the dispute. A d
by camhart 4y ago
There is the business side of this to consider. Disputes are expensive--companies are forced to pay significant fees whether they win or lose the dispute. A dishonest customer lying to their bank about your product/service should be able to be banned from using your product/service. Otherwise, what's to stop them from maliciously charging then filing disputes over and over again?
To be clear, I'm talking about a different case, where the customer doesn't reach out for help, and doesn't give you an opportunity to correct the problem (which most banks ask them to do first but they just lie about it). With my business, this is the case for 9 out of every 10 disputes (and I have a very low dispute rate). The other 1 time is they just mistakingly reported it as a dispute because they didn't recognize it, but after you reach out they correct it with their bank (but guess what, you still have to pay the dispute fee when that happens).
When your SAAS product costs $5 / month, and the dispute fees are $15 / dispute or more, and customers go back and file disputes on the previous X months of charges, and they never give you a chance to make it right, it becomes a problem worth banning them over.
- naniwaduni 4y ago> Otherwise, what's to stop them from maliciously charging then filing disputes over and over again? Their bank?
- camhart 4y agoThe bank profits from it... no incentive on the banks part to stop it.
- naniwaduni 4y agoWhat part of a chargeback do you think is profitable for the bank?
- camhart 4y agoMy understanding is the dispute fee goes mostly to the bank.
- makeitdouble 4y agoFrom the bank/issuer's perspective, if the customer pays for payment protection, their matrix becomes: - they side with the merchant and penalize the customer: they risk losing the customer, their purchases and other recurring fees. The merchant does nothing more for them. - they side with the customer and hit the merchant: the merchant has no recourse outside of providing proof of wrongdoing on the customer side. If they have these proofs, the issuer hits the customer, who would need to get back to the merchant to further fight the charges (the bank is now out of the picture). If the merchant doesn't have any proof, their only possible action would be to cut off the issuer, but then they're potentially cutting off a whole slice of their customer base, so it's pretty unlikely. All in all, the bank has very little incentive to side with the merchant from the start.
- CydeWeys 4y agoOne simple answer to this is they could disable all new purchases without disabling the entire account. If you can no longer spend money there's nothing to charge back.
- deleted 4y ago[deleted]
- nkrisc 4y ago> Otherwise, what's to stop them from maliciously charging then filing disputes over and over again? You stop selling to them. You don’t need to ban their account to do that.