Many WordPress sellers give up on dealing with Credit Card disputes entirely, thinking
that their chances of winning them are too slim and decided it's not worth their valuable
time.
In this video, I'm going to uncover the unique techniques we've developed at Freemius,
which helped us take our disputes wins success rate from 4% all the way up to 30%!
According to a poll among members of the "Selling WordPress Products" Facebook group - most
of the WordPress product sellers say that their success rate of winning Credit Card
Disputes is lower than 5%.
Others admitted that they ignore Credit Card Disputes altogether.
According to the data provided by sellers - the methods we've developed are performing
extremely well and much better than the average, so let's dive in and explore them.
Actually, just before we dive in - why should you even care about disputes as a WordPress
product seller?
That's actually an easy one - it's because they are inevitable if you sell products online.
Based on Chargebee's Credit Cards Processing Stats - 6 out of 10 customers admit that they're
unaware of a store's return policy at the time of purchase and 8 out of 10 customers
admit to filing a chargeback out of pure convenience!
The sad truth is that even if, as an online store owner, you strictly follow all the regulations,
and only charge customers when they actually buy your product, or when there's a subscription
renewal - you are still highly likely to lose a Credit Card Dispute when one is filed against
you.
The reason for that is that the dispute triggers the bank/credit card company to immediately
refund the payment, which will be deducted from your business' balance, without questioning
the customer, and you'll have a limited time frame for submitting evidence to prove you
are "not guilty".
So basically, the burden of proof is on YOU!
As a customer - that's exactly what we expect from our Credit Card company.
As a business owner - that sucks, but, it doesn't mean you can't win.
One of the main reasons sellers lose disputes, even though they are acting correctly and
have done nothing wrong, is that they are unable to prove their innocence, or simply
don't want to deal with it.
That is a big mistake!
Your payment gateway providers, your bank and the Credit Card companies are all keeping
statistical records on the percentage of your business' disputed payments, and the number
of losses vs. wins.
If you ignore a Dispute - not only will you automatically lose it, but it also tells the
bank that you agree on the legitimacy of that dispute, practically admitting that you've
done something bad, as a business.
Those negative points add up and increase the risk of your business getting banned by
banks, Credit Card companies, or in extreme cases, shutting down your payments gateway
account!
If you think I'm exaggerating - just Google for sellers who have have been using PayPal
and Stripe and suddenly got their accounts closed.
So, even if you think you are going to lose a Dispute, it's still important to submit
your counter-evidence, to show all the relevant entities that from your end, you did everything
by the book, and that you are not running a "funny business".
As for the possible dispute types you may have to deal with as a seller - well… there's
a whole list of them, so we won't go into a detailed review, but let's just say that
if you apply the techniques I'm about to share with you, which we've applied successfully
in Freemius - you should be well equipped to strengthen your evidence submission and
substantially increase the chances of winning those credit card disputes!
So, let's see what you can do:
The first thing you need to make sure is that you employ a crystal clear Checkout.
Avoid any surprises or hidden footnotes, and make sure that the terms of refund, subscription
renewals, amount to be charged, taxes, trial periods, moneyback guarantees, etc. - are
all crystal clear and stated.
As an example, here's what we show on the Freemius checkout when a user is about to
subscribe to an annual plan.
The clearer the checkout is - the lower the chances for a potential dispute.
In case of a real dispute - you're also likely to be requested to show a screenshot
of those terms and how they are presented to the customer as part of the counter-evidence
submission process.
The 2nd thing you should be doing is to prevent fraud by simply verifying your customers'
ZIP code during purchase.
Businesses reported that the most effective fraud prevention technique is address verification.
Now, you don't really have to validate the whole address.
Simply validating the zip code associated with the costumer's card will do.
If you're using a payment gateway like Stripe, it comes with a really great Machine Learning-based
fraud detection mechanism called "Radar".
If you force the zip code validation, you can include it as part of the evidence you
submit, which will significantly increase your chances of winning Fraud-related Disputes
in which customers claim they didn't use the card.
Number 3 is to only share your WordPress product's download link via email, and not directly
after the checkout.
Why?
Because if they download the paid product, you can be certain that they are in fact receiving
your emails, which is a very strong evidence for most of the CC Dispute types.
The downside here is that the customer may not receive an email from you for different
reasons like a typo in the address or other deliverability issues.
This can be easily addressed by including your technical support email address in a
prominent spot they cannot miss - customers contact support in case they need to.
When you only share the download link via email - in some cases, users make typos when
they type in their email address, and this may lead to "product not delivered" type
of disputes.
An easy workaround we've come up with that both validates their email address AND does
not add another input field which badly affects the checkout form's conversion rate, is
to only show that additional email validation field after the customer had entered their
email and first name.
This approach will eliminate most of those "product not delivered" claims.
Moving on to the next technique that helps us tackle those "product not delivered"
claims is a very important but simple one: Track the download event!
If you can prove that the customer had indeed downloaded the product, and are able to include
details such as when and from which device, then you are most likely going to win that
CC Dispute type.
Simply track those events to be able to present that data if you need to, and it will also
help you when selling to customers from the European Union, where the "14-day cooling
off period" applies and says that a customer from the European Union can return the supplied
product for any reason and get a refund during 14 days.
That rule is a little different for digital products, for which it is respected only if
the customer did not unbox the product - meaning, they didn't download it during those 14
days.
If you sell subscriptions, we have a great technique that helps us void most of the "fraudulent"
disputes" where the cardholder claims that they didn't authorize the payment.
It is quite simple actually: we email a subscription renewal reminder enough time in advance, and
we track the open event.
Here's an example of the events section of a site with an active subscription on Freemius:
As you can see - it clearly shows that the subscription renewal reminder was opened by
the customer 2 hours after it was sent.
We can submit this as part of the counter-evidence and it's almost certain to win us the dispute
because we can prove that the customer knew about the upcoming renewal and had enough
time to cancel it.
Another crucial piece of data which can tremendously help you win disputes and that you should
be collecting is the IP address of the customer during purchase.
The IP address is, de facto, the shipping tracking code of digital goods in the
eCommerce world.
It's a mandatory field that you have to fill in when submitting evidence for any type
of Credit Card or PayPal Disputes.
The IP address helps the bank to validate if there's a match in the geolocation associated
with the IP address and the cardholder's address and check if the cardholder had ever
logged into the bank or credit-card's website from that IP.
When there's a match, obviously it refutes most Fraudulent-type Disputes.
I'll add to that, that in general, the more data you can show about your product's usage
by the customer, the better.
Things like the URL of the WordPress installation that's using your premium theme/plugin,
what's the WordPress/PHP version running on that site, etc.
All these data points make your evidence stronger, which makes it harder for the Credit Card
representative that is reviewing the data to deny it.
For example, if you can show an event log of your customer performing a product version
update - it will completely refute their possible claim of not using your product anymore.
We've all heard of the common confusion that deactivating a product also automatically
cancels its subscription.
To tackle that - when a customer clicks on your premium plugin's deactivation button
or tries to switch from your premium theme to another, instead of just deactivating your
product, ask the customer if they are interested in canceling the subscription as well.
I recommend you do that only after checking if the license is associated with any additional
websites - you don't want to cancel their subscription for all of them.
One of the things that confuse cunsumers the most when they read their Credit Card's
statement at the end of the month is if they see a company name that they do not recognize.
A good practice would be to make the product's name similar or at least close to the company's
name so that it makes sense for the customer and doesn't make them think they've been
frauded.
In case your company's name does not resemble your product's name - you can use the Dynamic
Soft Descriptors to control and modify the description that will appear on the customer's
credit card statement and make it more familiar to them.
This will significantly reduce the "Unrecognizable Charge" Dispute types.
To wrap up all of my advice here - I just want to add one more tip that can save you
a ton of time when dealing with credit card disputes and submitting your counter-evidence
to fight them: My suggestion for you is to automate whatever
you can in those efforts.
As a developer, you can almost fully automate the whole process of collecting all these
data-points and transactional events, and then pull it out of your database to quickly
generate your counter-evidence.
That's what I've got for you in this video - hopefully, it is useful for your business.
I think that you should definitely implement the proven practices which I've demonstrated
above if you want to keep running a healthy business.
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