Chargeback tip – check your descriptor

One of the top reasons for receiving a chargeback is when a customer doesn’t recognize a business name on their credit card statement. These are the types of chargebacks generally occur a few weeks or even a month after a purchase was made. The customer looks at their credit card statement and not recognizing the name of a place where they made a purchase, they call their bank. Many times they do not even need to request their bank to file a chargeback, but the bank automatically does on their behalf. American express has a history of making chargebacks without their customers asking for one. We were unfortunate enough to be the recipient of one such chargeback, and Amex even refused to reverse it after the card holder told them that they indeed made the charge.

When you initially set up your merchant account, your business name (DBA) is normally used as your descriptor. The descriptor is the name that your customer will see on their credit card statement. While this is a fairly simply process, many times processors mess up the descriptor, or they put something that a customer would not immediately associate with the business they just purchased from. A long business name can be difficult to logically squeeze into the few characters allowed in a descriptor. Websites are especially susceptible to this dissociation, as a domain name may not directly match the business name. Some customers will remember the domain, and some the business. In most cases I recommend using the domain name rather than the business name. If they don’t recognize it, they can pull up the website: “Oh yeah, I remember buying something here.”

Here’s an actual screen shot from my bank account. I have no idea what this is…

When you open your merchant account, you should always run a test transaction (NOT WITH THE MERCHANT ACCOUNT OWNER’S CARD!) for a few dollars to make sure the money goes into the correct bank account. This is a perfect time to check the descriptor and make sure it is something that makes sense.

These types of chargebacks are a waste of money and time for business owners to deal with especially since they are normally legitimate transactions. Make sure your descriptor looks the way you want it to. If you start receiving “Cardholder does not recognize transaction ” chargebacks, it is a good idea to verify that your descriptor is not what is causing the problem. If there’s something wrong with it, your processor should be able to fix it for you.

Lastly, operating multiple websites on the same merchant account will often result in an increase of chargebacks. Unless the products are the same and the domain names are similar enough that a customer will recognize the charge on their statement, business’s should have a unique merchant account for every website they operate. Visa and MC routinely shut merchants down for operating multiple unrelated websites on the same merchant account. How do they find out about them? Almost 100% of the time it’s from: “Cardholder does not recognize transaction” chargebacks.

If you find any ridiculous descriptors on your statements feel free to send them to me, and I will post them up here. Use a service like photobucket or flickr to upload them and send me the link to your photos through the form.