A Florist's Guide To Avoiding And Winning Chargebacks (Updated)
This article was updated in June 2022 in response to a reported uptick in chargeback activity in the floral industry.
With credit cards comes the potential for mistakes and fraud. Your card number might be used in a transaction without your knowledge. Maybe it’s an innocent mistake and your number is simply entered in error. Or maybe it was acquired through more nefarious means.
Either way the chargeback process is there so you can say “Hey! I never authorized that” and have the charge reversed.
That’s good news for you (you don’t have to pay the charge) but bad news for the merchant (who has to give back the money). This post looks at how retail florists can reduce the number of chargebacks they receive and fight the ones that they do.
The Problem With Chargebacks
Unfortunately the chargeback dispute process does not favor the merchant. Consumers need very little proof to validate their end of a claim. Much more is expected of the merchant.
Even more unfortunately chargebacks are very easy for the customer to initiate. Customers just assume (often correctly) that it will be easier to call the bank and file a chargeback than to call the merchant and ask for a refund. So the customer who didn't like the flowers they received, or felt they died too soon (next time try keeping them in water!) may just call the bank, cross their fingers, and say the flowers never arrived.
General Rules For Avoiding/Fighting Chargebacks
Because the deck is stacked against them florists need to first take steps to avoid chargebacks, then fight back when appropriate.
Many chargebacks are the result of bad communication. The customer isn’t clear on what the final after tax total will be or how it will appear on their statement – and when they don’t recognize it they start the chargeback. Or they aren’t aware that they should call you with concerns about quality etc.
Many if not most of these can be avoided with better communication… end every call by telling the customer exactly what will be charged and when and how it will appear on their statement. Send them a receipt so they can see. Stress that if they have any questions or concerns at all they should contact you directly.
This is especially true in 2022, during a period of high inflation. Someone who has not purchased flowers in some time may be genuinely shocked by the (completely justifiable) increases in prices and delivery fees, and initiate a chargeback based solely on the feeling they got ripped off simply because the prices were higher than they remembered.
If a customer complaint is valid do not dispute the chargeback if it has already been initiated. Even more importantly do not refund the cardholder once a chargeback has been initiated – you could end up being out both the chargeback and the refund.
The goal is always to avoid chargebacks so that you don’t have to fight them.
The other general rule to remember is that you can beat them and win. It’s now always easy, but don’t just give up. We’ll look at how you should proceed below.
Addressing Specific Types Of Chargebacks
Not all chargebacks are created equal. Winning chargebacks and keeping your reputation intact depends on recognizing the different types.
Merchant Error: 20-40%
Chargebacks are often the result of merchant error. Some of these are common to all types of retail, but are encountered more frequently by florists because of some of the peculiarities of the retail flower business.
For example any retailer may accidentally enter the wrong payment card number, inadvertently chargeing the sale to a different customer. That customer will not recognize the transaction and dispute the charge.
In the flower business some shops still keep credit card numbers written down for active customers, making this kind of mistake easier to make. And by the way – it is absolutely NOT alright to keep hard copies of credit card numbers around your shop. Storing credit card number securely, in an encrypted fashion, in your POS is fine, and will also help prevent the kind of mistakes that lead to chargebacks.
Another common problem is accidentally processing payment for the same sale more than once. Again this is even more common in flower shops that still use pen and paper. The person that takes the order writes the credit card number on the order form (again – this is not OK!) for processing later…. only it gets processed more than once by accident.
Yet another problem comes when the cardholder is surprised by the amount. If the charge is higher than what they expected they may simply initiate a chargeback because it’s often easier than dealing with the merchant.
Again – this is even more common in the retail flower business because of the service charges and delivery fees we have to tack on in addition to the sales tax charged by all retailers. To avoid this kind of chargeback florists need to be very clear with the customer, saying something like “OK, I’m now going to process your credit card for $XX.XX”.
And if it is likely that they won’t recognize your business name on their credit card statement (some shops may go by a different name than what will appear on statements) then you should advise them that “the charge will show as coming from…’”.
Another common source of chargebacks that can be fixed with better communication comes from differences between the sale date and the fulfillment date. If the customer is ordering Valentine's Day flowers in January and you’re going to charge their card immediately you need to tell them that! Otherwise they get their January statement, see a charge for flowers they have not received yet, and proceed to initiate a chargeback. Again you just need to explain that you are going to charge the credit card number now.
How Florists Can Fight Back (Or Best Respond to) Merchant Error Chargebacks
If the customer complaint is valid and the chargeback resulted from outright merchant error (you entered the wrong card number, processed payment twice, etc.) then simply don’t dispute the chargeback and let the process complete as intended. Don’t be pro-active and refund the charge, if you do you could then lose both the chargeback and the refund. It’s also a nice idea to call the customer, apologize for the mistake and assure them that you are cooperating with the credit card company to get their money back.
If however it is a communication error (the customer didn’t recognize the charge, was confused about the amount, etc.) then you should contact the customer and explain, encouraging them to drop the chargeback request. You also need to prepare to fight the chargeback if they don’t, by assembling whatever evidence you have to confirm the sale and receipt of goods.
Friendly Fraud 60-80%
More accurately defined as chargeback fraud or first-party fraud these cases involve a seemingly satisfied customer that authorized the transaction, received and was satisfied with the merchandise… but then disputes the transaction.
This type of fraud is increasing rapidly (more than 40% a year) as more people realize how easy it is to initiate chargebacks, and that there are few consequences to doing so. It doesn’t take much to just report some disputes and hope that some charges get reversed.
This is actually an abuse of the chargeback process. Chargebacks are intended for cases where the cardholder did not authorize the transaction. In cases of friendly fraud they did make the purchase and they should recognize the charge. Any issues they have should be addressed, at least at first, directly with the merchant. Unfortunately customers have learned that it’s often easier to just initiate the chargeback with a (in their opinion) harmless lie.
All retailers are exposed, but florists have it worse. You really only know what the flowers look like when they leave your shop. You generally can’t be sure of the state they arrive in, or what happens once they get there.
If a customer is disappointed with what they receive, or the flowers don’t last as long as they would like, they may abuse the chargeback process by initiating a dispute rather than simply contacting the flower shop.
How Florists Can Fight Back Against "Friendly Fraud" Chargebacks
The first step is better communication. Every time you finish a sale remind the customer that you want them to be happy, and encourage them to call you back with any questions or concerns. Make sure that the flowers include a card with your contact information.
And, again, this has never been more important than it is during a period of high inflation. Florists can't assume that customers know how much prices and delivery charges have risen, and if you don't tell them it's easy for thim to initiate a chargeback just because they feel like they got ripped off.
If a customer does initiate a chargeback try contacting them. If you feel they have a legitimate complaint – at least legitimate enough that you would have given them a refund – then you can apologize and ask them to contact you directly the next time. The let the chargeback process complete without disputing it. Don’t also issue a refund or you can be out both the refund and the chargeback.
You’ll also discover that in many cases the customer never meant to initiate a chargeback. For example they see a charge they don’t recognize so they call the credit card company. They aren’t saying they didn’t make the purchase, they just don’t recognize or remember it.
The support agent often takes the easy way out. They just say something like “you don’t recognize it? OK, I’ll take care of it.” and they initiate the chargeback. Their thinking is that if the charge is legitimate the merchant will successfully fight the dispute (like you have nothing better to do!).
Again this is often easily handled by talking to the customer. They’ll be surprised they had even started the chargeback process and be happy to drop it. Help them by explaining exactly what they need to do: “call that same number, explain that you initiated a chargeback, but now remember the purchase. Because if you don’t we don’t get paid.”
But – get the paperwork in order anyway. If they have not dropped it as the dispute window closes you are going to have to step in and fight it.
If however your call lead you to believe you are being defrauded then fight back. If some shady character tells you that the flowers he sent to his girlfriend were no good and you don’t believe him you have recourse – tell him you are going to call her to confirm. Explain that you are going to call and ask if the flowers were OK, because the boyfriend is reporting that they were bad and is trying to reverse the charge.
That will, in many cases, encourage them to drop the chargeback.
If that doesn’t work and you want to fight it assemble all the documentation and send it in as instructed with the chargeback notification.
Criminal Fraud 1-10%
In these cases criminals use pilfered credit card numbers (acquired through identity theft, hacking databases, etc.) to purchase goods that will be charged to innocent victims – the actual holders of the card numbers they are using.
The chargeback process was intended to protect cardholders from exactly this kind of activity – unscrupulous entities charging payments to their accounts. And there is really nothing you can do to fight it.
The good news is that this kind of chargeback is very rare, less than 1%.
In the flower business the percentage is even lower. Someone using a stolen card is likely to want to purchase something very valuable, possibly with resale potential. Flowers don’t fit the bill.
Another problem is that with flower delivery the criminals would have to give up a valid delivery address to actually take possession of the goods. It’s unlikely they would want to take that risk.
How Florists Can Fight Back Against Criminal Fraud Chargebacks
The good news is that, as a florist, you are already pretty much immune to this kind of fraud. If however someone comes into your store and made an unusually large purchase you should take a long hard look at their ID. And if someone tries to place an unusually large pickup order mention that you will need to see their ID when they pick the flowers up.