How to Reduce CBD Credit Card Disputes and Chargebacks

As a CBD business owner, you’ll know how important it is to build and maintain a good relationship with your CBD merchant account and CBD payment gateway provider. This holds even more true in light of the fact that CBD oil merchants are banned by PayPal or Square for example.

As a matter of fact, one of the biggest risks identified by CBD business owners is the risk of seeing their merchant account shut down. Surprisingly, a shut down can happen much more easily than one might expect.

Indeed, when evaluating the standing of their clients’ accounts, merchant account providers tend to look at the ratio of credit card disputes and chargebacks to the total number of transactions processed. When this ratio exceeds a certain threshold (often placed at 1%), then the client is at risk of being considered in breach of contract. This can lead to their account being shut down, and consequently, unable to process credit card payments online or in-store.

Moreover, being turned down by one acquiring bank will raise a red flag for all others and seriously undermine your chances of finding a new acquirer willing to take you on.

So, if you’re keen to stay in business you might want to check out the following tips on how to reduce CBD credit card disputes and chargebacks.

Tip 1: Sell quality products

At the core of every successful business is a quality product and/or service. The first step towards keeping your customer disputes and chargebacks at a minimum is to ensure that you are selling high quality CBD products and offering outstanding customer service.

At a minimum, your CBD products should be manufactured from organic hemp and have undergone third party laboratory testing. Ideally, your suppliers should be GMP and ISO certified and your products should clearly claim what they do, and do what they claim.

If you meet or even exceed your customer’s expectations it’s unlikely that they will even consider opening a dispute against you.

Tip 2: Look out for credit card fraud

Credit card fraud is when a stolen or counterfeit credit card or payment card is used as a fraudulent source of funds to pay for a transaction, in order to obtain goods. Unfortunately, credit card fraud is widespread and, on the rise. (1)

We recommend that business owners stay on the lookout for transactions which look suspicious. In particular, fraudulent purchases tend to have certain hallmark characteristics.

Among them, the use of a suspicious looking email address. Nowadays, most people use their name and surname in their email address. On the other hand, scammers tend to use spammy email addresses, often from free or little-known email service providers.

Another red flag is the request that the order be shipped with the quickest – and most expensive – delivery option.  Fraudsters do this with the hope that the parcel will be dispatched and delivered before the fraud is identified.

If in doubt, you can try to call the phone number associated with the transaction. If despite several calls you do not get a reply, then you could leave a message to inform the client that the order is being put on hold until they ring you back. In 99% of cases a scammer will not take or return your calls. And you will have saved yourself another potential dispute and chargeback!

Tip 3: Make product returns easy

At the source of some disputes can be the fact that a client was unwilling or unable to return an unwanted purchase. Indeed, some clients chose to keep the product and dispute the purchase, rather than go to the effort of putting the parcel in the post and/or explaining why the product wasn’t suitable.

To avoid this type of dispute, we recommend that CBD businesses make it as easy as possible for customers to send back their unwanted purchases by offering free, no-questions-asked returns.

Also, consider creating a dedicated customer service email address and make it a priority to respond to return requests, as rapidly as possible. This should help reduce the probability that the customer has a change of heart while they wait for your response.

Tip 4: Offer outstanding customer service

Our final tip is to go above and beyond the call of duty when it comes to your customer service.

In business, like in life, mistakes happen. Sometimes the wrong product is dispatched, a parcel goes missing or a product gets damaged during transport. And understandably, your customers get irritated.

To avoid the risk of these customers opening a dispute, try to ensure that you are as apologetic as possible about the incident – even when it’s not your fault! Remember: “customer is king”.

For example, if your customer received the wrong product – let them keep it. Then offer to send out the correct product free of charge and via express.

If the product was damaged during transit, send out another for free and as soon as possible. Similarly, if the parcel goes astray.

By clearly demonstrating to your customers that you genuinely have their satisfaction at the top of your priority list, you will greatly reduce the probability of a dispute or chargeback.

Final thoughts

To summarize, taking fraud and chargebacks very seriously could be the key to your success. The strength of your relationship with your acquiring bank – or lack thereof – can literally make or break your business.

The margin between a good standing and a bad standing is fine. With fraud on the rise, and the ever-increasing sophistication of modern-day scammers, businesses can never be too careful. By implementing these 4 simple tips you could greatly improve your chances of staying in the good books!