Direct Response Advertising Chargebacks

Person hitting buy now button_CardinalCommerceIn a direct response advertising campaign, a business will develop marketing materials that encourage the consumer to interact with their brand. As consumers explore a given business, the direct marketing piece will invite them to respond. The purpose of this campaign is to encourage shoppers to complete an actual transaction. This “call to action” can include many things, including a signup, submission of an email address, chat or conversation or a personal visit — all to encourage the buyer to engage with the merchant and eventually make a purchase.

The Chargeback

Chargebacks can occur either after an actual transaction, or at any point after which the consumer has shared their card information with the business. When consumers choose to give a business access to their credit card information, it creates the potential for a problem. When a consumer disputes a charge on their card, they initiate the chargeback process. If the consumer trusts a given merchant, they could choose to forgo the chargeback process and deal with the merchant directly but, by issuing a chargeback with their card-issuing bank, they are assured a quicker resolution to the problem. After the consumer issues the chargeback with their bank, the bank requests that the merchant’s bank, or the acquirer, issue a refund to the consumer, reversing the charge. 

Reasons for These Chargebacks

Direct response advertising chargebacks occur primarily because the credit card information is shared online or over the phone, and not in person. This impersonal aspect of the transaction creates inherent risk, opening up the potential for chargebacks.

  • If the transaction is conducted via phone or internet, it’s difficult for the business to verify the cardholder’s identity. The buyer could be a fraudulent poser — someone other than the cardholder — making purchases on their card. The actual cardholder will likely file a chargeback to dispute the fraudulent charge.
  • If the business promises to deliver a product in a specific time frame but does not deliver, the cardholder may file a chargeback.
  • If the merchant uses the consumer’s card for purposes other than the promised product or service, the consumer may file a chargeback.
  • If the consumer believes the business has faulty security or privacy measures regarding credit card information, they may file a direct response advertising chargeback.

Avoiding These Chargebacks

A small business that uses these marketing strategies successfully will also experience a fair amount of direct response advertising chargebacks. These chargebacks are avoidable, however, but businesses must remain diligent in several areas:

  • The business should follow through on promises made during the direct response advertising campaign.
  • The business should be transparent about its security and privacy measures.
  • The business should clarify orders, purchases and transactions involving a credit card, especially if the charge will recur monthly or annually.
  • The business should make contact information readily available, and remain open to questions from consumers. A business that can quickly, and efficiently solve problems with consumers can avoid chargebacks entirely.

Back to Chargebacks

Are you experiencing chargebacks in your online store? Are your consumers abandoning their carts before buying? Learn how Cardinal Consumer Authentication can eliminate fraud and false positives, and provide the benefits of 3-D Secure with friction-free checkout for your buyers. One Connection to Cardinal drives digital commerce. Download the brochure now.