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Tips: Refunds, Chargebacks, Complaints, Contract clauses

post #1 of 24
8/22/12 at 10:50pm
Thread Starter 
Hi everyone, in light of recent threads about customer complaints, requests for refunds, canceling payments e.t.c.

I'd like us to have a thread as a reference point (not a place for legal advice) just for guidelines on how to handle these issues, from prevention (contract clauses) to damage control.

For example:

I understand that Square does not permit refunds so if a customer is to get a refund, the merchant must run 2 transactions: one to charge the new (discounted) amount and the second to refund the client's first (full) payment. I read somewhere that it's better to run the new amount first before processing a refund. Not sure why.
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post #2 of 24
8/24/12 at 6:50pm
Quote:
Originally Posted by vgcea

Hi everyone, in light of recent threads about customer complaints, requests for refunds, canceling payments e.t.c.

I'd like us to have a thread as a reference point (not a place for legal advice) just for guidelines on how to handle these issues, from prevention (contract clauses) to damage control.

For example:

I understand that Square does not permit refunds so if a customer is to get a refund, the merchant must run 2 transactions: one to charge the new (discounted) amount and the second to refund the client's first (full) payment. I read somewhere that it's better to run the new amount first before processing a refund. Not sure why.



I wrote that. It's because if you're processing a refund from square and have to do the entire original amount (they can't process partial redunds yet) you'll have to have your client's card to do it. If you process the full refund for a disgruntled client, then say " i need your card to charge you again," do you really think they'll hand it over? Do the new charge first,t hen issue the refund for the original amount. That way you'll at least be sure of getting them to sign off on the new charge. Especially if they're as shifty as some of the people who have been trying to rip people off lately.
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post #3 of 24
8/24/12 at 7:30pm
My advice is to accept cash and checks only if you can, and give checks enough time to clear. Credit cards are great for consumers (I use mine just about every day) but not so advantageous for merchants.

When I get a complaint from a customer, I give them a refund after talking to them and confirming that it's a valid complaint. This happened to us once in 4 years of business and 700+ orders: a customer called and complained the cake they had was dry and they didn't eat it. It was a gluten/egg/dairy/soy/nut-free cake and they probably didn't follow the directions for when to take it out of the fridge (the directions were given verbally and printed on the invoice) but I gave them a full refund anyway, since if they weren't satisfied they shouldn't have to pay.

They may have been trying to get free cake, but I find it's best to give the customer the benefit of the doubt. This is easy when the customer is friendly, but IMO the true test of superior customer service is treating rude and disrespectful people with courtesy and respect, even if they don't deserve it. If you post on CC regularly you will get plenty of opportunities to practice this skill. icon_wink.gif
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post #4 of 24
8/25/12 at 10:09pm
Thread Starter 
Thank you costumeczar and Jason_kraft. You're both invaluable to CC with all the advice and tips you give.

@Costumeczar: I can see the logic in running the new transaction first. I'd hate to have to chase a customer down to get their card.

@Jason-kraft: While I love the convenience of being able to accept credit cards, I found myself thinking about the processing fees today. The way I currently have it set up, when a client uses their card the fees cut into my profit. It's no big deal for small orders less than $100 but 3% of the larger orders does add up. I suppose that's the price of convenience?
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post #5 of 24
8/25/12 at 10:25pm
Quote:
Originally Posted by vgcea

@Jason-kraft: While I love the convenience of being able to accept credit cards, I found myself thinking about the processing fees today. The way I currently have it set up, when a client uses their card the fees cut into my profit. It's no big deal for small orders less than $100 but 3% of the larger orders does add up. I suppose that's the price of convenience?


It really does add up if you look at it at the macro level. At a rate of 3%, you are basically working for a week and a half every year just to pay those credit card fees.

I agree that accepting credit cards is more convenient than cash or checks. This might be worthwhile if you have to drive 30 miles to get to your bank, but I spent maybe 5 minutes a week depositing checks and cash at our credit union (it was next to a grocery store so I would combine trips). Over the course of a year that's about 4 hours, so if you have $35K in annual revenue and are paying $1000 in credit card fees, you are paying $250/hour for this convenience.
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post #6 of 24
8/26/12 at 4:18am
I think that the issue of accepting credit cards is more of convenience for the client, not for us. People are so used to paying with a card today for everything they don't even carry checks or cash.
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post #7 of 24
8/26/12 at 5:06am
I just add the cc fee to their bill. Concert ticket services do it with every transaction. Why should I pay for their convenience?
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post #8 of 24
8/26/12 at 9:34am
Quote:
Originally Posted by leah_s

I just add the cc fee to their bill. Concert ticket services do it with every transaction. Why should I pay for their convenience?



You should probably read the credit cards' TOS.

You can offer a cash discount but you can't charge a credit card or "convenience" fee.

http://www.creditcards.com/credit-card-news/merchants-who-violate-credit-card-terms-1275.php
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post #9 of 24
8/27/12 at 12:09am
Thread Starter 
I've had some places (e.g. Secretary of State's office when I filed the paperwork for my business) include a processing fee if I used a credit card to pay. I wonder how they get away with it.
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post #10 of 24
8/27/12 at 4:46am
Quote:
Originally Posted by vgcea

I've had some places (e.g. Secretary of State's office when I filed the paperwork for my business) include a processing fee if I used a credit card to pay. I wonder how they get away with it.



That's a processing fee that's separate. I don't think you can just add the fee to the amount due without calling it something else. Ticketmaster calls it the convenience fee, which always makes me curse them when I get the bill.
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post #11 of 24
8/27/12 at 8:08am
Quote:
Originally Posted by vgcea

I've had some places (e.g. Secretary of State's office when I filed the paperwork for my business) include a processing fee if I used a credit card to pay. I wonder how they get away with it.


I believe there are some exceptions to this rule, including government agencies and utility companies.

The Ticketmaster "convenience fee" is added to all transactions, not just credit card transactions. The convenience fee can sometimes be avoided if you are willing to drive down to the venue and buy tickets from the box office in person.
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post #12 of 24
8/27/12 at 2:55pm
Thread Starter 
Thanks to both of you for clearing this up for me.
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post #13 of 24
8/27/12 at 4:01pm
I'm in the opposite camp - I prefer credit cards. I use Google Wallet (and yes, it's called "Google Wallet". Google Merchant is the back end of Google Wallet). It has 100% merchant protection. I add a transaction fee to every order - it is pre-calculated into my per-serving charge or I add it as a convenience fee. Many, many companies do either way.

No, I'm not in violation of any TOS - because I charge it on every transaction weather they pay cash, check or credit card. Who are they to tell me what the "convenience fee" covers?

Google Wallet has an excellent payment guarantee. I can reverse charges, refund small amounts, and generate invoices sent to a customer to be paid no problem. Paypal and Square do not offer anything like this (I don't think):

http://support.google.com/checkout/sell/bin/answer.py?hl=en&answer=42863

2 business days after the payment happens the money is deposited into my account automatically.

I do have a Square, I have used it a few times. I even know some people on the Square team. Unless they can offer protection like Google (which they never will - they don't have the assets), I will only use them as back-up processing.

Paypal sucks and is the WORST for taking your money, freezing your account etc. I don't have a Paypal account. I can't stress enough to people to stop using Paypal - they are NOT on your side!

So yeah, GO GOOGLE!
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post #14 of 24
8/27/12 at 4:22pm
But google has this in their terms of what's covered as far as chargebacks:
The resulting chargeback must be for a claim for unauthorized purchase or non-receipt of items. Chargebacks for claims of defective merchandise or items not as described, failure to post credit for cancelled or returned orders, or duplicate billing arent covered.


So if someone said the cake was "defective" then you're back in the same boat. I'll take your word that google wallet is better than the others, but I have a feeling that it isn't totally foolproof. I doubt anything is other than cash...

Does google wallet let you swipe a card with a scanner, or do you have to type it in or send an invoice? For me the convenience is the ability to have someone pay a deposit right there without me letting them go home and "think about it" is they want to hire me right then. If I'd have to send them an invoice at a later time that kind of kills that.
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post #15 of 24
8/27/12 at 5:08pm
Hurm - I will re-read but I am fairly sure as long as you have a refund policy on your website including what your remedy is for dissatisfaction and the customer agrees to it at the purchase, plus they sign for the cake in person - then its covered. I have a refund policy on my website and I have text I include on every Wallet payment request that says: "NOTE: The completion of this payment request is your acceptance of Beyond Buttercream's cancellation, refund and chargeback policy located at http...."

I've only had one chargeback and because I had language on the payment request, a link to my cancellation and refund policy on my website and a signed invoice for when they picked up the cake, the chargeback was canceled in my favor very very fast..

Not saying it's 100% ironclad, but I researched this a lot when I first started on what was the best way I could avoid any issues accepting credit cards.

They don't have a card reader like Square, but they do have this: http://www.empsebiz.com/googlewallet/index.html

Of course only helps if you already have POS readers.

So, you have to log into your merchant account then generate an invoice via email that gets sent to the customer. I can do it pretty easy from my iphone.
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