As the merchant of record for your online pharmacy, your practice may receive a Dispute Notification from Merchant Services for a client who has made a purchase from your online store. While chargebacks were designed to protect consumers from dishonest merchants, there remains some risk to the merchant (i.e. your practice) of chargeback fraud.
To help you better understand chargebacks and what to do about them, this article will answer the following questions:
- What are chargebacks?
- What are reasons a consumer might file a chargeback?
- What happens when a chargeback is filed?
- What can the practice do to win/reverse a chargeback dispute?
- How do I protect my practice against chargeback fraud?
What are chargebacks?
A chargeback occurs when the cardholder or the cardholder’s bank challenges all or part of a transaction.
What are reasons a consumer might request a chargeback?
There are many justifiable reasons a consumer might request a chargeback, such as goods and services not received or not as described, a duplicate transaction, canceled recurring transaction, or because the consumer’s card has been compromised or stolen.
But consumers have requested chargebacks for reasons that do not involve any failure on the merchant’s part. These instances, commonly referred to as “friendly fraud,” include:
- The consumer has “buyer’s remorse”
- The item return process seems too cumbersome
- The consumer is unwilling to wait for (or does not understand) the delivery schedule
- The consumer failed to return their item within the specified return time limit
- A family member made the purchase, but the cardholder refuses to accept/pay the bill
- The consumer claims not to recognize (or has forgotten about) the transaction; ex. an AutoShip order
What happens when a chargeback is filed?
When someone disputes a charge on their card, they will receive a provisional credit on their account. The amount of the dispute is debited from the practice’s account along with an additional $25 chargeback fee.
Next, your merchant processor will communicate with you, the practice (not Covetrus), by mail. You are likely to receive a Dispute Notification similar to the one pictured below.
Dispute Notifications are often vague and will not provide the cardholder’s name – only a date of transaction and the amount being disputed.
It’s important to note the expiration date on the Dispute Notification (inside the box in the upper right corner, as pictured). Merchant processors provide a fairly small window of time (generally 10 days) for the merchant to provide information that may be used to win/reverse the dispute.
Missing that expiration date, even by a day, will result in the cardholder winning their dispute. This also means that the consumer has effectively received the product for free, and the practice must absorb all associated costs.
What can the practice do to win/reverse a chargeback dispute?
It is the responsibility of the merchant (i.e. your practice) to prove that the transaction in dispute was a valid sale.
Practices that receive a dispute (e.g. a Dispute Notification) should email disputes@covetrus.com as soon as possible – and before the dispute expiration date.
Our team will provide Merchant Services with supporting documentation for proof of sale to help you win the dispute. Examples of supporting documentation include:
- Copy of the order being disputed
- Copy of any refunds provided for the item(s) being disputed
- Copy of order tracking history (via FedEx, UPS, or USPS)
- Copy of customer’s order history – if on AutoShip – to show that the customer has ordered this product before
Chargebacks can take up to 60 days to finally be resolved, and that outcome will be communicated only to the practice (not to Covetrus).
How do I protect my practice against chargeback fraud?
Unfortunately, fraud does happen on e-commerce stores. Covetrus uses a fraud-prevention software program call Kount that is designed to catch most of false or fraudulent sales. If one of those sales is missed, Covetrus will reimburse the practice the disputed amount lost, along with the $25 chargeback fee they were assessed.
If you have any questions related to chargebacks and/or have received a chargeback dispute, please email disputes@covetrus.com.