What's a Chargeback
So you've noticed a new row on your Balance page titled chargeback with a negative number next to it.
This doesn't sound good but... what the hell IS a chargeback?
A chargeback (or charge reversal) happens when someone asks their credit card provider to cancel a charge on their credit card statement, or when they start a dispute in PayPal asking for their money back. Chargebacks can be made for a variety of reasons - typically for fraud. If one of your customers is using a stolen card for example, it's very likely the card owner will notice the charge at some point and initiate a chargeback.
We have very extensive screening tools to make sure this doesn't happen but it still does, albeit very rarely. It's an unfortunate plague every single store in the universe has to deal with.
When one of your customer initiates a chargeback, you are responsible for the refund only. Think of it as your customer forcibly taking his money back.
Our payment processors charge extra fees to handle chargebacks (~$15-17), we as a marketplace cover those fees.
Why Do They Happen?
There are a few reasons why chargebacks are issued:
1) A purchase was made of one of your products using a stolen credit card, and the credit card provider is now cancelling that charge
2) A customer does not recognize the charge on their credit card statement and, for lack of a better word, "freaks out" (see below for more information)
3) A customer believes they have not received the product they paid for and rather than talking with you directly about this, simply cancels the charge
What Happens Then?
We fight every chargeback that hits us. Our payment processors will ask us for all the information we have about the order and we try to provide proof to the customer's card provider (or PayPal) that the charge was legitimate and that, to the best of our knowledge, the customer did intend to buy this product.
This is all we can do. Chargeback dispute policies at banks and PayPal only allow us to state our case, then back away.
The chargeback will appear to you as a full refund of the sale. Cubebrush pays all necessary chargeback fees, rather than forcing them onto you, and we fight to get your money back for you. We will notify you of the chargeback and provide you with the email address of the customer in question.
If you already received the payout including the proceeds from the product(s) affected by the chargeback, the way we get the money back can go 2 different ways:
1. If your store has a steady flow of sales, we'll simply collect the chargeback amount from future sales so there is no immediate impact for you. You will see that negative balance on the chargeback row on your Balance page.
2. If your store is not currently generating sufficient sales, we will request a payment cancellation from PayPal for the amount we sent you that we need to refund
As a means of preventing further chargebacks, which hurt our credit rating, we also add the customer in question to our blacklist, preventing them from ever shopping on Cubebrush again.
There is no guarantee that we will win our dispute of the chargeback, the odds are always stacked against us when it comes to digital content where there is not physical shipping address. If we do win however, we will notify you immediately.
Multiple Chargebacks & The Dreaded 1% Limit
If your account has had too many chargebacks issued against it, our risk team may get involved, as per our Terms & Conditions. Chargebacks hurt Cubebrush's credit rating, and the better our credit rating, the lower we can keep our rates for creators.
Specifically, if your chargeback volume goes over 1% of your total volume,your account will be suspended by Cubebrush and you may be asked to leave our platform. 1% is the standard, accepted upper limit for chargebacks in the payments industry.
What does that mean? It means that if you have made $1000 on Cubebrush, and you incur $10 in chargebacks, your account may be permanently suspended. It may seem harsh, but this is the nature of the game, unfortunately.
What You Can Do
The first thing you should do is send Cubebrush any and all correspondence you have had with the customer who has issued this chargeback. BCC firstname.lastname@example.org on this correspondence. This may increase the chances of us winning the dispute for you.
If you have not corresponded with the customer yet, we recommend that you email them immediately and ask them (nicely!) why they disputed the charge. Oftentimes, customers won't recognize a purchase on their credit card statement, and are more than happy to reverse the chargeback. Again, please send us all correspondence you have with them as this will help our case in the chargeback dispute.
And voila, such is the wonderful world of chargebacks.
Q: Can Cubebrush prevent chargebacks from happening?
A: No. Not at all. There is no payment processing entity in the universe we presently inhabit that can stop a customer from issuing a chargeback. If someone at another payments website smugly informs you that their system prevents chargebacks, please verify that their pants are not currently burning.
Q: I had a customer issue a chargeback 3 months ago - what happened?
A: We don't know. We are not allowed to inquire with banks or PayPal as to the status of a chargeback's dispute. If we win the chargeback, we will send you an automatic notification. If we don't win it, we're literally never informed otherwise.