Credit Card Convenience
The vast majority of modern small businesses now conduct a large portion of their sales through the telephone or internet. The sheer convenience that these mediums offer to customers means that trips to the store are no longer required or even necessary, with the same level of service being coupled with the freedom to shop and order from home using a credit card.
This means greater potential revenue for small businesses like florists and gift shops due to the order-friendly nature of the items they tend to sell. All a customer need do is provide a credit card number and mailing address and specify what they want to complete the transaction. Unfortunately, this also opens up a new world of potential financial issues involve credit card fraud and other dishonest practices.
Credit Card Charge Backs
One of the biggest problems relating to credit card use and online or telephone ordering is the possibility of a charge back. What this refers to is when a purchase is found out to be fraudulent or invalid and the initial cost to the bank is requested as compensation payment back from the business who oversaw the transaction.
The biggest source of credit card charge backs is surprisingly not due to crime, however. Invalid orders come about, often months after the fact, as unforeseen circumstances arrive. For example, an order that was made on a joint credit card that later gets cancelled due to partnership or marriage issues can raise a red flag, resulting in a charge back.
Other common situations involve children using a parent’s credit card without their consent or when a person uses their partner’s credit card without their knowledge. Come bill time the owner of the credit card will see the mysterious charge and ask “what’s this?” A quick call to the bank will set things straight if the claim of misuse is proven to be true. The end result is a charge back wherein the business provides the bank with the compensation money.
Another common example that mirrors the above involves separation and divorce. A purchase that was made on a shared card that is affected by a divorce can end up being challenged by the original owner. Unsurprisingly, the business is the one that is forced to pay the charge back to the bank.
What Banks Do to Prevent Charge Backs
You might be wondering what banks do to prevent a credit card charge back from occurring. Other than blaming small businesses for having lax security measures, the answer is surprisingly: “not much.” Banks suffer no loss from a charge back because a business is required to pay the damages. The only person to lose out is the business itself.
Most small businesses employ privacy and security measures designed to limit fraud, meaning that illegal transactions are a small piece of the pie. Banks, on the other hand, are the ones who should be providing security in the remaining situations. Something as simple as using a PIN or the CV number on the back of a credit card for verification would help to prevent the vast majority of charge backs.
The sad truth is that banks do nothing to implement such features. It’s much easier to simply ask the business to return their earnings and then wipe their hands of the affair entirely. Although some banks and credit card companies are considering implementing the use of enhanced security to prevent abuse, many are doing nothing to reduce the damage that charge backs do to small businesses.
Many of the charge back situations seem perfectly legitimate to florists and other businesses. They’ll confirm the credit card number and address and even call the person back to verify the order without issue. It’s then several weeks or months later that an issue arises wherein a person denies having been given a gift or a personal problem is revealed involving credit card misuse.
What You Can Do to Prevent Credit Card Charge Backs
The continued economic strength of local small businesses is something that you can help maintain. These companies rely on your personal business to survive and many are often unable to afford the sudden demand from a bank to pay a credit card charge back. By considering the following safety measures you can do your part to keep this from happening.
The first thing is to be aware of who has access to your credit card. Under no circumstance should a child be able to get a hold of it, so keeping your wallet or purse out of their reach can eliminate accidental purchases. Remember that banks have no security checks, meaning that a number and address is all that’s needed.
Be sure to check your monthly bills when they arrive in the mail to make sure that everything is in order. If you discover a discrepancy, contact the bank and investigate. By being vigilant you can eliminate credit card misuse and the damage that it causes to small businesses.
Copyright (c) 2008 Brant Florist
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