Handling Chargebacks and Disputes for Credit/Debit Transactions

What are Chargebacks

With Credit/Debit Transactions as made by Users, either at the PinPads of the VAC Kiosks,

or through Online Payments with the LaundryCat App,

there is a possibility that a Chargeback could be filed afterwards by the Account Holder of the Credit/Debit Card with respect to the Transaction.
A Chargeback may be filed up to Months after the Transaction took place.

Where a Chargeback is filed and you Lose the Dispute, the end result will be Penalties of;
- the Transaction amount will be reversed, and your Merchant Account balance will be debited

- a Chargeback Fee (typically around $25) will also be applied and debited against your Merchant Account Balance

Typically Chargebacks for products and services as provided by Laundromats fall under one of the following Scenarios, where the Account holder of the respective Credit/Debit Card has initiated the Chargeback;

    A. because their information was stolen, and has been used without their knowledge by criminals

    B. to try to get the product/service for free as a form of fraud

    C. as a form of retribution for perceived poor quality of the product/service

    D. due to confusion as to where and what the Transaction was for, and assuming it to be invalid

    

In all cases the Issuer of the Credit/Debit Card as well as the Payment Processor that processed the Transaction will initially side with the Account Holder,

and the burden of proof will be on you, the Merchant, to prove the Transaction was valid.

   

Disputing Chargebacks

Examples of notifications sent by Payment Processors for Chargebacks may be seen in the attached documents;

- Fortis Example Chargeback Notification PDF (example of Chargeback filed with respect to Transaction at PinPad of VAC Kiosk)

- Worldline Example Chargeback Notification PDF (example of Chargeback filed with respect to Transaction through Online Payment with LaundryCat App 

The steps to Disputing the Chargeback depend on the Payment Processor that processed the respective Transaction, but in general each involves the following;

1. The Payment Processor will send you a Notification for the Chargeback filed (typically by email),
 and you will see a report of the Chargeback when you access and review the state of your Merchant Account with them.

You should make sure that you have Notifications for Chargebacks enabled with each of the Payment Processors you have a Merchant Account with.

2. You will have 10 to 30 Days to file a Dispute against the Chargeback, and Submit Evidence in your favour.
Not acting within the allotted time will automatically default to you Losing the Dispute, and incurring the Penalties.

Note that with Scenario A mentioned above, for use of stolen Credit/Debit Cards/Information you will always Lose the Dispute.

The reasoning being that you should not have accepted Payment in that Scenario

3. Through the procedure of the respective Payment Processor, you will Submit Evidence in your favour. 
After which the Dispute will go into arbitration, and may take up to a few months to conclude in either a Win or Loss.

Resources for handling Chargebacks with a number of the main Payment Processors Laundroworks integrates with are as follows;

Fortis 
- Retail Fortis Chargeback Guide PDF (see attached)
- How to Set Up Chargeback Alerts in Commerce Control PDF (see attached)
- Responding to Chargebacks (SAMPLE LETTER) PDF (see attached)
- Understanding Retrievals PDF (see attached)

Worldline 
- Disputes Overview

Stripe
- Chargebacks – the basics: What they are and how businesses can prevent them

Note that with Managed-Stripe-Merchant Accounts as provided by Laundroworks/Cents,
you would work directly with Laundroworks/Cents to Dispute the Chargeback and/or Laundroworks/Cents would Dispute the Chargeback on your behalf

Commerce Control Center/Business Track
- Dispute manager Guide
~ many Payment Processors delegate Dispute handling to a Commerce Control Center Application Account

Collecting and Submitting Evidence

1. Identify the key information about the Transaction corresponding to the Chargeback, as given by the Payment Processor

- the Date and Time that the Transaction occurred

- the Card-Type (Credit, Debit, EBT) and the Card-Brand (Visa, Mastercard, etc..)

- the Payment Method (Chip-Insert, Tap, Swipe, Mobile Wallet, Online Payment)

- the Card-Number (last-4, first-6, or whatever is provided)

- Reference ID's for the Transaction (e.g. Auth Number, Transaction ID, Ref Number, Order Number, etc..)

- Billing information on the Credit/Debit Card, such as the City and State of the Billing Address, or the Name of the Account Holder (if may be provided)

Note that where a Mobile Wallet Payment Method is used, the Card-Number for the Transaction may not be same as on the corresponding physical Card;
- GooglePay payments may use a Google Pay virtual card number of the credit card
- ApplePay payments use the Apple Pay card number of the credit card

2. Locate the corresponding Transaction in Laundroworks LaundroPortal Records

i. Determine the Location in the LaundroPortal to which the Payment Processor Merchant Account for the Transaction corresponds to

ii. From the Location-Panel of the Location, access the VAC Log Report

iii. Run a Report with the following filters to narrow down the Records shown
- VAC: All
- Data Type: All Payment Processing
- Transaction Filter: All User Usage
- Start Date: set a Date 1-2 days before the Transaction Date
- End Date: set a Date 1-2 days after the Transaction Date

For Payment Processing Records with a Result of Approved, you can click on the Tran ID Column figure to display the Full Receipt generated for the Transaction

You may also enable the following visibility options to show additional information on the report for the Transactions;
- Show Detailed Payment Processing Result: display internal details related to the Transaction in the Result column
- Show Payment Processing Receipt Content: display the content of the Receipt for the Transaction (excluding the Receipt Header)

That data would also then be included in the CSV File Export.

iv. From here, review the listed Payment Processing records, and find the one that most closely matches the information for the Transaction from the Payment Processor. Navigate to the Card-Tracker page for the Account in question by clicking on the entry in the Card Number Column

3. Review the information for the Account in Card-Tracker

Start by reviewing the User Info tab, and review the registration information for the Account, such as Name,  Email, Phone.
Creation Date represents how long they have been registered as a customer to your business,
and Last Transaction Date is when they last used a Machine or made a Payment.

Something you may want to try at this point, depending on the Scenario and if you have an Email or Phone for the Account,
is to contact them and try to politely reason with them to drop the Chargeback claim filed.
You'll want to record the conversation and/or email correspondence to potentially submit as Evidence should they refuse.

Next review the Usage Report tab for the Account, where you may want to look at all History of usage for the Account, including the Transaction in question.

Note that available Usage History is limited to the last two years. If Usage History is required prior to that, it must be requested for from Laundroworks.

And like with the VAC Log report,  You may also enable the following visibility options to show additional information on the report for the Transactions;
- Show Detailed Payment Processing Result: display internal details related to the Transaction in the Result column
- Show Payment Processing Receipt Content: display the content of the Receipt for the Transaction (excluding the Receipt Header)

That data would also then be included in the CSV File Export.

Note that for LaundryCat Account's, the Detailed Payment Processing Result shown will include information such as;

- device, osVersion: The Phone Model and Operating System Version the Account was using at the time of the Transaction

- ipAddress: The IP-Address the Phone was communicating with at the time of the Transaction
~ you can use an online tool like WhatIsMyIpAddress.com to get information on the geographic location and ISP associated with the IP-Address

Looking at the Usage History as a whole, we can look for indicators as whether the Account is knowingly attempting to commit fraud, especially in the case  Scenario A mentioned above;

- has the Account being making many Credit/Debit Transactions, but relatively few Machine Usages?
- does the Account normally carry a high Balance (Float)?
- if you have a Vending Machine, or POS Reader, are those where the Account uses up most all of their acquired Balance?

- has the Account used more than two Credit/Debit Cards for Transactions within a short span of time?

- if you were able to get Billing Address information on the Credit/Debit Card(s), are they from Out-of-State, or from Cities far from where your business is located?

Note that if it is Scenario A for use of stolen Credit/Debit Cards/Information you will lost the Dispute, and Collection of Evidence would mainly be for your review, or to submit to Police/Authorities were you to want to file a criminal report on the matter.

For the the other Scenarios, we want to be able to Submit enough Usage History by the Account to show that they are a regular willing patron

of your business and that the Transactions were deliberate.

A recommendation is that you provide as Evidence to the Payment Processor (or Authorities)
-  either Screen Shots or a CSV File Export of the Usage History, with the Detailed Payment Processing Result and Payment Processing Receipt Content included
- a screenshot of the contents of the User Info Tab, which will have their Registration information and other details

Explanations of the Columns of the Usage History may be referenced from the help document VAC and Reader Log Operation Glossary

Account Status Escalation and Adjustments

Depending on the Scenario of the Chargeback, you may want to escalate the situation and carryout further adjustments

1. Upon review of the Usage History of the Account, their Payment Processing records in particular, you may want to pre-emptively Reverse some or all of their past Transactions through the Management Tools as provided by the respective Payment Processor for the Merchant Account.

You would do this in order to avoid any Chargeback Fees that would be applied were Chargebacks to be filed against them.


2. Through the Ban Card Tab of Card-Tracker for the Account you have a few options you may apply

a. You could outright Ban the Account, as also described in the Banned Cards Article.
Where the Account would then no longer be usable in any respect at your business

b. You could Disable Credit-Card Payments for the Account (LaundryCat Accounts only) where the Account would still be usable at your business, except that all attempts to make online payments (including by Mobile-Wallet) would be automatically declined

c. You could enter up to three phone numbers to receive Text Alerts on, for whenever the Account is next used live at any Reader at your business.

d. With LaundryCat Accounts you may also take immediate action through the Load Card Tab, where a Change balance request may be performed to immediately change their remaining Balance

  

Mitigating Future Chargebacks

The attitude of Payment Processors and Card Issuers is that you as the Merchant should have done your due diligence to not have accepted Transactions mistakenly or fraudulently. As such the best offence in this case is to have a strong defence.  

PinPads at VAC Kiosks

-  install Cameras in the near vicinity of the VAC Kiosks, and make it known to users that the area is monitored

-  ensure that Card Manual Entry is not somehow enabled on the PinPad. This should have been disabled by default, but if not, contact the Payment Processor to ensure it has been disabled

-  Chip-Insert is considered the most secure means of accepting Credit/Debit payment. If you are seeing many chargebacks related to Swipe or Tap, you may want to consider asking the Payment Processor to disable those Payment Methods

- make sure that your PinPad is operating properly, if you notice issues with it review the Credit Card Processing Issues article on steps to remedy them

- if your VAC Model has a Receipt Printer, try to always have it operational to provide receipts to users for Credit/Debit Transactions to better avoid future confusion and disputes from them.

See the Receipt Printer - Paper spec and Issues article for more details

Online Payments with the LaundryCat App

Various configurations may be enabled in the Mobile App Configurations for LaundryCat to harden against fraudulent activity. Consult Laundroworks or guides provided for the App for more details on setup

i. enable Address Verification Service (AVS) where Users would need to provide Legitimate Billing information associated with the Credit Card they wish to register for use with the LaundryCat App in order to be able to make Transactions with it.

In particular; 

    - The Name of the Card Holder

    - The Address of the Card Holder, including the Street-Address, City, State, Zip-Code and Country

ii. enable Transaction History Allowances and Auto Disabling Credit-Card Payments by Account

This involves us applying configurations where

For the Last Given Number of Days,

We can compare;

- The Number of Declines to a Given Maximum Number of Declines Allowed

- The Number of Different Credit-Cards Used to a Given Maximum Number of Different Credit-Cards Allowed

- The Total Amount of Approved Purchases to a Given Maximum Total Amount of Purchases

Where if any of those Allowances are exceeded;

- We disable Credit-Card Payments for the Account, where ALL further attempts to pay by Credit-Card will be Declined

- We send a Notification Email to your Support Email, indicating we have disabled Credit-Card Payments for the Account

A good conservative set of values to start with is;

- Last Given Number of Days: 7

- Given Maximum Number of Declines Allowed: 4

- Given Maximum Number of Different Credit-Cards Allowed: 2

- Given Maximum Total Amount of Purchases: 100

iii. Service Area/Distance Threshold for Card Billing Address

Here we set a Maximum Distance that the Billing Address of the Credit Card can be from the Business Address, where if the Maximum Distance is exceeded, the Payment will be Declined.

So for example, if on your Locations, we set Maximum Distance of 30 miles,

this would then mean if a Users Billing Address is more than 30 miles from the location they are registered to then the Payment will be automatically Declined

You should consider this Threshold for Card Billing Address as many times, where Fraudulent Credit Cards are used, they are typically registered out of state.

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