What is a Chargeback?
A chargeback is a debit to a depositor’s account for an item that has been previously credited, as for a returned bad check. In the payment industry, not all chargebacks are created equally. The reasoning for issuing a chargeback through your banking institution varies, but all have the same outcome: funds you dispute are immediately refunded to you per acceptance of the dispute by your banking institution. Typically, the card holder is almost always correct in chargeback scenarios unless the merchant can provide proof of service. In industries such as consumer goods and the service industry, providing proof of service is easy. For instance, a retail store can provide proof of delivery by a tracking number and confirmation signature of delivery. A restaurant can provide a receipt showing when the consumer ate and what was ordered. Providing proof of a political donor’s support is not necessarily as clear cut. Therefore, when a donor issues a chargeback to your campaign, it can be difficult to provide this necessary information to dispute a claim.
How We Process These Chargebacks:
Let’s imagine a scenario where this applies. A donor decides to contribute to a campaign they are looking to support. RTM ensures the credit card is authorized and processes these funds. The funds are then sent to the campaign within two business days. This same customer receives their billing statement in the mail and sees a charge they made two weeks ago that they cannot remember making. They contact their banking institution and decide to issue a chargeback. Once RaiseTheMoney.com receives notice from the donor’s banking institution that a chargeback has been issued, we immediately advance the funds to that bank to pay the donor for their contribution. The donor then receives a refund on their contribution to the campaign. No questions asked. RTM is legally responsible for sending these funds back. Since RTM had to advance these funds to the customer, RTM must then withdraw these disputed charges from the campaign’s bank account. The campaign legally owes RTM the funds. RTM will withdraw these funds from the campaign bank account. If there are not enough funds to cover the chargeback, RTM will contact the campaign directly. This completes the final process in the chargeback scenario.
Ways We Help Prevent Chargebacks:
RaiseTheMoney.com is committed to implementing features to prevent these disputes. For example, campaigns can edit the billing descriptor listed on the customer’s banking statement to match the campaign. This step will help the customer recognize the charge on their card as valid. Each contributor is also emailed a receipt at the point of contribution. This way, the donor has this email on record if they need to reference it at some point in the future.
Sometimes though, these precautions are not enough and situations arise where chargebacks are unpreventable. For example, if the donor has another fraudulent charge on their account, any pending charges will be automatically marked by the banking institutions as also fraudulent and disputes will be filed immediately.
We hope this helps you understand a little bit more about how the process works! If there is ever a question about why you are seeing funds withdrawn from your RTM account, always feel free to give us a call or open a support ticket!