Small Businesses & Credit Card Chargebacks | The Payment Technology Podcast | B2B Vault Episode 99

Hey everybody, what's up? It's Justin live from B2B Vault, the payment technology podcast with your host Allen Kopelman, and we'll be providing you educational information about business payments, fintech, decentralized finance, and the technology businesses use in today's world. And in today's podcast, we're going to be talking about high risk— I mean, excuse me, we're going to be talking about merchants, small businesses, and chargebacks. And, you know, there's always different ways of fighting the chargebacks, different crazy stories about the chargebacks. Allen has a lot of, you know, interesting stories about that as well. You know, I myself wasn't very familiar with this process. I didn't know that this was even something that you could do. And, you know, like, here you go.

Yeah, you had a thing where you were trying to get your money back. Oh, forever, right?

Oh my god. So yeah, I bought a— I tried to buy my daughter a Nintendo Switch. Online. Um, it never came. My bank, it took over— it was in December, I think, is over almost 6 months.

It's crazy, shouldn't take that long.

But it was a debit purchase, it wasn't a—

yeah, debit takes a little bit longer than using your credit card.

I mean, I'm just going to say PNC is a terrible bank. I'm just sorry.

That's okay. But I'm just saying, when you do a chargeback from the consumer standpoint, debit and credit are two different products, right? So it's two different processes. On credit, it's a little bit different because it's credit. On debit, you have to deal with your bank, and they don't really deal with that many debit card chargebacks, right? It's always better if you're making an internet purchase to use an actual credit card, especially if you're not familiar with the merchant, you know, the business. And that way you have more, a little bit more protection. But, you know, we're going to talk today about chargebacks. You know, I always split the discussion up into two areas, one the internet there, you know, and one for card-present. Today we're going to dive into card-present. I'm going to start off with a little, a little story before you get in.

What is card-present?

So card-present means where you're doing face-to-face business, retail, restaurant, you know, wherever you're dealing with the person face-to-face, you know, the cards going in the machine or somebody's doing a tap and pay or paying with their Apple Wallet. You know, it's a face-to-face sale, right? So we're talking about card-present, face-to-face sales. And, you know, EMV was supposed to be the end-all to everything. You know, so let me find this one. You know, I've been helping like a few merchants with a bunch of chargebacks the last few days. I'm still working on a few now, and one of the ones I'm working on is this one for $2,200, and it's the craziest— it's a crazy, crazy, crazy chargeback. And believe me, people will charge back any amount, any amount of money. Of course, it's going to be the last piece of paper right? So here it is. So this customer, literally, they complained about everything. They complained about— they claimed that they did not receive the goods and services, and the goods and services were different than the written description, which makes no sense. I mean, this isn't a— this isn't a restaurant, bar, nightclub situation. And they dispute the quality of the merchandization of services and merchandise. I don't even know what that means. Merchandise mischaracter— oh, the quality and mischaracterization of services and merchandise. I mean, if you come with it, that's like a $10 word. I don't even think you can make that in Scrabble, it's so long.

Mischaracterization.

Yeah, I missed that word. Yeah, it's a good word, but I'm just saying, like, that's like a huge word. That's like a $10 word. You know, they want to supply—

it's a very legal term, right?

Supply a detailed refute to these complaints along with any applicable supporting documents and the reason for the adjustment. And then they also complained that one of their party was asked to leave the club, so they wrote in about They actually tried to do this chargeback about 4 times, okay? And each time they added more and more on to the letter. Oh, someone was asked to leave the club, so then we just had to write another letter, you know, saying that we wrote another letter and sent it in, even though we sent in detailed, um, one of these are mine. Oh, we wrote in detailed letters, you know, all about like, you know, what was— what went on with the transaction. So the person also claimed like they got a private room at the club and they didn't get the private room. So we had to explain, like, you come to the club— I mean, we'd literally write out— I mean, we wrote a detailed— to a long letter that took 2 pages explaining. You come to the club, you decide you want a private room. The hostess or the manager shows you around the club and shows you which rooms are available. Then you're going to pick the one that you want, right? So the guy picked the one he wanted, and he got the private— you know, usually you pay money and you're in there for an hour or two hours. You get your bottle service and all that, right? It's all included. And then you pay, you know, you you get your room and then you make your payment, la-dee-da. But obviously this guy didn't want to pay, and he's been fighting and fighting and fighting, going back and forth. I mean, literally, Justin probably— and Samantha, listen, for the last— probably, I think I was on the phone for over an hour.

That was just today.

Yeah. And I was also on the phone with the chargeback department the other day for over an hour too, trying to get this cleared up for the client, you know. So we work, you know, on behalf of the clients. When they're having, you know, chargebacks. You can't— you know, merchants will say to me, oh, I want to stop people from doing a chargeback. You can't, you can't even have a piece of paper that says I will not do a chargeback because it means nothing. Because what people have to understand is you have your merchant agreement and the cardholder has their cardholder agreement, which gives them rights.

So I mean, just to clarify real quick, like, what exactly is the definition of a chargeback?

So the definition is you made a purchase and now you don't want to pay for it for whatever reason. Now you have what I call— this is just what I would say was a scam. This is just outright fraud on behalf of the cardholder because obviously it's a club, so they take extra care. And if—

I'm sorry to cut you up, but if you— if say you find out that you you know, obviously, you know, there's video footage, you know, there's— yeah, there's pictures.

They, they took the guy's driver's license.

The owner of that club, like, press charges on that?

Oh yeah, you could. In most states you can press charges because— and I learned this because I used to be a chef. So when I was a chef, you know, one of the weird things you learned about is hospitality laws, right? So, you know, people always refer to like a dine and dash, right? Dine and dash— someone eats in the restaurant and leave, right?

So I think everyone's done that once in their life.

So basically, it's— in some states it's a felony, right?

And it's called— in Wisconsin it is.

So it's called— they don't call it the dine and dash felony, it's called the fraud of an innkeeper. So there's these innkeeper laws that basically say that, oh, if you go in this place and you eat food and then you don't pay, you can go to jail. In fact, when I lived in Atlanta, I had a friend when when I was a chef, he owned a restaurant downtown, and it was in a really bad area. There were a lot of homeless people. He felt bad for them, and they would come into the restaurant and they would order— he sold chicken wings, sandwiches, and pizza. That's it. So, and it was near the university, uh, Georgia Tech.

Okay.

So obviously a lot of people over there, and so A lot of times homeless would come in, they would order a pizza, they would eat the pizza, then they'd say, we have no money. And he knew they had no money, but you can't just say you have no money, give me the money for the pizza. He knew what they wanted. And then he would call the cops, the cops would come, and it was freezing most of the time outside, or super, super hot, and they wanted to go to jail. So they would just take those homeless guys and they would either take them to jail or some homeless shelter because sometimes they couldn't get in the homeless shelter because the ones near them were full, right?

I mean, the sad part about the whole thing is like, that's literally the end story to most of those guys, is like, they want to go to jail, right? Because they got 3 hots and a cot, right?

You know, so they want to go— well, they would take them most of the time to a homeless shelter because they're not going to throw them in. They don't really throw them in. Yeah, Atlanta. They take them to it most of the time. Not all the time, but most of the time they're doing that anymore. Well, I don't know what goes on anymore, but this— but this is a random thing.

I know they're outraged, but you can basically be like an encampment for people.

Like, if the merchant lost this transaction, they could actually just call the cops and say this guy defrauded— filed charges that he was committed fraud and get charges filed against this person. Which, you know, the person's stupid for doing this because they probably don't know that they could get charged with a felony.

Oh, for sure.

So they could get charged with a felony, then they could get— they could, they could also, on top of that, because it's under $5,000, right, they could go to small claims court and take the person. They have the guy's driver's license.

I mean, to me it's just ridiculous. Like, you're trying to say that you weren't in an establishment and 99% of these places have you on closed caption cameras, right? I don't really understand, like, why you would try to— I mean, so I'm sorry that you got caught going to the strip club, Johnny, and your wife looked at your credit card statement.

We don't know if this is exactly a strip— it's like, you know, also this happens in nightclubs, right, where it's just like a nightclub, you're out partying with your friends.

Yeah. Oh, let's get boys night out. And your wife found out you were at the club with your ex, and now you're trying to cover your tracks.

You're getting the special couch, bottles, and all that stuff. Get out of here, it's expensive. And those places, those clubs, they go get— they get the, uh, you know, they get your driver's license.

What's happening? Pay your bills, Captain.

So like, here's another case where the customer is claiming this guy bought a car or put a down payment on a car and claims to have not received or partially received goods or services. I don't understand. Like, you went to the car dealership, you put a down payment on the car using your credit card, and now you're saying that you didn't get it? Doesn't make sense. This is an on— this one's an ongoing fight. No, but there's all kinds of reasons. And then you're, as a merchant, You know, you either need to get smart on how you answer these, right? Or you need to ask for help, like from a guy like me. I help my clients. Like, here's another one. Someone has a reason, does not recognize. So they want to know, you know, they just—

they're just saying that they don't even know, like, right, like they were there or not. That's ridiculous.

And this one, they should have been— they shouldn't have sent a chargeback out for this. They should have sent a retrieval request. Just asking for a copy of the receipt and the paperwork. So I don't know why they sent that one out. And then here's another one, fraud card-present environment, which means the customer's claiming fraud but it was a card-present transaction. This one, they sent in all the information and the cardholder or issuing bank accepted liability for the dispute. So it's important that you respond to these so you can get your money back. Get your money, right? I'm just reading like a bunch of these because it's important, you know. Here's one, somebody's claiming the EMV liability shift, and the customer— the merchant sent in the receipt that, you know, the receipt, it shows that it was processed using the chip, and they won the chargeback. You know, but it just shows you people don't want to pay their bills, and it could be a result of the economy, right? And they're trying to like extend their— when they have to pay or not.

Well, I mean, that's part of it, but a lot of people are just dirty people.

Here's another one from a restaurant. This— these I don't understand because, you know, you go to a restaurant and I actually write this in the chargeback letters for the merchant. This is a restaurant bar. When you go to a restaurant or a bar, you place your order, you are served, and then you pay at the end. Right. This is how every restaurant works in the world.

Unless it's fast food. Right.

If it's fast food, you order your food, you pay for it, and then they give it to you.

Right.

But this is like a sit-down situation. It works like that. I mean, do we have to explain that to the credit card company that that's how it works in a restaurant? You would think that they go out to eat or they've been out to eat at least once or 1,000 times, right? You would think. And we have to write that every single time. This is a restaurant. This is how it works here. This customer is claiming non-receipt of merchandise and services. Provide valid proof.

I mean, how do you provide—

why would you not know? Like, they have to send in a copy of the receipt and they're asking for an invoice or order form. Makes no sense. This was a card-present transaction and they can—

so what would be the reasons why someone would do— besides them just don't want to pay their bill, so they're— or they had a bad experience.

Well, they're not complaining that the food was bad or they got sick. I've seen some like that. I saw one where a guy wrote a whole thing saying he's gluten-free and they they must have gave him some gluten because he got home and he was sick. Now, that doesn't make sense either. Like, how is the restaurant responsible? How do they know that while you were sitting at the table, I'm gluten-free and Justin orders pasta, and I decide that pasta looks pretty delicious, Justin, and I want to try a little bit of it even though I know that could make me not feel so good later. How do they know that didn't happen, right? Or the guy saw the chocolate dessert on the table, said, that looks really good, I'm gonna try one little small spoonful.

Hey, before you go back into all that, uh, more of those wonderful chargeback stories from H-E Double Hockey Sticks, um, be sure to enter the contest, man. Today's your last day to enter. For your chance to win a Meta Quest 2.

Posted on all of our social media, the link is posted everywhere.

So this is your last chance at B2B Vault to enter the— to win a Meta Quest 2, $100 gas card, and a $50 Amazon gift card.

Not— you don't get all three.

No, you— those are the first, second, and third place, right? Weirdos. Anyway, uh, yeah, so be sure to follow B2B Vault on Instagram, Facebook, TikTok, LinkedIn, Yeah, Twitter. And Twitter, we'll tweet you. Don't, don't forget to follow us and to join the contest, please. Today's your last chance.

Yeah, there's like about almost 1,000 people.

Yeah, there is 1,000 people.

Yeah, over 1,000 now.

Uh, yeah, I believe so.

Awesome, it's great.

Your chances are getting thinner and thinner.

Yeah, there's one guy, he said he keeps commenting, I hope I win, I hope I win. Yeah, I've seen it on Twitter.

See, one person has so many entries, I'm—

I don't even know how they did that.

I might have to— gonna have to see if they did some, some, uh, untrustworthy things there.

Huh, that's weird. I thought it was limited, but we'll see. No.

Okay, well, I mean, yeah, there's— but you, you keep sharing and sharing and sharing, so I don't know.

I guess if you keep sharing it, you get another entry.

My entries haven't been going up. I've been trying to figure this out, so like without worrying.

I mean, that guy's a contest professional.

There's, there's people that I had to remove from the contest whose emails were like contestwinner@gmail.com. Okay.

Yeah, well, you know, also, if you don't, if you don't, um, verify, verify your email, you're not entered into the contest.

Yep.

I mean, there's way more than 1,000, but—

oh, I mean, there's—

I think there was a total of like 3,000 but people don't verify, so they don't— they're not entered. Um, here's another one: incorrect amount billed, supply sales ticket to show. So the guy says the transaction's $140 and he thought he's only paying $120. Merchant sends in the receipt, it's all covered, you know. Here's another one at a restaurant. They complain non-receipt of merchandise. They want to valid proof that they received it. I mean, what do they need, a video of the guy eating the hamburgers? I don't understand. I mean, it's getting a little crazy, you know. And they ask all kinds of questions to the person. Was— what was not received? The guy says the merchandise. And then what was the description? No, the merchandise was not received. Well, why would you— if you went to a restaurant, why wouldn't you pay your bill? If you paid your— why would you pay if you didn't get their food? It just makes no sense to me. So that's what the person is claiming, and that, you know, so it just causes time. You know, the merchant just has to spend a lot of time doing all this, and if you don't do it, then you're not going to win.

And during that time, during that time, so obviously that, you know, like say I go to Allen's Steak Shake Right. Shop, whatever. I order a T-bone, I get a filet mignon, right? I'm unhappy. I go home, I charge back the—

yeah, but why wouldn't you complain at the restaurant? It's busy. Doesn't make a lot of sense. No, I mean, no, I'm just saying, like, you're gonna complain at the restaurant.

I mean, I would complain, right? I used to not be that person. My wife finally—

no, but I'm just saying, if I got the wrong food, I was gonna— like, once I went to a restaurant And they served us, they put the food down, and then I stopped the server and I go, this is not what we ordered, you know. And then they were like flipped out about it, you know. So they took it back, obviously. We didn't eat it or anything, but the girl put it down so fast. And then we looked at the food, that's not, it's not our food, right? And obviously whoever it belonged to, they're not going to want it after it's been put in front of somebody else, especially now with the situation, you know, COVID, right? So no, that—

I don't—

I just think—

I'm rocking my COVID.

I just think that, like, I saw Visa and MasterCard made some changes to— within regards to internet merchants, but it doesn't go into effect until next year. So people have a whole— it doesn't go into effect till 2023, which is wrong. They should just put it into effect now. And that rule is interesting, but we'll talk about that like another time because It's not going to help anybody now. And then they want to know, like, why they didn't get credit. I mean, why would you pay for your food if you didn't get your food? And there's a bunch of these, and that's all coming from— a bunch of these all came from, like, one restaurant. I mean, the guy fighting the $2,200, I mean, I actually wrote— we probably wrote about 5 letters, sent it all over to the chargeback department, addressed every single claim that the guy made in the in the, uh, in his letter, the guy made about 8 different claims, you know. And the— I always question when I meet people from the card brand, you know, people that work at Visa and MasterCard. I say, I don't understand, like, 2015, you guys went crazy, right? They have this EMV liability shift. So let me explain what that is. What that is is, let's say, Justin, you come into my business right? You present me with your credit card. I don't have an EMV machine, right? So I take the card and I swipe it using the mag stripe. Why these cards still have mag stripes on them is also beyond my comprehension, right? 2015 is already 7 years ago. Yep. Okay, so I would think in 7 years they ran out of these mag stripes already, right?

Nothing—

unless some guy, Mr. Mag Stripe, is just— has some patent and it says every credit card you print has to have this thing on it. But I would think, you know, just get rid of it. No, I'm just saying, who knows, right? Yeah. So you swipe the card, the bank can just say, oh, we see that's a swipe, it's not an EMV, we, we want to charge it back.. And the bank could do it without even asking the customer, right? But I've been into many, like, doctor's offices, dentist office, um, trying to think what other business. Mostly it's medical, and they haven't upgraded any of their stuff where they take an EMV. They're swiping the card. And one time the dentist got mad at me and they go, oh, we got a chargeback. I'm I'm like, I don't know anything about it. And the funny thing was, I went and checked my bill. It was still on my bill. So I called the credit card company, and they— and I got a copy of the chargeback letter, and I sent it to them. I go, I don't know, understand, like, why you guys are doing this. Like, if you took it, if you charged it back, and they have no— because they have no rights because of the EMV shift. So if they don't have a slip that shows chip on it or EMV, they automatically lose. So I go, well, if they lost, why didn't you take it off my bill, right? They didn't have an answer for that. So I said, well, you need to fix it and send them back that money because I'm not paying them again. Because look, I'm— my bill, it's not off my bill. I didn't get a credit, right? So I find that to be a little bit weird.

It's a little deceiving.

Yeah, it's deceiving because as a cardholder, you wouldn't know about it.

But I mean, I mean, yeah, but that goes for banks and everything. I mean, you just got to pay attention.

Yeah, exactly. But you know, like, I see a lot— you know, I saw another article recently discussing, um, discussing like a little shift from people using their debit cards, that people are using their credit cards more. And I went and looked, and I saw like there was like a slight little there wasn't really like a big difference in that. Maybe that could be geographical too, like some geographical areas, because I think like in some states where things were closed longer, you know, there the economy is not as strong as in other places, right? You know, so like in Florida where things were open a lot quicker, the economy's stronger. Although I drove down you know, a major street the other day near my house in Coral Springs, and I was actually shocked. I was— I was driving through— excuse me, driving down the— driving, you know, down the street to go run an errand. I was actually shocked. There was like a lot of— I saw quite a few businesses went out of business that I thought were good, strong businesses, but you never know. Their lease could have went up. Sales weren't maybe not so good for a while. And, and, you know, we just did a podcast about like omnicommerce, right? And we're going to do some other podcasts about that because I think omnicom— omnichannel, the omnichannel style of having a merchant account is the future for businesses. And they need to have this omnichannel because they need to have the the way for customers to pay them the way customers want to pay. I mean, I even saw a story about grocery stores, right, and how that— the— how they're evolving, you know, to keep up. And then Instacart's, you know, business is down because more people are going to the store, but they're— maybe they're not going to the store. More stores started offering that kind of service where you can just pick it up curbside. Although I'm the kind of person, I like to go get my food because I used to be a chef, so I want to look at the food, touch the food.

Yeah, exactly.

See what looks good, what doesn't look good.

See if it's hot.

Yeah, if you're buying something cooked, but I'm just saying in general. So, you know, chargebacks, it's very difficult for small businesses to deal with. I wish that the card-issuing banks would be a little bit I don't know how to, how to phrase it. I think that the card issuing banks, they can see that the person— the EMV chip was used, and I think that they should just ask for the receipt and not do a chargeback. They should do a retrieval request, right? So if you're listening from the credit card, you know, the people who make that decision, which is Visa and MasterCard and the card issuing banks, listen to the podcast, listen, you can come on and discuss it with me. I've asked a bunch of people to come on the podcast. Yeah, they haven't really come. But, you know, Dick Durbin and anybody else on his committee wants to discuss credit card processing, love to discuss it with you. Any senators from Florida, Marco Rubio, Rick Scott, you can come on the podcast. Visa, MasterCard chargeback people, Amex chargeback department. 'Come on, let's discuss it.' They need to be a lot more fair, or I guess that's— or diplomatic, I think, with the merchants. If you see that it's EMV, they should just say, 'Hey, we want a copy of the receipt,' and that's it. And not all this whole mess of stories. 'Oh, I didn't get my food.' They can clearly see from the name of the place, right, right, that it's a restaurant. Okay, it's not confusing, you know, Allen's Bar and Grill. Okay, we know what that is, you know, 2929 Restaurant. We know what that is, right? If it has a weird name, put it in Google. They have a minute to like Google it up, right? You can just highlight it and Google it or type it in real fast. But I think that they need to be a lot more diplomatic, fairer, more— I don't know, what other word can we use?

Oh, I think they just need to be more, uh, not thorough, no, but I think they need to treat merchants a little more fair.

They need fairer treatment because, I mean, I understand they're for the cardholder, right? When I want to do a chargeback, I want my bank to be on my side. True. But I think on these card-present ones, which is what we're talking about today, and we'll do another another podcast on card-not-present transactions because it's different, right? And, you know, there's tons of companies that can help you if you're a high-volume merchant with non-card-present. There's companies that help you fight the chargebacks. With this, with card-present, there's no companies that help. I'm probably the only one. I call my program Chargeback Rescue, and that, that's what we call it, Chargeback Rescue Program. You have chargebacks, you need help, We help you card present, card not present. We can refer you to companies who deal in that, in that area. And I also think that, you know, if there's some, you know, there should be some other, like I always go back to like two-factor authentication or other types of authentication. I think that, you know, the credit card companies need to stop talking about that and just put something, implement something, whatever it is. Because I mean, they ask you all the time, like when you log in, like you probably get asked, you log into your bank on your phone, or you log into your bank on your computer.

It doesn't ask me on my phone anymore because it's like they know it's your mobile, right? Right. If you log into it on your device, like your desktop, it's going to send you a push notification to your phone, right? That's two-factor right?

Or sometimes they say, oh, is this a trusted device?

Exactly.

You have to click yes. So I think that, you know, they need to— I think they need to be more connected, more connected to identifying people at the point of purchase for every single purchase, and just send people a text and they have to click yes. Boom, it can happen. It happens in like nanoseconds. It does. I mean, when you're buying something and you're using Shopify, they just send you a code. And there's other websites that do the same thing. And I think there needs to be more of that and needs to be more accepted by the credit card companies as a form of identifying the cardholder. So if you have problems with chargebacks in a card-present environment, you need some coaching, we can give you a little coaching. Want to hire us? You can hire us. If you're a merchant, we provide the service to you at either no cost or a nominal fee. And you can find out more on our website, or you can text the word BOOK to 954-827-9818 and get a link back and book an appointment. So enter the contest, be ready for Thursday at 3 PM. Catch us on LinkedIn, Facebook, YouTube, YouTube. We're going to be there, the live 100th episode of B2B Vault. All right, I can't believe we made it to 100 episodes. The first few were horrible, but we're— we've been on the roll. And yeah, we're on a roll, right? So don't forget the 100th episode. We'll be looking for you, and send us some questions to be read. There's some surprise giveaways.

Peace out.

Peace out. Carpe diem.