The Podcast About Chargebacks! & FTC New Rule! | Mark Wagner CEO of Disputifier

Welcome to the Biz to Biz Podcast, your number one source for all business news.

Hey everybody, welcome to B2B Vault, and today we're here with Mark Wagner of Disputifier, a chargeback company that helps merchants win chargebacks, defend chargebacks, get chargeback notifications, and all kinds of other good stuff. So welcome to the podcast, Mark. Second time with us.

What's going on? Thanks for having me again.

Yeah, so, you know, like, what's going— you know, we always like to talk about, like, topical things that's going— that's going on with chargebacks. And obviously, you know, fraud is— there's a lot of fraud. That's number one. Number two, you know, that's things that merchants are constantly worried about, you know, getting, getting more approvals. Yeah, another thing merchants worry about. And then the big thing is the click to cancel, and the FTC put out a rule, um, a hard rule after California passed their law. And, um, you know, how is that going to affect merchants in the SaaS business, recurring transaction businesses where people are getting billed for like lawn service every month or pool service or a SaaS product. Like, so how's that going to shake out? What's your thoughts on that?

You know, we'll see.

We will see.

I think, um, a lot of businesses initially are probably not going to do it compliantly, um, but a lot of businesses need to be aware there's some pretty significant penalties, um, and it's per instance, which is like Crazy, right? So obviously, you know, businesses are just gonna have to fight with increased churn, you know, on their subscriptions. And another thing with the click-to-cancel is like traditionally, if you go to cancel a software, like you ever installed like Adobe, like Photoshop or something like that? Right. And every time you go to cancel it, it's crazy. They're like, okay, no, don't cancel, we'll give it to you for 50% off. They have like a 3-step flow to like help prevent,, you know, cancellations, which as a business owner I get, right? You know, churn is very expensive, but that's just not allowed anymore. Or at least you have to have permission to even give someone an offer to, uh, you know, to save their subscription at a, at a lower price or something, which is crazy to me. So, um, you know, we're just ultimately being restrained.

Yeah, I think more or less they just want it to be like as easy as it was to sign up But I noticed I've tried to cancel something recently, it was like $200, it was like $150 a month. They're like, oh well, we'll give you— do you want to go down to the next level? Do you want to go down to the next one? I was like, no, I don't want this anymore. It wasn't that hard. But I don't think they're gonna complain too much about that. I think if you don't let people cancel, that's going to be a whole nother ball game.

100%. Yeah, I mean, any business that's not letting you cancel or they're making you jump through a thousand hoops, like, doesn't really deserve to in business, right? So I think ultimately it's a good thing that we're, you know, just helping out the consumers and making that easier. But ultimately, you know, businesses have a lot to worry about. And this is just one more thing to add to the puzzle.

And I think in the last few years, probably since COVID a lot of businesses have gotten into recurring transactions as a way to increase revenue.

Absolutely.

Yeah.

Especially the ones that rely heavily on online marketing, just because, you know, costs have skyrocketed. People that do Facebook ads and all sorts of stuff like that, Google Ads, it's just not what it was 5 years ago. So they really need some sort of recurring revenue on the back end to just be able to acquire customers profitably.

So, you know, I mean, I guess we're probably going to see a lot of, um, Oh, you know, a lot of, you know, I know a lot of people cancel subscriptions all the time, especially like TV subscriptions. Yeah, but I wonder how it's going to affect like companies who actually have you like in a contract, like phone company, because I know they were fighting it. They're like, well, we have you in a contract, you can't, right? It's all, even though it's a recurring bill. Yeah, or the electric company, I don't know.

Yeah, that's a good point. That's a real good point for sure. It'll be interesting to see how that kind of stuff plays out if they're enforcing it for certain businesses instead of, you know, the phone companies and the contracts and stuff like that. But I think it all just comes down to we have to like wait a little bit of time and kind of see who the FCC goes after for infringing upon the click to cancel rule. And, and maybe we'll get some sort of clarity in the suits that follow, although The businesses that get involved in that are certainly not going to love it.

And from the standpoint of like chargeback, um, notifications and things like that, you know, one, one of the things I follow a lot of forums on like Reddit and on Facebook, and one of the things I see a lot of merchants, especially low dollar, you know, low ticket merchants, they, you know, they feel like they're getting scammed now because they have RDR turned on. And they become like a target for scammers. What do you think about that?

Yeah, I mean, we haven't really seen that across the portfolio, but maybe a big enough company where, you know, they're able to find that could, could be relevant. I think that in general there's two types of scammers, right? There's like the fraudulent people in which there it's like a fraud ring, like typically, you know, overseas, like that kind of stuff where they're banging like stolen credit cards and stuff like that through the website. That sort of stuff. I mean, it shouldn't ever get to the RDR phase if you have proper like fraud screening tools in place for like that initial transaction. And then the other side of things would be a real customer. And if a real customer purchases from you and then they charge back and they get an RDR, you should block that customer, right? You should not take any more orders from that customer. You should block their email, their address, all that kind of stuff. So I think if you have the right tools in place, it wouldn't really be an issue. But if you're just kind of like letting it go through, like, oh, they got an RDR and you're not tracking that or blocking them from purchasing again, then you could definitely run into some issues.

I've even seen like retailers now where people are trying to return things at the retail store and they're like, oh, you return too much. We're not taking stuff back from you anymore.

Yeah, yeah, for sure. It's funny. I mean, there's return rings, like there is, it goes deep, it goes deep for sure. Even Amazon and stuff like that, their targets, you know, there's fake tracking labels that people will send to be like, oh, I returned this, but they didn't. Um, I mean, it goes deep for sure. There's people that make their whole living based off of just, you know, scamming small businesses and big businesses for that matter, which is really sad, but you know, it allows people like me to, you know, make a living fighting those guys.

So do you see like an uptick on merchants getting more, more, more— like, is the chargeback ratio trending up, or is it like staying pretty much the same in general?

Or— I don't think—

yeah, like, in general, do we see like a higher percentage of chargebacks, or There's particular industries that are getting hit harder.

Of course. Yeah. I mean, since COVID chargeback rates have been going up, right? And as of recently, they've really been going up, which I think is mainly due so to the holidays. You know, obviously right now there were a lot of businesses that sold a lot in November, December, a lot of people that maybe like weren't happy with their product, whatever. And maybe charging that back right about now. So chargeback rates are increasing, especially in January as you kind of get those trailing chargebacks from Q4. But from a broader perspective, the past couple of years, chargebacks have just been increasing and increasing and increasing every single year. And I think that's just due to consumers getting more knowledgeable about the fact that they can kind of abuse the system and just really get a free refund whenever they want. And just the lack of education around the fact that that's illegal. And, you know, there's obviously no consequences for these consumers, which is unfortunate. But hopefully we can sort of even the playing field a little bit for the merchants.

It would be good if like the chargeback companies had a blacklist of people who do too many chargebacks and kind of shared that across their network. It would kind of— the processors could be like, okay, yeah, here's somebody, they're doing too many chargebacks. We're blocking them out of our system.

Yeah, for sure. Some software exists like that. We have a variation of that. But I mean, ultimately the, the fraudsters, like the real, like the professional ones, you know, they're always just going to like try to get around it, right? Whether that's spinning up new addresses, new emails, like all sorts of stuff, they're just going to make it really hard to trace back a chargeback to that new order, you know? But the normal ones, I mean, Yeah, you can for sure use technology to do that. I think it should be distributed across processors better. Like you were saying, I think every processor should just have this master blacklist. And once you're, you're personal, I think businesses have a chargeback ratio they need to keep in check. I think consumers should too. You know, I think consumers, if they're charging back more than 2-3% of their transactions, that's an issue.

Yeah, that's kind of crazy. You know, the other thing, you know, dropshippers are really having a hard time now getting merchant accounts. And we get contacted by tons of people all the time doing dropshipping. And we tell them, like, you know, if you can't get the goods to your consumer within 10 days, the likelihood of you getting approved by a credit card processor today is slim to none.

Yeah, yeah, for sure. It's, it's sad, definitely. I mean, these guys have nowhere to turn. You know, they're getting turned away from Shopify Payments, from Stripe, and they're going to traditional merchant accounts. And, you know, ultimately sometimes not getting accepted there either. We see dropshippers that do it right and we see dropshippers that do it wrong. You know, there's certain ones that do it right. They get quicker shipping times. You know, they're able to run a business with low chargebacks, but majority don't. Unfortunately, majority are just not running the best businesses.

Says restart required. Oh no. Hey Mark, I can't hear you anymore.

Yeah, but good to go now.

Yeah, we're good. So we were talking about dropshippers. So, you know, a lot of the processors, they, they— that's the first thing they ask, how many days to, to get the product.

Yeah, for sure. Um, yeah, so I mean, there's certainly dropshippers that do it right. There's dropshippers that do it wrong across the board. I mean, it's a beginner business model. So a lot of the guys doing this, they're just not too familiar with how to run proper customer service teams, ship orders on time, deliver orders on time, the right shipping methods to use, where you want to ship from. There's Chinese New Year. They got to worry about all the factories. All the shipping companies are out for 2 weeks. I mean, right now of all times is like, it's not good, right? It's about to be Chinese New Year, which means they're shipping from China, they're kind of screwed. So I mean, these guys, they just like the beginner dropshippers, they're not in a good spot. But we do see guys that have been doing this for a couple years, they've got their procedures in place, they know how to run a good dropshipping business and they can do it without really high chargebacks. It's just by and by, I mean, you know, it's a beginner business model, so you just attract people that just don't, don't run the best businesses, unfortunately.

Oh, that's crazy. What do you think about the business model where merchants are selling like a high-dollar, you know, like hat or a t-shirt, and then they're running these sweepstakes? What do you think about that business model?

I think it was a terrible business model. I mean, um, there's certainly like a ton of risk associated with that business model. Um, sweepstakes in general just get a really, really bad reputation in the industry for good reason. You know, a lot of people just just use that as an excuse to, you know, bill customers in very ambiguous ways that they may not disclose and all sorts of stuff. But by and by, if you're running like any type of giveaway promotion, like you buy something to get a prize and then the customer doesn't win the prize, you're just going to deal with really high chargebacks.

Yeah, we have a couple clients. One guy gives away— like, he was giving away one motorcycle, now they give away two motorcycles every single— and they don't seem to get that. They get a few disputes, but pretty all in all, I think that, uh, they're sending out like a good quality t-shirt, you know, and a good quality hat. It's not like a $2 product. Yeah, so people are not—

they're not mad.

Yeah, they're not mad. Plus they sell other stuff, you know, other motorcycle-related products, and you know, so like accessories, bags, leather, things like that.

A real business, huh? It's a real business then.

Yeah, it's a real business, but that, you know, they pump a lot— a lot of people are just buying the t-shirt like, oh, I can win this motorcycle, 100%. Yeah, another guy like has one where you can win a Dodge Ram truck.

Nice, nice.

So people are buying like the t-shirts and the hats and all this stuff from these clients, and it seemed to get like really popular during COVID Yeah, for businesses to do that. And they use, like, you know, as long as they're using a third-party service, you know, the banks will approve it because the third party is basically controlling who the winner is, right? That way there's no— if they're in a state where they can't participate, it lets them know, or, you know, and things like that. And they authenticate the user that they are over the age of 18 or 21. Depending on the state, you know, based on their credit card, they're able to figure out, figure that out. What other kind of business model? What kind of— you see any new business models popping up?

Hmm. I mean, somewhat. There's always— I think there's always like different ways that people can market products for sure. But ultimately it feels like everyone's kind of doing the same stuff. You know, it's, it's like the same sorts of business models. Obviously there's a ton of like different ways to give value to your customer, right? Like, for example, we work with a ton of people that sell like nutraceuticals and things like that. And there's always new trendy ingredients, you know, be it functional mushrooms or whatever they want to, they want to kind of, you know, sell. So there's always like different, different kind of like ways to, to take it.

But at this time of year, I'm sure it's a lot of like diet products, lose weight, right?

It seems like that's kind of losing some hype. Maybe, uh, consumers have kind of caught on to the fact that you just have to eat less. You can't, like, you can't take a pill to lose weight. Um, but it seems like focus and energy are like the main things that people are kind of selling nowadays to, uh, to consumers, for good reason. You know, I drink a lot of coffee myself, so, uh, you know, supplements make sense.

Get out the— get out the espresso machine, right?

Exactly, exactly.

Yeah, good jolt. No, definitely, definitely. I see a lot of different, you know, focus products, um, health products, keto products, you know, different vitamins, supplements, you know, that always around the beginning of the year those businesses like kick off and try to sell a lot. And, you know, I also see, you know, a lot of telemedicine out there for like Ozempic and Zepbound and all of that. And, you know, surprisingly enough, like, we have a couple of— we have a few merchants doing that and there hasn't been that many chargebacks.

It's clean. Yeah, it's, it's really interesting how that works. But I think it's just because, like, there's a lot— like, you have to talk to someone, you have to get a prescription, technically prescription. So I think that may contribute to it. Plus, it's like, as he's older, a lot of chargebacks come from younger consumers because, you know, they have less money, they're more aware of the system. And they care less about the consequences, whereas like older consumers are a little bit more wise and they know that they can't just charge back everything that they don't want to pay for. So I think that's probably why the telehealth skews to lower chargeback rates. But also those—

and those merchants have to be, you know, legit Scripps certified.

They are. Yeah, 100%. It has a higher barrier of entry, which I feel just means that it's more qualified operators running these businesses, you know.

Oh, definitely. Is it that? Definitely, that's what's going on there. And what about, like, you know, we get a lot of people coming to us trying to get into the travel space. Yeah, they don't, they don't understand, like, that they have to be, like, a certified travel agent. Yeah, they need to have IATA and things like that, and then they get very frustrated with the whole process of getting them.

It sounds like the worst business to ever run. I'm sorry, I just like, I can't. We work with a lot of travel merchants and I just feel bad for them.

You help one of my merchants, they got their chargebacks down pretty low now.

So there we go. Travel merchants get hit with so many chargebacks, it's, it's incredible. It's, uh, it's really sad. I can't imagine they have high margins, so all those chargebacks must really eat up.

Yeah, they're more— they work on a— people don't realize, like, they work on a small margin. They're just getting a commit you know, a small commission. It might be 10 or 20%, and you think that sounds like a lot, but if you're dealing with a $50 item and you're making $5 or $10 on it, you know, that's not a lot.

Yeah, 100%, I would agree.

So if you were going to start an e-commerce business, what kind of e-commerce business would you start?

Um, I would definitely want to make sure it's something that has a lot of value to the consumer, but also something that's not a one-time purchase. I think one-time purchases are very difficult nowadays. It would probably be something in the supplement space because we see a lot of supplement brands that go grow really, really fast. Um, and something that's like kind of on the cutting edge. Like for example, there's a new ingredient that pops up every year. Last year I feel like it was colostrum, which is kind of like collagen but a little bit different. Um, so, you know, we saw really, really big colostrum brands go from nothing to 9 figures a year. So it would either be something that's like just blowing up ingredient-wise, or something that's a little bit less discovered yet, and then you just try to market and educate the consumers, and then, you know, as a result, grow the company. So it would be something I'd have to dive into the science and figure out what people are missing that's a really good supplement. But it would probably be something along those lines. All right.

Are you a big—

I drop shipping. What's that? Yeah, absolutely.

Who's, who's your favorite football team?

So I'm from North Carolina, so I got to go with the Panthers, unfortunately. But I also live in Texas right now. So we got the Panthers and the Cowboys. You know, at one point, one of those teams is going to be good.

And I think Jerry Jones can get Deion Sanders to be the coach.

You know, we will see. We will see. But yeah, it's hard to say for sure. I'm a big hockey fan as well. Watch a lot of hockey. I'm not sure about you.

Oh, we have the Florida Panthers. We did good last year.

Oh, you did great last year. You got the best team pretty much.

Yeah, they won the Stanley Cup.

Yeah. Yeah.

You can't get a heart attack.

But my favorite—

my favorite football team is the Miami Dolphins.

Of course. Yeah.

And then, you know, waiting for You know, Unrivaled actually starts tonight, the 3-on-3 women's basketball league. Yeah, Caitlin Clark's not playing, so—

oh no.

Yeah, she's not in the 3-on-3 league. I just hope that, you know, like these players, I wish they would pay the women's basketball players more or figure out how to get the league up because they have to go play overseas and a lot of them get hurt, you know. And I hope nobody gets hurt in this 3-on-3 game.

For sure.

It's in my— it's— they're playing all the games in Miami, but you can't even get tickets It's no way sold out at a small— it's at a tiny arena. Yeah, you would think they're gonna get paid more soon, you know.

It feels like WNBA is kind of on the map now because of Caitlin Clark, so I think hopefully salaries will follow.

All right, let's see, one last thing. What would— if you— that we'll discuss like card-present, um, chargebacks, because that's not something any chargeback company's really figured out how to do anything about. But you got to give a good piece, you know, some good advice to every person out there. They, let's say they're starting, getting ready to start their business, or they're getting ready to do e-commerce for the first time. What would be 2 or 3 pieces of advice you would give them to the, to those merchants?

For sure. I mean, of course I'm in the business of chargebacks, so like when it comes down to chargebacks, obviously you want to be aware. But ultimately what that boils down to is like The point of a business is to provide value to your customers, right? So as long as you get that piece down and then you get the customer service piece down and you can do those two things, then you're going to have a good business, right? You provide value and then you provide really good service. And if you can just nail those two things down, then you've done 90% of the job, right? That's easier said than done, of course. But ultimately, like that, that's what it means to run a good business. And those are the businesses that have low chargebacks. Those are businesses that make a lot of money because because when you provide value and you provide good service, people tell their friends and then, you know, it all, it kind of compounds, it snowballs upon itself. So I know it's like stupid. It's like, well, of course you like have good service and like provide value, but like, what does that actually look like for your business model? How can you just delight your customers? How can you make them happier? And then ultimately, if you do that effectively for a long enough period of time, then you never have to worry about getting new customers. They just come in your door because people tell their friends when they have a really good experience. So I would just, I would say that is my best advice, although it sounds really basic.

Yeah. One thing I always tell merchants, we give them a little guide, says, you know, what kind of things you have to have on your website, your basics, privacy policy, terms and conditions, return and refund policies, you know, have your contact information on there. And answer your phone. I tell people answering service is not like super expensive. You can find one that like answers the phone for doctor's offices or attorneys. They're usually pretty cheap instead of a, you know, answering service like company. And that way, you know, if someone calls up at 10 o'clock at night, you know, they can just take a message, yes, someone's going to call you between 9 and 5, versus they go to their phone and go, chargeback, 100%. Yeah, so that's the piece of advice I give people is, you know, figure out that it's so important, you know, your checkout process on your website and your customer service.

Yeah, absolutely. I totally agree. Well, having those checkboxes, definitely got to get those. Can't forget those.

Can't forget the checkboxes on the checkout page, right? Absolutely.

Awesome.

All right, so if people want to— if people want to get in touch, want more information about Disputifier, you can go to disputifier.com. We'll post the link. And also, we're a reseller. We work with Mark. You want— you need a merchant account, you need Disputifier, we can hook the whole thing up for you and get you taken care of for the whole thing. Any last words, Mark?

Just want to thank you for having me on, and I look forward to doing number 3 pretty soon here. I'll get a neon sign. It's going to be great.

Okay, we're going to send you the info so you get a neon Big fire neon sign.

Amazing. Let's do it. Thank you for having me. I appreciate it.

All right, thank you. Thank you to Mark. And, uh, peace out everybody. And for all you e-commerce merchants, I hope that we, uh, provided you with some great information today on B2B Vault.

Amazing.

Thank you, Mark. Peace out. Like, subscribe, and share.