As high as I have been riding from the amazing start I have had in this journey, today I was given a serious reality check. As I’m uploading products today, I received an email that said I had received my first chargeback. The email stated that $1564 will be taken from me in 3 days. I cannot explain the gut wrenching feeling I had right that moment. I’m just about 2 months into this store, and a very large portion of my profits are gone from one chargeback.
Incase you are wondering what a chargeback is, it is when a consumer sees a charge on his credit card that he didn’t make and he files a claim with his credit card company. The credit card company immediately takes that money back from the sale, and gives it back to the credit card owner.
This particular order didn’t make sense to me at all. The address was a law office in a large city. The recipient was the lawyer himself. I did a quick google search after receiving the order, and the whole first page of google was links to this gentleman’s law office. I felt pretty confident in this order at this point. The thought of fraud did not even cross my mind. Another tool that I had employed to help me in fraud prevention was an app called Signifyd from the Shopify app store. Signifyd offers a free dashboard that does a fair amount of research for you on the name, email address, shipping address, and geo location from which the order was placed. They also give the order a score between 0-1000 to help you decide whether or not to fulfill the order. It is an amazing free tool that every eCommerce store owner should have from day one. But even with this free tool, that gave me a score of 923 for this order, I had received a chargeback.
Signifyd also offers complete fraud protection. For 1% of your sale, they will cover you 100% in case of a chargeback. And they will pay you within 24 hours! Of course I didn’t have this service at the time of my chargeback. I had heard others in the DSLprogram.com forums mention that they had had a chargeback, but I kept telling myself that it wouldn’t happen to me. I was too diligent in researching my customers before shipping the order I would tell myself. Chargebacks won’t happen to me I would say. And 1% of my sales seemed like a lot of money in the beginning. But I couldn’t have been more wrong. And just to put it into context for you, 1% of the order that was charged back to me would have cost me $15.49 to insure. At that moment in my store, I had roughly 20K in sales. I would have paid right around $200 to protect myself up to that point. Seems like a no brainer in hindsight, but when you are just beginning your business it seems like a lot. And I think we all might be little arrogant thinking things won’t happen to me. I know I was.
When my emotions calmed down, I called Signifyd to discuss upgrading. I was signed up for the complete plan by the end of the day, and it turned out to perfect timing. The very next day I received an order for a $1,000 product on my store. Signifyd guaranteed the order, so I proceeded to process the order. A couple of day later I received a suspicious email asking about tracking for the package. The name emailing me was not the name on the order. I called the phone number listed on the order in hopes to clear things up, and it was disconnected. I called Tally at Signifyd about the suspicious activity and he recommended canceling the order. I explained to him that the order had already shipped, and the vendor said they could not recall the package. Tally, in an extremely calm voice, said “You’re covered 100% whatever happens so don’t worry about it”. As you can imagine, I was still quite bothered from the last chargeback, and couldn’t believe how calm Tally seemed. One month later I received a charge back for that order. I gave Signifyd the information they ask for, and 24 hours later they deposited the money in my account. It was an extremely smooth process, and I’m thankful Signifyd was there for me. One more chargeback might have sunk me this early in my store’s journey.
Many large companies including Wayfair, MakerBot, and Pure Fix Cycles all use Signifyd. And so should you! Protect yourself right from the start so that you never have to go through what I have. Spend more of your time growing your business and less time worrying about fraudsters.
Download Signifyd on the Shopify app store today. That will get you the free dashboard. Then, I highly suggest you sign up for the complete plan. You can do so buy sending Tally at Signifyd an email. He will gladly get you set up. Or click here to go directly to sign up. Do me a favor, and let him know that Ben from Take Consistent Action is the reason you signed up!
I wrote this article, and waited to post it, as I was still a bit grumpy about the situation. I decided to post it today because of the update below.
UPDATE: I received some good news about this chargeback today!!
Needless to say, I was ecstatic when this email hit my inbox today! I am so grateful right now.