Chargebacks. Every event Organizer's worst nightmare.
We've been in the business long enough to know that chargebacks are the pits.
While we utilize a variety of anti-fraud measures to prevent fraudulent transactions from even getting through our system in the first place, they sometimes happen and are a standard part of doing business—even if you follow our suggested precautions to prevent them.
So How Exactly Does A Chargeback Work?
When a cardholder claims their card was used without their consent, they can 'dispute' the charge with their bank or credit card company. The bank or credit card company then opens an investigation into the nature of the charge.
This can be for a multitude of reasons, not just because a card was used without a customer’s consent. It could be because it’s a duplicate charge, or the cardholder simply doesn’t recognize the charge, or because they claim there was a problem at the event, etc.
After the investigation is complete if the bank or credit card company agrees with the cardholder, a 'chargeback' occurs and the merchant of record, in this case, Freshtix, has the amount of the purchase 'charged back' against their account.
Normally when a dispute is initiated, the credit card company or bank deducts the funds equal to the amount of the dispute from Freshtix's account and notifies us that we need to provide details of the transaction in order to get those funds back. And often, even that isn't enough.
And so begins the dance. We work very hard on behalf of our beloved event Organizers to get back their money.
Obviously, if a cardholder's card is used without their permission, we can help provide a ton of documentation to help track down the thief.
Our tools include
- Confirmation of the opening of the email with the tickets
- Email account tracking
- IP address tracking
Oftentimes a cardholder's information has been stolen and no amount of evidence that we provide can win the chargeback in our favor. However, more often than not, we can show enough evidence to help win the dispute. Everything is handled on a case by case basis. Procedures and processing time vary among institutions but generally, a decision can take anywhere from 1-3 months.
Oh, and by the way, it takes us about 45 minutes to gather all the information and respond to each case!
As an event Organizer, we are your first line of defence against credit card fraud. Without giving too much away, utilize a variety of anti-fraud practices including:
- We require the address a ticket buyer submits to match the address on file with the bank or credit card company. We require an exact AVS (Address Verification System) match.
- We decline sales where the Address Verification System response is a No Match on Street Address or Zip Code
- We require the purchaser enter their CVV2 code and that it match
- We employ velocity screening to prevent multiple transactions from the same IP address
- We limit transactions from known fraudulent IP addresses
- We require ticket buyers to check a box indicating they agree to our Terms and Conditions to be able to purchase tickets.
Detection & Action
- By utilizing many of the features above, we're able to quickly identify transactions we believe to be fraudulent. These are flagged, cardholders are contacted and sales are reversed if need be.
- Transaction reviews. Our transactions are reviewed in a number of different ways both by humans and robots (algorithms) to look for patterns. Suspicious transactions are dealt with one by one and cancelled if we believe them to be fraudulent.
For Event Organizers
It's important to understand how chargebacks work.
- Disputes and chargebacks can happen months after the original transaction or the event took place. The is no time limit.
- We're often at the mercy of the credit card company or issuing bank.
- Credit card companies and banks will often side with the cardholder even if you can prove the sale was legitimate. Consider an issuer like American Express. If a cardholder disputes a charge for an expensive purchase who is American Express more likely to side with? The Merchant or the Cardholder? If they upset the cardholder they could lose them as a customer and that means a loss of revenue from fees. If they upset the merchant, what is the merchant going to do? Stop accepting American Express? Not likely. Too many customers want to use an American Express card.
- Freshtix is just the middle-man here. We will do everything we can to help you retrieve your funds, but if we lose the chargeback you are responsible for the repayment of the amount and a chargeback fee, per our terms and conditions.
What Can You Do To Protect Yourself?
We understand that at a busy event some of the suggestions below might be hard to implement, but if you want to better protect yourself, here are some recommendations.
- Regularly review your Attendee Report and your Sales Reports. Look for fraudulent or suspicious things like:
- Fake Names
- Ticket buyers with zip codes in different states from where your event takes place
- Potentially fake email addresses like email@example.com or firstname.lastname@example.org or email@example.com
- Incomplete Addresses such as "1 main st" or "34 poipoipoipoip"
- Incomplete First and Last Names
- Improper or badly formatted phone numbers
- The incorrect zip code for the area. E.G. 10001 for someone in Atlanta, GA
- Have everyone attending the event check-in and sign something to say they have received their tickets.
- Scan every ticket to prove that it was used
If you notice anything suspicious, please contact us immediately. We can offer advice and best practices for handling each situation.
Some Helpful Tips
- We will not win every chargeback no matter how vigilant we both are.
- Even if you follow all the recommendations above, someone can be dishonest and dispute a charge even though you believe it to be legitimate. Remember our example above? A credit card issuer is more likely to side with the cardholder so that they don't lose the cardholder's business, rather than the merchant.
- Card Issuers' requirements to validate a charge are not justifiable. Just because you, as an event Organizer, cannot prove a ticket buyer 'used' a ticket, doesn't mean that you are at fault. But the Card Issuer will often still side with the cardholder.
- Remember that cardholders can be dishonest too. The bad ones are few and far between but they're out there. We've seen cases where a cardholder will dispute a charge and win because it was raining the night of the event that was advertised as taking place "Rain or Shine". When they dispute the charge, they'll say claim something such as "merchandise was not received" but fail to mention it was because they opted to stay home out of the rain and not attend the event. Because we cannot prove a ticket was used, the issuing bank may win the dispute.
Different Types of Chargebacks
There are typically two types of disputes and chargebacks:
- Friendly fraud - I no longer wish to pay for my purchase
- we win most of these
- True fraud - a purchase made stolen credit card
- almost impossible to win since the cardholder isn't usually liable for fraudulent purchases made on their card
What Happens If I Lose A Chargeback
If we lose a chargeback we will invoice you for the full amount of the chargeback plus a $25 fee per chargeback. Invoices are due with 15 days after the date of the invoice. After that, the unpaid amount will have an interest at a rate equal to 1.5% per month, compounded daily.
For more information, please review your Organizer Terms and Conditions.