Chargeback for Services Not Rendered

Your goal is always to give a client the best service possible. This is why getting hit with a chargeback for services not rendered can feel like such a gut punch.

Most of the time, though, this is the result of your own wrongdoing. Even if you did provide what you believed to be a quality service, you may have fallen short of the customers’ expectations. 

This means avoiding the issue going forward is as simple as upping your game and paying better attention to terms and services - from providing a better description of services to communicating with customers if there will be a delay.

We’ll help you put this type of problem in the past below with tips on preventing and fighting chargebacks of all reason codes, not just this one. Disputifier makes it easy as the #1 chargeback company

All you have to do is get set up and let our AI-powered prevention and management solution handle the rest. It stops 95% of disputes in the first place while helping you win up to 70% of chargebacks that do occur. 

Plus, you only pay if you win - what do you have to lose? Try it out risk-free today, or learn more about chargeback for services not received below.

Overview of Chargeback for Services Not Rendered 

Chargeback for services not rendered is known as reason code 4853 through Mastercard (Goods or Services Not Received) or reason code 13.1 through Visa (Consumer Disputes, shorthand description is “Merchandise/Service Not Received). 

In general, a chargeback occurs when one of your customers contacts their bank to initiate a reversal of a transaction. There are a number of grievances that can lead to this unfavorable outcome, from simple fraud to errors, and in this case, dissatisfaction with the service received or non-reception of the services in question.

While it’s a measure put in place to protect customers from unauthorized transactions and failures in product or service delivery, it can often be misused by customers who are either too lazy to go through the return/refund process or want to fraud companies.

Now, the chargeback for services not rendered can be a tricky one. At face value, it may appear that only customers who never received a service they paid for would use this reason code - that’s not the case.

So, let’s take a deeper look at some of the common causes of this issue.

Causes of Chargebacks in Service Industries

Beyond simply failing to provide a service for your customer whatsoever, there might be a disconnect between what they were expecting and what they received. 

Or, it could just be a technical error in which they were double-billed. There’s more than meets the eye here. So, you should understand all the potential reasons for this type of dispute:

  • Non-Delivery of Services: If a customer pays for a service and it is not provided as scheduled - or at all - they are likely to initiate a chargeback. This can arise from misunderstandings about service timelines, cancellations, or if a business fails to deliver on the promised service due to operational issues.
  • Misrepresented Services: If the actual service provided differs significantly from what was advertised or agreed upon, customers may feel deceived. Discrepancies in the quality or scope of the service delivered compared to what was marketed or specified in a contract are a common issue. 
  • Technical Errors: Duplicate charges, incorrect amounts charged, or even charges processed without proper authorization are common technical issues that can lead to chargebacks. Customers might also dispute charges if there are errors in how transactions are coded or processed given that they may not understand what they were billed for.
  • Cancellation and Refund Issues: Problems often arise from unclear or unmet policies regarding cancellations and refunds. A chargeback may occur if a customer cancels a service according to the agreement but doesn’t receive a refund in a timely manner, or if there is a dispute over whether the cancellation policy was adhered to.
  • Fraud: This can include someone disputing a charge for a legitimately provided service in an attempt to receive it for free, or unauthorized use of another person’s payment information to purchase services. This is the easiest type to catch and refund before it has a chance to escalate, as we discuss in our guide on how to prevent chargebacks.

The only way to know for sure which of these is the reason for your specific issue is to communicate with your customer. Ideally, you’d be able to resolve the issue and get them to withdraw their chargeback so that it doesn’t affect your chargeback ratio. 

That being said, let’s look at all the implications merchants need to be aware of.

How Merchants are Impacted

There are direct and indirect costs associated with any sort of chargeback, and this is no exception. 

The immediate effect of a chargeback is revenue loss from the reversed transaction. Merchants not only lose the income from the sale but also the goods or services already provided, in the case of services, the effort and resources spent are not recoverable. 

Now, if you truly didn’t provide the service in question, this makes sense. But it can be frustrating to feel like you upheld your end of the bargain and then lose out on the income and the cost of doing business.

But that’s not all. There are also chargeback fees tacked on from the payment processors, which tend to be around $15. Not much, but it certainly adds insult to injury. Frequent chargebacks can lead to higher processing fees as merchants are deemed higher risk.

There’s also the time and resources that goes into fighting the dispute, which can steal your attention from revenue-driving tasks. Merchants must gather evidence, communicate with banks and payment processors, and manage paperwork.

Perhaps most importantly, though, your reputation is on the line. Chargebacks can damage relationships with customers, especially if they stem from dissatisfaction with services. This can lead to negative reviews and poor word-of-mouth, impacting customer loyalty and acquisition.

Moreover, frequent chargebacks can strain relationships with banks and payment processors. If this becomes a recurring issue, you may face increased scrutiny, higher fees, or even the termination of your account.

We have more insights on what happens if you lose a chargeback or what happens if merchant does not respond to dispute, but we’re here to avoid these outcomes and set you up for success in not just fighting chargebacks head-on, but preventing disputes going forward.

How to Avoid and Address a Chargeback for Services Not Rendered

Given the financial and operational toll chargebacks can take on your business, it’s worth investing in preventative measures and management solutions. 

Disputifier is the best chargeback company because it handles everything for you so that you can focus on core business activities. That being said, here are some best practices for prevention and management in general.

Clarifying Service Agreements and Maintaining Open Communication

Because many chargebacks are the result of a disconnect between what a customer receives and what they were expecting, it’s important to make agreements crystal clear from the start of your engagement.

Clearly outline what services will be provided, including the scope, timeframe, and specific deliverables. Do not make the mistake of overpromising and underdelivering for the sake of closing a sale - you’ll pay for it in the long run.

These terms should be not just clear but easily accessible to the customer before they finalize their purchase. Include these terms on your website, within the customer's purchase confirmation, and in any pre-service communications.

Regularly update customers on the status of their service, especially if there are any changes or delays. This will prevent frustration and reduce the likelihood of disputes. 

You should also establish and maintain open channels for customer feedback. Quick and responsive interaction can resolve issues before they escalate to chargebacks. 

Say your customer is dissatisfied - rather than ignoring it, attempt to remedy the situation or offer a refund. While it’s a tough pill to swallow, it’s typically the better option than letting it escalate to a dispute.

Immediate Response Strategies

Even with the best preventative measures disputes are part of doing business once you reach a certain scale. So, knowing what to do when you get chargeback alerts is incredibly important.

Promptly acknowledge disputes and communicate with the customer to understand their concerns fully. Again, try your best to rectify the issue in-house before it snowballs. Partial refunds, additional services, or future discounts are all ways you can compromise before a chargeback is finalized. Learn more about sending a chargeback email to customer in our blog.

Gathering and Presenting Evidence

Creating a compelling package that states your case to the bank or payment processor is going to be the difference between winning and losing a chargeback once it gets to this point.

This is why we recommend you keep detailed records of service progress and completion. Documentation can include signed contracts, emails, text messages, and logs of customer interactions.

Organize all this evidence logically to show your side of the story and demonstrate that:

  • The cardholder is incorrect or outright lying.
  • The chargeback is invalid as it doesn’t align with payment processor requirements.
  • You attempted to remedy the issue on your own with a refund, additional services, etc.
  • The cardholder agreed to reverse the transaction.

Any of these can support your case and help you boost your odds of winning the dispute. Be sure to present your package before the chargeback deadline, or all your efforts will be for not and the payment processor will reach a verdict without ever hearing your side of the story.

Monitoring and Follow-up

If the bank agrees with you and reverses the chargeback, great! But if not, engage in the pre-arbitration process. This involves submitting additional evidence to support your case that the services were rendered as agreed.

Eventually, you may find yourself in the arbitration phase where the card network will make a final decision based on the evidence presented by both parties. 

You may be wondering…how often do merchants win chargeback disputes? It all depends on your risk level, but the industry average ranges from 10-30%. 

But what if we told you that our system can help you win up to 70% of chargebacks? Better yet, you can prevent 95% of disputes from escalating in the first place. It’s time you put the stress of chargebacks for services not rendered in the past with Disputifier. 

Let Disputifer Handle Chargeback Prevention and Management on Your Behalf!

As you can see, there’s a lot that goes into preventing and fighting disputes associated with services not rendered. This can create a huge bottleneck in your business that not only leads to extra costs but tons of stress. We’re here to take it off your plate with the #1 dispute management solution.

Disputifier uses Verifi™ and Ethoca™ alerts so that you’re immediately notified about a chargeback being initiated. You can then take steps to reverse the transaction and refund the customer before it has a chance to go through, saving you a ton of headaches.

Meanwhile, fraud scanning helps you automatically cancel suspicious transactions that would otherwise cause disputes. The system even has features to mitigate issues associated with orders not being received by the customer leading to chargebacks.

It’s a 100% hands-off approach to chargeback prevention that is supplemented with tools to help you fight chargebacks when they do occur. This too is entirely automated, as Disputifer builds a compelling representment package and fights the case for you.

Because we fight thousands of chargebacks a month, we know what works. Our tailored responses are based on real data and proven to take your win rates as high as 70%! But don’t just take our word for it, you only have to pay when we win a dispute on your behalf.

So, why not take the first step to eliminating the stress and turmoil chargeback for services not received (and any other reason code, for that matter) can create for your business? A free trial is just a few clicks away.

Final Thoughts on Chargeback for Services Not Received

Chargebacks for services not received can be a frustrating challenge for businesses, especially if you feel as if you’ve done everything in your power to leave a positive impression on your customer.

However, this is just part of doing business. So rather than act from a state of emotion, remain calm and clear-headed as you fight the dispute head-on, creating a compelling representment package if you’re unable to remedy the issue with the customer.

You can also implement the preventative measures we discussed to lower the likelihood of these issues going forward - like being more clear in your service agreements and improving communication.

Learn more about how to win a chargeback as a merchant or the idea of chargeback insurance in our blog. We’re constantly creating more resources to help merchants protect their profits and reputation. 

That being said, all you need for effective dispute prevention and management is within reach at Disputifier. Take control today with proactive strategies and put problems like chargeback for services not rendered in the past!

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