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8 Mistakes Causing Returns and Chargebacks and How to Avoid Them

Evereve using WeSupply analytics

Introduction: The Twin Challenges of Rising Costs and Returns in E-Commerce

Returns and chargebacks are common challenges faced by eCommerce retailers, with both impacting the bottom line significantly. According to recent statistics, retailers lose billions each year due to chargebacks, with some studies estimating as much as $40 billion in losses annually. While returns are often inevitable, chargebacks—disputes initiated by customers with their banks—can be avoided with the right strategies in place. Both situations not only affect a business’s revenue but can also harm customer satisfaction, damage relationships, and increase operational costs.

This article will explore the 8 mistakes that commonly lead to returns and chargebacks in retail, providing actionable strategies to minimize these issues and protect both your profits and your customer relationships.

Understanding Returns and Chargebacks

What Are Returns and Chargebacks?

Returns occur when customers decide to return a product or service, usually due to dissatisfaction, wrong purchases, or product defects. While returns are generally manageable, they can still incur costs related to logistics, restocking, and potential loss in sales.

Chargebacks, on the other hand, happen when a customer disputes a charge directly with their credit card issuer or bank, often resulting in the retailer losing both the product and the revenue. Chargebacks can be triggered by fraudulent activity, clerical errors, or dissatisfaction with a product or service. These disputes are costly not only in terms of lost revenue but also in chargeback fees, which can further strain a retailer’s operations.

Both returns and chargebacks represent revenue leakage, and a substantial portion of these issues can be traced back to common retailer mistakes. Fortunately, many of these mistakes are preventable with careful attention to customer service, product details, and operational processes.

Why Do Chargebacks Happen?

Chargebacks can occur for a multitude of reasons, often stemming from merchant errors, customer disputes, and billing or payment issues. Merchant errors, such as incorrect billing information or failure to obtain proper authorization, can lead to chargebacks. Customer disputes are another common cause, arising from issues like damaged or defective products, incorrect orders, or dissatisfaction with the product or service. Additionally, billing and payment issues, such as unclear or misleading billing descriptors, incorrect charges, or failure to provide clear transaction details, can confuse customers and prompt them to initiate chargebacks. Understanding these causes is crucial for implementing effective chargeback prevention strategies.

Mistake #1: Poor Customer Service and Communication

The Role of Customer Service in Preventing Returns and Chargebacks

Customer service is often the first line of defense against returns and chargebacks. When customers feel heard and valued, they are less likely to escalate issues into chargebacks. On the other hand, poor customer service—whether it’s slow response times, lack of empathy, or inadequate solutions—can quickly lead to disputes.

When customer service fails to resolve issues effectively, customers may feel ignored or undervalued, prompting them to initiate chargebacks to resolve their concerns through their banks. In fact, up to 30% of chargebacks occur due to poor customer service, with many customers opting for chargebacks instead of seeking resolution directly with the retailer.

Best Practices for Improving Customer Service

To reduce the risk of returns and chargebacks, retailers should:

  • Ensure fast and empathetic responses: Whether through live chat, phone, or email, customers should feel valued and heard immediately.

  • Provide self-service tools: A well-designed FAQ section, live chat, or automated systems that can address common concerns quickly will enhance customer satisfaction.

  • Be transparent and honest: If there are mistakes or delays, communicating the issue upfront and offering solutions can prevent customers from turning to chargebacks.

  • Encourage customers to leave feedback and follow proper return procedures: Implement interactive size guides and clear return policies to motivate customers to provide feedback and adhere to return guidelines, reducing returns and chargebacks.

By prioritizing excellent customer service, businesses can create positive customer experiences that reduce the likelihood of disputes and returns.

Streamlining Customer Service: How WeSupply Reduces Returns and Boosts Efficiency

WeSupply enhances the role of customer service by reducing return-related inquiries and chargebacks, allowing your team to focus on higher-priority tasks. Here’s how:

  • Branded Tracking Pages: Provide a seamless, branded experience by displaying order updates without third-party websites.
  • Delivery Notifications: Keep customers informed proactively, reducing the likelihood of service calls and boosting brand loyalty.

  • Proactive Return Notifications: Send personalized SMS or email updates, informing customers of return status, reducing “Where’s my refund?” inquiries.

  • Automated Return Process: With clear instructions and automatic notifications, customers can manage returns independently, reducing manual processing and freeing up your support team.

By streamlining these processes, WeSupply helps minimize customer service calls, optimize your team’s time, and ensure a smoother post-purchase experience for both customers and your business.

Combat inconvenience with proactivity & self service

Book a quick call with our experts to see how WeSupply can help you make returns easy for your customers with a beautiful, self-service solution that makes their experience easier while also providing new ways to lower costs and earn back revenue.

Mistake #2: Inaccurate or Misleading Information

How Inaccurate Product Details Lead to Disputes

Inaccurate product descriptions, pricing errors, or misleading information can frustrate customers, leading to returns and chargebacks. When customers receive products that don’t match the description or have been priced incorrectly, they may feel cheated, prompting them to request refunds or initiate chargebacks. One of the most common reasons for chargebacks is an inconsistency between what customers expect based on a product listing and what they actually receive.

Best Practices for Avoiding Inaccurate Information

To reduce disputes:

  • Ensure accurate product descriptions: Double-check all product specifications, images, and details to ensure they are aligned with the actual product.

  • Be transparent with pricing: Clearly display the full price, including shipping fees or additional charges, so that customers aren’t surprised during checkout.

  • Use clear billing descriptors: Ensure that the charge on the customer’s statement matches the business name and transaction details to avoid confusion.

By providing accurate, clear, and transparent information, retailers can avoid misunderstandings that lead to returns and chargebacks.

Reducing Disputes: How WeSupply Enhances Product Accuracy and Customer Satisfaction

Inaccurate product details can often lead to disputes and returns, but WeSupply helps businesses tackle this challenge by offering powerful SKU-level returns analytics. Here’s how it works:

  • Identify Return Reasons: Pinpoint reasons for returns at the product and variant level, such as color, quality, or size.
  • Gather Reviews: Identify products that need more customer reviews to increase trust and reduce disputes.

By leveraging WeSupply’s insights, businesses can improve product details, enhance customer satisfaction, and minimize returns due to inaccurate expectations.

Mistake #3: Product Quality and Condition Issues

The Impact of Product Quality on Returns and Chargebacks

One of the most direct causes of returns is poor product quality. Often, poor product quality is a result of merchant error, leading to returns and chargebacks. If a product arrives damaged, defective, or fails to meet customer expectations, the likelihood of a return is high. If the issue isn’t resolved quickly, it can escalate into a chargeback, especially if the customer feels that they are being forced to return the item through the retailer’s return process.

Retailers must ensure that their products are of high quality, properly inspected, and accurately described. Failure to do so can lead to product-related disputes and even chargebacks, particularly in high-value categories like electronics or luxury goods.

Best Practices for Managing Product Quality

To minimize the impact of product quality issues:

  • Inspect all products before shipment: Check for damage or defects before shipping, especially for fragile or high-value items.

  • Offer a satisfaction guarantee: This builds trust with customers and reassures them that they can return products easily if they are dissatisfied.

  • Provide detailed product images: Clear, high-quality photos allow customers to accurately assess the product before purchase, reducing the risk of returns.

Mistake #4: Shipping Delays or Inaccurate Shipping

How Shipping Delays and Inaccuracies Lead to Customer Disputes

Shipping issues are another significant factor contributing to returns and chargebacks. Issues in the delivery process, such as late shipments, missing items, or inaccurate tracking information, can cause frustration and prompt customers to initiate chargebacks if they do not receive satisfactory assistance.

When customers experience delays or problems with the delivery process, they may resort to chargebacks, thinking that their concerns will not be addressed otherwise. By not meeting shipping expectations, retailers risk alienating their customers, causing them to take further action to resolve the issue.

Best Practices for Improving Shipping Accuracy

To prevent shipping-related chargebacks:

  • Ensure timely shipping: Aim to fulfill orders within the promised time frame and avoid delays.

  • Provide clear tracking information: Send customers shipping updates, including tracking numbers and estimated delivery dates.

  • Communicate proactively: Notify customers of any delays or issues with their order to avoid confusion and frustration.

By improving shipping accuracy and communication, retailers can prevent a significant number of returns and chargebacks.

Reducing Disputes: How WeSupply Proactively Updates Shipping

Shipping delays and inaccuracies can lead to customer disputes, but WeSupply offers solutions to keep your customers informed and reduce frustration. Here’s how:

  • Estimated Delivery Date: Set clear expectations for delivery times, helping eliminate shipping anxiety and build long-term trust.
  • Delivery Notifications: Proactively update customers on order status, notifying them of any delays or changes, so they don’t have to reach out to you.

    • Track the status of “grey areas” like in transit or out for delivery.

    • Understand processing times by location for data-driven solutions.

    • Proactively notify customers about important touchpoints like shipping delays or exceptions.

By keeping customers in the loop, offering transparent delivery tracking, and using powerful analytics, WeSupply helps reduce disputes and enhances the post-purchase experience.

Mistake #5: Lack of Clear Return Policies

The Importance of Clear Return Policies in Preventing Returns and Chargebacks

A poorly defined or overly complicated return policy can create confusion, leading to customers returning items and potentially disputing the charges with their bank. Uncertainty around how returns work, what is returnable, and the timelines involved can frustrate customers and increase the chances of a chargeback.

Best Practices for Crafting Clear Return Policies

To mitigate the risk of returns and chargebacks:

  • Make policies clear and accessible: Ensure customers can easily find return guidelines on product pages, order confirmations, and in the footer of your website.

  • Offer hassle-free returns: Make the return process simple and straightforward, ideally with pre-paid return labels or simple online tools.

  • Clarify return windows and conditions: Set clear timelines for returns and specify conditions for acceptable items to be returned (e.g., unopened, undamaged).

  • Offer in-store credit: Consider offering in-store credit as an alternative to refunds. This can deter fraudsters who exploit return policies and protect your business from financial loss.

A clear and customer-friendly return policy can foster trust, reduce confusion, and minimize disputes.

Streamlining Returns: How WeSupply Prevents Chargebacks with Clear Policies

Clear return policies are essential for preventing returns and chargebacks, and WeSupply makes it easier for businesses to manage them. Here’s how:

  • Self-Service Returns: Simplify returns with a few clicks, reducing customer service calls and manual processing.
  • Flexible Return Rules: Create customized return rules, like free return shipping, to match specific items and business needs.

  • Refund Options: Offer refunds via store credit, gift cards, or coupons to encourage repeat purchases and foster loyalty.
  • In-Store Returns: Enable easy drop-offs for online returns at physical stores, enhancing customer convenience.

  • Green Returns: Offer refunds for unwanted items without requiring returns, reducing waste and improving sustainability.

  • International Returns: Configure region-specific rules for returns, shipping charges, or restrictions based on country.

With WeSupply’s customizable return policies, you can enhance clarity, reduce confusion, and improve customer satisfaction while preventing unnecessary returns and chargebacks. Book a demo today to see how WeSupply can simplify your return process!

Simplify Returns for Your Customers and Support Team

Book a quick call with our experts to see how WeSupply can help you: simplify the Return experience with just a few clicks, reduce customer service calls and manual processing, notify your customer about their refund, automate returns and reduce user error

Mistake #6: Neglecting Customer Feedback and Complaints

Why Ignoring Complaints Leads to Chargebacks

Failing to address customer complaints or feedback can directly contribute to chargebacks. Customers who feel that their concerns have been ignored may escalate the issue by filing a chargeback, especially if they feel their only recourse is through their bank. When negative reviews or complaints are left unaddressed, they can snowball into larger issues that affect both future customers and current relationships.

Best Practices for Handling Customer Feedback

To manage complaints effectively:

  • Respond promptly to all complaints: Ensure customers can easily contact you, and respond to issues as quickly as possible.

  • Address online reviews: Actively monitor reviews and comments on social media or review platforms, and provide solutions to any negative feedback.

  • Seek feedback proactively: Regularly ask for feedback after purchases, ensuring that customers feel heard and valued.

By addressing customer complaints head-on, retailers can prevent small issues from escalating into chargebacks.

Reducing Chargebacks: How WeSupply Turns Complaints Into Opportunities

Ignoring customer complaints can lead to chargebacks, but WeSupply provides tools to track and address issues before they escalate. Here’s how:

  • CSAT and NPS Tracking: Measure customer satisfaction and loyalty through CSAT and NPS to identify pain points early.
  • Logistics Analytics: Use data-driven insights to pinpoint areas for improvement in your post-purchase experience, ensuring you adapt to customer needs.
  • Integration with Review Platforms: Collect and display customer reviews across multiple platforms, providing transparency and addressing concerns before they lead to disputes.

By actively tracking and responding to feedback, WeSupply helps businesses stay ahead of potential issues, reducing chargebacks and fostering stronger customer relationships.

Mistake #7: Failure to Prevent Fraud

How Fraudulent Transactions Lead to Chargebacks

Fraudulent transactions are a leading cause of chargebacks. Whether it’s card-not-present fraud or friendly fraud, retailers need to be proactive in detecting and preventing fraudulent activity. Fraudulent chargebacks occur when a customer claims a transaction was unauthorized, even though it was legitimate.

Best Practices for Preventing Fraud

To protect your business from fraud:

  • Implement robust fraud detection tools: Use advanced fraud prevention systems to analyze and detect suspicious activity before orders are processed.|

  • Monitor high-risk transactions: Flag and review large, unusual, or high-risk transactions to confirm their legitimacy.

  • Use secure payment gateways: Ensure all payment transactions are processed through secure, PCI-compliant systems.

By taking a proactive stance on fraud prevention, retailers can protect themselves from chargebacks due to fraudulent transactions.

How WeSupply’s Return Policies Prevent Fraud and Chargebacks

Fraudulent transactions and return abuse can lead to chargebacks, but WeSupply’s pre-built return policies help protect your business from these issues. Here’s how:

  • Reduce Return Fraud: Implement measures to target serial returners, reducing the risk of fraudulent returns and safeguarding revenue.

  • Blocklisting: Prevent fraudulent customers from returning products by blocklisting specific email addresses or customer groups, ensuring fair and secure return processes.

With WeSupply’s pre-built return policies, you can proactively protect your business from fraud while maintaining a streamlined return experience for legitimate customers.

Mistake #8: Lack of Proactive Dispute Management

Why Dispute Management Is Essential

Many chargebacks occur because retailers lack an effective dispute management strategy. When chargebacks are not contested effectively, businesses are more likely to lose money and products. A proactive approach to dispute management can help retailers win chargebacks and recover lost revenue.

Best Practices for Managing Disputes

To minimize chargeback losses:

  • Monitor chargeback trends: Regularly review chargeback data to identify patterns and take action accordingly.

  • Collect and maintain transaction records: Detailed transaction logs and communication history provide critical evidence when contesting chargebacks.

  • Work with chargeback specialists: Consider partnering with a chargeback management service to help reduce the impact of disputes.

  • Fight chargebacks: Implement proper documentation and proactive measures to prevent disputes. While it is possible to contest invalid chargebacks, it can be a costly and uncertain process.

By managing chargebacks proactively, businesses can reduce financial losses and strengthen their relationships with customers.

Additional Considerations

Beyond the common merchant mistakes and customer disputes, several other factors can contribute to chargebacks. Poor customer service, for instance, can lead to chargebacks if customer inquiries or issues are not resolved promptly and satisfactorily. Inadequate product descriptions can also result in customer dissatisfaction and subsequent chargebacks. Shipping delays are another significant factor; when products are not delivered on time, customers may resort to chargebacks. Clerical errors, such as mistakes in data entry, can also lead to chargebacks. Lastly, the lack of compelling evidence to support a chargeback dispute can result in a lost dispute. Addressing these issues can significantly reduce chargeback risks and improve overall customer satisfaction.

Billing and Payment Issues

Billing and payment issues are a frequent cause of chargebacks. Unclear or misleading billing descriptors can confuse customers, leading them to dispute charges they do not recognize. Incorrect charges, whether due to human error or system glitches, can also prompt chargebacks. Additionally, failure to provide clear transaction details can leave customers uncertain about their purchases, increasing the likelihood of disputes. Inadequate payment processing, such as failing to process payments correctly, can further exacerbate these issues. Ensuring transparency and accuracy in billing and payment processes is essential for minimizing chargebacks.

Monitor and Analyze Chargeback Data

Monitoring and analyzing chargeback data is vital for understanding the root causes of chargebacks and implementing effective prevention strategies. By tracking chargeback rates, businesses can identify trends and patterns that may indicate underlying issues. Analyzing the reasons for chargebacks can help pinpoint common causes and areas for improvement. Identifying high-risk transactions allows businesses to take proactive measures to prevent chargebacks. Implementing prevention strategies based on chargeback data can significantly reduce the occurrence of chargebacks, safeguarding revenue and enhancing customer satisfaction.

Train Employees on Chargeback Prevention

Training employees on chargeback prevention is crucial for reducing chargebacks. Educating employees on common merchant mistakes can help prevent errors that lead to disputes. Providing customer service training ensures that employees can effectively respond to customer inquiries and resolve issues, reducing the likelihood of chargebacks. Implementing quality control measures helps prevent errors and ensures that products are delivered correctly. Encouraging employees to report issues can help identify and address problems before they escalate into chargebacks. By investing in employee training, businesses can enhance their chargeback prevention efforts and improve overall business operations.

Conclusion

Returns and chargebacks are costly but preventable problems for eCommerce retailers. By avoiding the 8 common mistakes outlined in this article—poor customer service, inaccurate information, product quality issues, shipping problems, unclear return policies, neglecting feedback, fraud prevention gaps, and ineffective dispute management—businesses can safeguard their revenue and enhance customer satisfaction.

Retailers that prioritize customer experience, transparency, and proactive management of their processes will reduce the occurrence of returns and chargebacks, ultimately improving their bottom line and customer loyalty.

Summary

WeSupply helps businesses reduce mistakes that lead to returns and chargebacks by improving the post-purchase experience. With clear, customizable return policies, proactive delivery and return notifications, and robust data analytics, businesses can track customer satisfaction and pinpoint return reasons. WeSupply also helps prevent fraud by blocklisting fraudulent customers and managing serial returners. By addressing potential issues early and streamlining the returns process, WeSupply ensures a smoother, more reliable customer experience, ultimately reducing disputes and chargebacks. Get started with WeSupply today and protect your revenue!

Frequently Asked Questions

How does WeSupply help reduce returns caused by inaccurate product details?

WeSupply offers SKU-level returns analytics to identify return reasons at the product and variant level, including issues with color, quality, and size. By analyzing this data, businesses can adjust sizing charts, review product images, and gather customer feedback to ensure more accurate product representations, ultimately reducing returns and chargebacks.

How can WeSupply prevent chargebacks related to shipping delays and inaccuracies?

WeSupply helps prevent disputes related to shipping by providing clear Estimated Delivery Dates and Proactive Delivery Notifications to keep customers informed about their order status. Additionally, Order Flow Logistics Analytics offers detailed insights into order processing, allowing businesses to address potential delays before customers escalate them into chargebacks.

How can WeSupply’s return policies help prevent fraudulent returns and chargebacks?

WeSupply’s pre-built return policies allow businesses to reduce return fraud by targeting serial returners and using blocklisting to prevent fraudulent customers from returning items. These tools help safeguard business interests, ensuring that only legitimate returns are processed and reducing the risk of chargebacks.

Does WeSupply have an official Shopify App?

Yes, WeSupply does have an official Shopify App. You can download and begin to integrate it with your Shopify store.

Does WeSupply have an official Magento extension?

Yes, WeSupply has an official extension for Magento. The WeSupply x Magento integration allows for automating order tracking experiences, reducing customer inquiries, automating shipping email and SMS notifications, and providing a fully branded order tracking experience

Does WeSupply have an official BigCommerce App?

Yes, WeSupply has an official BigCommerce App. You can integrate WeSupply with your BigCommerce store to improve your post-purchase customer experience.

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