Hey Thea,
We do a lot of business by credit card. What is our recourse if we take a credit card payment by phone and then the customer disputes it with the credit card company, even though it is a valid charge? Is this a safe practice? It seems to be pretty common and when I questioned it, I was told, “That’s how it’s always been done.” Is this accurate?
— It’s coming undone
Dear Undone,
That has to be one of my favorite answers when I ask about a process or policy. “That’s how we’ve always done it.” It’s tossed out like a golden phrase that explains all and solves any issues. Well thanks, that certainly clears everything up. My interpretation of that phrase is, “Go away, this works. Why are you making problems?”
“That’s the way we have always done it,” falls in the category of set it and forget it. Someone at some point in the company’s history set up a policy or procedure and that is where the story ends. Never to be revisited again. If it ain’t broke, don’t fix it.
It works until it doesn’t. What worked in the past doesn’t always translate to today’s environment. Technology, economy, and people’s integrity all change. It is the rare individual who does not know how the credit card game works.
It is a common practice in our industry to take those credit card payments by phone. People are busy, they want to deal with it once and move on. Telling a customer they have to take another step—either coming in with the card, or logging into your payment portal—upsets some customers, and not everyone on your team is comfortable having the conversation.
But seller beware: If you take a credit card by phone and the “customer” disputes it, you are now in a tangle with the debtor’s credit card company. Credit card companies like to keep their customers happy. If the charge is disputed, the verdict almost always lands in favor of the disputer. It is now an unpaid accounts receivable. A gift that keeps giving. Only swiped or self-service via portal are considered secured transactions, and there is a higher level of difficultly in disputing. “It wasn’t me,” doesn’t have as much teeth when the customer entered info themselves or swiped.
There are a few ways to remedy the issue:
Measure the pain. How often does this happen and at what cost? Just because you have always done it that way doesn’t mean it is a sacred company cow. It may never have been efficient and best practice, it just stuck.
Develop an updated policy. Allowing the use of credit cards over the phone should only be a convenience for customers who have a completed credit application, and have been extended a line of credit and terms. They are established with you. Those customers are far less likely to dispute. You are in a relationship. We both have skin in the game.
Make it policy to never take a “newbie’s” credit card by phone. That means cash customers, or anyone who is unknown to you. For cash customers that want the ability to “phone it in,” they need to get a credit application. If I don’t know who you are, I can’t find you and collect. A name and address for the order doesn’t count. For first timers‚ make it policy that they come in and get to know you. Oh and bring that card—we will give it a little swipe.
We haven’t even touched on fraudulent and stolen cards. Identity theft is part of life at this point. That alone should be cause to update processes and procedures. The only phrase more frightening than the one above is, “Honey, my parents are coming to stay for the summer.”
