We wrote about Chargebacks what seems like a long time ago, but was less than a month. It is one of the most read blog posts we have ever done. But there has been a lot of things we have developed, and a lot of common questions we get, and a lot of data we have collected. This blog reviews a lot of that.
Informing Race Directors
We have worked hard to more tightly integrate chargebacks directly into our system. This gives us better reporting, and a bunch of automation that we will talk about below. But it also exposes chargebacks more directly to Race Directors.
We built an automated chargeback email notification, so that each time a race gets a chargeback, an automated notification goes out to the race director to let them know about the chargeback and to suggest ways that you can reach out to participants to ask them to reverse the chargeback. We have seen only limited success.
One story was a participant spent 3 hours on hold with her credit card company waiting to be able to reverse the chargeback and eventually called the race director back and told him she had given up.
Another story is more encouraging, and we actually saw our first reversal show up on our end late this past week. A reversal will show up to us in the credit card system and we will automatically credit the race back for that chargeback (less the $7.50 charge the credit card network keeps in place).
We have also added reporting. It is under the Financial menu -> Chargebacks submenu. Here is a sample from a race that was scheduled to happen on March 21:
There are a number of interesting things about this to note:
- Chargebacks started a week before the race was scheduled when the Coronavirus first started to get publicly communicated and when the race director decided to announce the cancellation.
- Chargebacks are still happening several weeks after the race was supposed to happen.
- The reason is a bit different in each chargeback because each credit card provider has a different system where cardholders do their challenges. But they are all basically saying what they purchased was not provided to them – the race did not happen.
- Each chargeback has a processing fee from the credit card network (we do NOT get any of that), that is the responsibility of the merchant (the race).
- You will notice the status for many of these shows “Lost 2nd CB”. This means that RunSignup challenged the chargeback with information that included the signed waiver and in the case of this race, and very clear “No Refund” policy. We have now received enough of these from VISA cardholders to know that VISA is taking the stance that all chargeback challenges will be declined. Note that lost challenges cost the race another $7.95. Therefore we have decided that we will not challenge VISA chargebacks. We do not have enough data yet to make that determination for other card brands like Mastercard, AMEX or Discover.
- The transaction number has a convenient link for race directors to find the details of the transaction, including the participants. You can find the contact information of the participants and the purchaser by clicking on this link to try to contact that individual.
Chargeback Impact on Reserves and Payments
We are beginning to use chargebacks as a way of automating our Payment Policies. At his time, we use it post race. We automatically delay payments by 21 days after seeing a chargeback. For example, in the above race that last chargeback was April 3 so if money was due to the race we would hold that in reserve until April 24. If another chargeback comes in on say April 7, then the payment would be delayed until April 28.
We will continue to collect data on chargebacks to continue to update our reserve policies. We hope to see chargebacks moderate over time and lower the pre race reserves from 20% per race and 10% overall in a payment account. We also hope to track post race chargebacks to modify those policies as well. For example we hope to lower the reserve requirements faster, and we will adapt to have it be more % based rather than a single chargeback resulting in holding 20% of race registration fees. Our goal is to roll out a set of updates at the end of April based on data.
The other thing that will help our automation of the reserve policies is going to rolled out this coming week – Net Promoter Scores for each race. Every race will get a new section at the bottom of their race info page where participants will be able to answer a simple NPS survey. We will NOT make those public, but will show them to the race director and it will inform our future policies on reserves. This will help us automate and adjust reserve policies on a per customer / per race basis over the coming months.