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What would you do (handling a payment dispute)?


#1

It’s been a long day, but I wanted to bring up a situation which arose today and see where you all stand on it. Maybe it’ll make me feel better to get it off my chest, so here goes:

Today I received a payment dispute for a domain that was auto-renewed. The dispute, if it succeeds, means my company is out the cost of the domain (it’s a .io domain, so the wholesale price is $39.50 and we charge $40, basically no margin) plus the chargeback fee ($15). The customer in question filed the dispute as “Unrecognized charge”. I emailed the customer and said that I assumed it was a mistake, explained what the charge was for, and then asked the customer to reverse the dispute. The response from the customer was: the dispute was intentional, he forgot to turn off auto-renewal, and he is upset because we didn’t refund him the charge in the first place, because he is a long-time customer.

So now, fellow bootstrappers, what would you do in this case?

(I’ll tell you what I did after I hear back from some of you).


#2

From outside your shoes it sounds like kissing goodbye to $55 is worth avoiding the possible bad reviews and back-and-forth headaches. Drop it and focus on your business.

From inside your shoes I can imagine how frustrated you must be and don’t want to let it go out of principle. And if you don’t I don’t blame you.

Good luck.


#3

Refund and forget.

Dealing with bad actors is cost of doing business.

$15 is not worth the stress and potential damage that a motivated angry person can do to your business thanks to internet and social media.


#4

If in doubt always refund, not worth the hassle or possible repercussions. Do you have emails that go out automatically before the auto-renewal actually happens? If not I would do this.


#5

Do you have emails that go out automatically before the auto-renewal actually happens?

Yes, numerous emails, with very clear notices about renewals.


#6

Unfortunately it’s just the cost of doing business, always going to get those painful customers, you just hope they are far and few between.


#7

I agree with the common sentiment here. Forget about it and move on.

Having said that, I’ve been in this situation a few times with Poker Copilot customers, so I empathise with your frustration and annoyance.


#8

Another agreement with the general consensus. In this particular case, ask the customer to stop the dispute and just issue a refund. Cost of doing business. Remember, Refund is always better than Chargeback. The odds of winning such chargebacks are very low in your favor anyway (been there, trust me).


#9

The dude is a jerk. Probably writes a book with a working title “What happened”, where he blames his DNS issues on you. :wink:

Add him to a black list, maybe? Or a “special inflated pricing” list.


#10

The dispute process is weighted heavily in the consumer’s favor, and these things can often take months to get resolved. The financial hit is unfair, but it’s better than having an open loop on the case for several months and ending up with the same result.


#11

Thanks to everyone who responded. In this case, I took this approach:

Here’s something you may not know: if someone opens a dispute you cannot refund them unless they first close the dispute with their bank. The money (along with the dispute fee) has already been pulled back out of your card processing account. So I can’t issue the refund unless he agrees to reverse the dispute - which is what I’m hoping will happen.

So where are we now? So far the person has not answered. I’ll let you know how it turns out.


#12

I’d recommend that in addition to keeping your fingers crossed, you upload all the relevant docs and emails to the merchant interface (e.g. refunds policy, auto-renewal warning, the conversation where they recognised this was an intentional way to bypass the policy, etc.). The clock is ticking and there is a time period for both parties to try to solve this before the bank makes a call. I’d say this person is probably going to ignore your request, and that most likely the bank will rule against you, but if you have all the docs and compelling evidence they were just trying to game the system, you may get lucky when the clock stops and they need to make a decision.


#13

Definitely a good idea, and is already done.


#14

I usually refund problem customers. They are a major PITA and I don’t want to have to deal with them unnecessarily. $15 or $30 or however much just isn’t worth the trouble.

If I wanted to deal with toxic people I’d get a “real job” :wink:


#15

Just refund it and move on. $15 does not worth the trouble.