The original flavor of “chargebacks” is the “defective” or “return” allowance charged to vendors of retail chains.
It still boggles my mind that in most major US retail chains, if you return a high value item, e.g. a TV or appliance, you can get a refund without the store clerk checking the merchandise.
It’s an unfortunate reality that in the US, consumers have been conditioned to expect lengthy return periods, and then still game the return system with various tricks. Need a tent for a camping trip? Great, use it for camping season, and return it within the 60 day return window for a full refund, no questions asked!
In my personal experience, when my company receives shipping containers with returned “defective” products, anywhere from 25-50% of the returns are working just fine.
In contrast, in Canada, Mexico, or many European countries, return periods rarely extend beyond 30 days.
With online sales, the same issues seem to have cropped up in a different form. Amazon can’t be bothered to actually verify whether returned merchandise is actually defective, or if the returned box actually has an item in it. If you ask to see the merchandise that triggered a chargeback, be prepared to shell out for freight, and wait weeks for your shipment to arrive. When it does arrive, and you find out that the merchandise is perfectly functional, or the customer kept the merchandise and sent back an empty box, good luck trying to find an Amazon rep who can adjust your account balance in a timely manner.
The return system on Amazon for consumers seems designed to encourage bad behavior. If you’re returning an item, and select your reason for return as “I didn’t like it”, you’ll be charged the cost of return shipping. If you claim that the listing was “inaccurate” or that there was a vague “quality problem”, Amazon will immediately let you download a prepaid shipping label. Better yet, you can test the different options for yourself, since Amazon doesn’t prevent users who selected one reason and have seen the return shipping cost from selecting another that has no return shipping cost.
All this is to say, I deeply empathize with the original comment and the child comment. If you’re selling low-volume, high-value goods, a bad string of chargebacks can easily threaten your business. If I’m selling 100 $50 dollar items a month on Amazon, and I suddenly get 3 chargebacks, that money is immediately deducted from my balance. To contest the chargebacks, you’ll have to go through the whole rigmarole I described before. Stripe’s underwriters are doing what makes financial sense for them, but that’s small consolation to the entrepreneur.
It’s awfully easy to say that any business with more than 1% chargebacks is doing something wrong, but if you’re a low volume seller trying to grow your business organically, a bad month or two (“variance”) can seriously crimp your cash flow and the threaten the survival of your business.