Ask HN: How can a SAAS win a chargeback dispute? | Hacker News Reader

Ask HN: How can a SAAS win a chargeback dispute?

6 pointsboldpanda2 comments

My SAAS business has had over 3000 transactions and only a couple of chargeback requests.

In both cases, I provided the customer what they paid for and it was a case of an employee using a personal credit card and then quitting the company and filing chargebacks instead of just emailing my support email and requesting a refund.

I sent all the documentation of receipts and email correspondence with the business showing that they indeed did request, receive, and intend to pay for our service.

In both cases I lost the dispute and was charged the fee + the refund.

Neither Amex nor Stripe had any answers for me. Seems unfair.

View on HN

Yes, it's unfair, and you will have to make peace with that. All businesses suffer losses from factors beyond their control. It's an expense/cogs line item just like your hosting bill. Be glad you don't share the plight of retail stores: not only do they get credit card chargebacks too, and are vulnerable to types of payment fraud you're not, but 1 in 11 people walking around have shoplifted at least once. 1.5% or more of the average retailer's inventory will simply vanish as shrinkage to theft, damage or lost items each year.

In your specific scenario, you likely didn't have the evidence needed to rebut those chargebacks. The only time you can rebut reason code 41 (cancelled recurring transaction) is if you have evidence the customer "did not cancel the transaction". A customer sending you nothing (i.e. subscribed, paid a few months, never requested cancellation) means you have no such evidence that they did not cancel those specific renewals. The customer, on the other hand, "does not have to supply evidence that you received a cancellation notice".

If these are losses you can work into your margins, then just walk away from these chargebacks. Unless these transactions are thousands of dollars each, it's probably not worth the time and energy pursuing the unpaid bills instead of operating the business.

Talk to a lawyer to find out what your options are. If the customer has enough money or assets, it may be worth suing them. There might also be grounds for filing criminal charges, e.g., theft of service.

It's possible that all it would take to get paid is having your lawyer send a letter to the company demanding payment (plus legal fees), and explaining that lack of payment will result in legal action.

Of course, if the total amount in dispute is less than thousands of dollars, it may not be worth your time and effort to sue. In that case, you could consider turning the debt over to a collection agency, or just doing nothing. And definitely never do business with this customer again.

Reply on news.ycombinator.com