If you are a creator on Patreon, chances are you’ve had to deal with chargebacks before. A chargeback is when a purchase is made, but the cardholder contacts their bank and wants their money back.
When chargebacks are used properly, they serve as a way for financial institutions to help protect consumers from fraudulent purchases. On the other hand, they can also be used by consumers as a way to avoid paying for things they purchased.
There could be many reasons for why a chargeback occurs. Here are three frequently cited reasons card holders request chargebacks.
- They claim they didn’t make the purchase they’re being charged for
- They were unsatisfied with the product they purchased
- They claim the product they purchased arrived late (or not at all)
There are about a dozen different reasons for chargebacks that any given bank recognizes. However, the most nefarious of chargeback reasons is called “friendly fraud.” Friendly fraud is a term used for when someone contacts their bank and claims they didn’t make a purchase (but really they did).
This could be because they were unsatisfied with the product and/or service, or they just wanted to keep their money (and the product).
Consumers participating in friendly fraud often believe that if they claim their purchase was fraudulent, there will be fewer questions from the bank, and they will get their money back faster — and unfortunately, this is often the case.
Patreon is dedicated to getting you paid for your creative works. That’s why we respond to chargebacks for you when they occur.
So, when a cardholder issues a chargeback to a creator, here’s what happens behind the scenes at Patreon.
First, the merchant (in this case, Patreon) is charged a fee, which can be anything from $5.00–$20.00 per transaction. Second, the payment that patron made to you is returned to the bank.
Finally, the bank sets a deadline for Patreon to respond to the chargeback.
Patreon has a robust system in place to respond to chargebacks. Depending on the particular scenario, we would send the bank proof that the patron’s charge was legitimate, or that the product they ordered was delivered by the creator. Or, in the case of an actual fraudulent transaction, we would just accept the chargeback.
After we respond to the chargeback to the bank, any number of things can happen. Sometimes we provide a ton of evidence, and the bank still sides with the cardholder. When that happens, we lose the fee, and the original transaction amount.
However, if we win, we get the fee and transaction back.
Legitimate chargebacks serve to protect consumers, and in Patreon’s case, that means patrons.
On Patreon, chargebacks can occur for many different reasons, including friendly fraud, confusion or miscommunication about a tier or benefit, etc.
Responding to chargebacks costs Patreon time and resources. For now, Patreon covers all costs associated with chargebacks, which means that even when you lose a dispute with a patron, you still keep the earnings that were under dispute.
However, even if Patreon wins the chargeback dispute, providing proof to verify purchases is a time-consuming process involving lots of research and submitted evidence.
And, even though you keep your earnings if we lose a dispute, chargebacks can damage the relationship you have with your patrons.
As a deterrent against friendly fraud, we may remove patrons who chargeback excessively. Still, if we could limit the amount of chargebacks Patreon receives each month before that happens, it would help us (and you).
So here are some things you can do to help us dispute fraud of all kinds, and to prevent chargebacks based on confusion or miscommunication:
When writing your tiers, make it very clear what the benefits are and how (and when) they will be delivered to patrons. Often chargebacks occur because of miscommunication. The more we can cut out misunderstanding, the better!
A large portion of chargebacks received are for non-fulfillment. In other words, a patron didn’t get (or wasn’t satisfied with) the benefit they were promised for supporting a creator. If you’re having trouble keeping up with delivering benefits to your patrons, it may be time to reevaluate your tiers and benefits. Choosing benefits that you can manage — and pricing hard-to-create benefits behind more expensive tiers — will help you avoid non-fulfillment and build trust with your patrons.
Keep those lines of communication open with your patrons. If you aren’t able to deliver a benefit to patrons at the time you promised, take a deep breath — these things happen. Get ahead of chargebacks by telling your patrons what happened in a direct message or a post on Patreon. Many patrons won’t ask their bank to dispute a charge, as long as the creator warns them about the delay in advance. You may be surprised by how forgiving your patrons are if you just keep them in the loop.
When it comes to telling your patrons about any delay in benefits, communicating with them outside of Patreon (i.e., email, social media, etc.) is better than not communicating with them at all. However, try to keep as much of these communications on Patreon as you can. Those messages between you and your patrons will come in handy if a cardholder claims they’ve never heard of you (or us).
Patreon has always disputed chargebacks for you. That way, you can get back to doing what you do best — creating. Following these best practices will help us limit — and dispute — future chargebacks.
We hope that this blog has helped you better understand how we respond to chargebacks, and what you could do to deter them on your creator page. If you want to learn more about other Trust and Safety related topics, be sure to check out the rest of our Trust and Safety series.
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