What is a Chargeback?
As a form of consumer protection, credit and debit card companies allow their customers to file disputes on transactions. Chargebacks can be filed for many reasons, including for cases where a customer received a defective product or never received a product from a store, incorrect billing, identity theft, cases of unrecognized and/or fraudulent activity on a credit card statement, and more.
While we hope you will never need to file a Chargeback yourself, you'll be glad this protection exists should you ever need it!
What does this have to do with my campaign?
While it is not common for backers of an Indiegogo campaign to file a Chargeback, it does happen. In the event a Chargeback is filed against a transaction made to your campaign, we recommend you reach out to the individual backer who filed the dispute to determine the cause of the Chargeback and see what you can do to help solve the problem.
There may be any number of reasons a backer files a Chargeback, but here are some cases we see commonly:
- Your friend, family member, or other backer didn't remember backing your project on Indiegogo.
- In this case, feel free to remind them of the campaign, what you were raising funds for, and what they are helping make possible.
- If they do remember, or otherwise want to continue to support your project, just encourage them to contact their bank to drop the dispute!
- The backer is frustrated with a delay in your shipping their perks and wants their money back.
- In this case, we recommend you be transparent about the delays and reiterate your thankfulness for their helping you move forward your idea, and work with them to arrive at a resolution to their concerns. Openness and communication can go a long way in helping resolve these types of disputes.
- If the backer insists they want to keep the Chargeback in place because they want their money back, we recommend you tell the backer you’re happy to issue them a refund if they contact their bank to cancel the Chargeback. Issuing them a refund will resolve the matter and help give this customer the best possible experience! It's in your best interest to issue a refund and move forward with your project and away from the negativity that an unhappy backer may have on your project.
- Once the refund is out of the way you can focus on continuing forward with your project, and helping make all your other backers happy. Continue with frequent communication on your progress, and strong follow through on delivering their perks!
- A backer receives the perk, but the perk is not as the campaigner described in their campaign, or is broken or otherwise defective.
- In this case, we recommend you work directly with the backer on their satisfaction and work towards a positive solution. A solution could be shipping them a new perk to replace their defective perk, or even issuing them a refund.
What is the process for a Chargeback, on Indiegogo?
When a Chargeback is filed against a transaction made to a campaign on Indiegogo, here’s what will happen:
- Credit Card holder files a dispute with their financial institution
- Our payment processor, Stripe, notifies Indiegogo of the dispute once the payment processor receives notice from the financial institution.
- Indiegogo then processes the dispute.
- As part of Indiegogo’s response to Chargebacks, we will i) hold the transaction and ii) send out a notification to both the campaign owner and the backer that a Chargeback was received. The transaction will reflect a status of “On Hold.”
- The financial institution will investigate the credit card holder’s dispute. The investigation may take up to 75 business days and is solely up to the financial institution.
- Once a decision has been reached, the financial institution will notify the payment processor, who will then notify Indiegogo. The possible results of a Chargeback decision will be described below.
Note: Indiegogo has no control over the decisions of the financial institutions, or the outcome of a Chargeback.
What are the results of a Chargeback?
There are two possible outcomes to a Chargeback, and each outcome has different implications for your campaign, and the backer:
1. The financial institutions agree that the charge is valid and should remain. In this case, the transaction will NOT be refunded to the credit card holder, and it will be reinstated on the campaign page.
- In this instance, the transaction will be re-added to your campaign page. You'll again see this amount included in your total funds raised, and the backer's pledge will be listed on the Contributions Tab of your Dashboard.
2. The financial institutions agree that the charge is invalid and should be sent back to the credit card holder. In this case, a refund will be processed from the campaign funds and forced back to the credit card used for the transaction.
- In this instance, the transaction will be permanently removed from your campaign page. You will see your campaign total funds raised decrease by the amount of the transaction, and the backer's pledge will be listed as 'refunded' on your Contributions tab and their Contribution Details page.
Should I ship the perk if the transaction has a pending Chargeback?
We recommend that you do not ship any perks to the backer while the contribution is showing a status of “On Hold.”
- If the Chargeback is resolved and re-added to the campaign, you are obligated to send the backer the perk they claimed.
- If the Chargeback is refunded back to the backer's credit card, you will not have to ship the backer their perk.
What if a Chargeback happens on a transaction where I’ve already shipped the perk, or am shipping soon?
In these situations, we recommend you reach out to the backer and provide them with proof you’ve shipped their perk, or that you will ship shortly. Working with the individual backer can help clear up any confusion on timing of shipping, and may help encourage them to drop the dispute.
Since Chargeback decisions are made solely by financial institutions and not Indiegogo, in some cases the Chargeback may be decided in the backer’s favor even if you have resolved this issue with the backer directly. This is why we recommend that you contact backers who have initiated a Chargeback dispute early on so that you can resolve this dispute between you. If you are unable to resolve the issue with the backer, it is possible that these Chargebacks can still be decided in the backer’s favor, and have to be refunded to the backer.
Chargebacks may be a part of running a campaign, and we want to make sure you know how to address them. We hope this helps give you more insight into Chargebacks, how to handle them, and how to give your customers the best possible experience!