Dentist visits often fill consumers with anxiety: What procedures will I need done? Will it hurt? Is it going to be expensive?
They hand over their credit card, anxious about their pressing dental needs and the potentially high bill they will receive. For some consumers, however, their mounting debt becomes overwhelming and they start to look for a way to alleviate some of the financial pressure they’re facing.
One method of dealing with financial stress is to use the credit card system against itself through the use of chargebacks.
What are chargebacks?
Chargebacks occur when a bank or consumer files a dispute over a credit card transaction. While there are legitimate reasons for using the chargeback system, it has become a leading form of fraud as unethical consumers use the system to their advantage.
Once used as a defense against identity theft and unscrupulous merchants, today’s consumers have begun to use chargebacks instead of dealing with the hassle of returns, and have discovered a loophole that has become so common it earned its own name: friendly fraud.
Monica Cardone explains that friendly fraud occurs when a customer files a chargeback after a transaction has been completed, resulting in the reversal of the charge, effectively giving them their purchase for free. The merchant is often unaware of this reversal until the funds are removed from their bank without notification and they must prove the legitimacy of the original transaction to have the money restored.
Most instances of friendly fraud are perpetrated online, but the savvy fraudsters of today have discovered loopholes that allow them to exploit card-present situations as well. As a result, even dentists are facing a new challenge: how to deal with (and avoid) chargebacks.
Dental patients filled with ‘buyer’s remorse’ are using ‘services not delivered’ or other false pretenses to avoid paying for their dental work. How can your office avoid these claims?
Ways to Avoid Chargebacks
Here are three tips for dentists to protect their profits and reduce risk.
1. Upgrade to EMV Terminals
New chip-and-pin technology is designed to help prevent the creation of counterfeit credit cards. These new payment cards need to payment processing terminals. If your dental office hasn’t updated its equipment, it’s important to do that now.
As of October 1, 2015, any business owner who hasn’t made the switch to new POS machines will be liable for any purchases made fraudulently.
2. Maintain Records
Documentation is essential to preventing chargebacks. Accurate records, including descriptions of work to be done, patient authorizations and dates and times of appointments must be maintained.
These records can be used to dispute chargebacks that claim “services not delivered” or “products or services not as expected”. Records showing the cardholder’s signature and a detailed explanation of work being done may be your only defense.
Train office staff to handle all documentation properly and ensure that records are maintained within patient files.
3. Be Leery of Online Transactions
Fraud is perpetrated at a much higher rate online. If you sell dental hygiene products in an online store or accept payments via online scheduling software, you are opening yourself up to greater danger. Proceed with caution.
As a dentist, you should be spending your time fighting cavities – not fraud. Engage the services of a specialist who can provide your practice with the coverage you need to prevent and fight friendly fraud.