The subscription business model, a.k.a set-it-and-forget-it economy, is booming right now, but they are also bedevilled by “canceled recurring billing” PayPal disputes.
Why do customers file canceled recurring billing disputes?
Speaking from the premise of legitimate cases, "canceled recurring billing" PayPal disputes happen when a customer cancels an ongoing periodic payment for a product or service, but the merchant bills them for the subscription.
Another cause of canceled recurring billing disputes is the good old human error of forgetfulness. Subscribers often forget to cancel until the due date is passed, and launch a PayPal dispute when the vendor billed them for the subscription.
And businesses with more extended subscription periods often get the harder blow at the beginning of new billing cycles. The reason is apparent; many people don’t remember they signed up for those packages. The moment they see the bill on their account, they’ll hit the merchant back with a PayPal dispute.
Even so, some fraudulent individuals use the canceled recurring billing reason code as an excuse to get freebies.
Although subscription-based businesses look like the coolest thing in the industry nowadays and everyone is migrating to the “set it and forget it” block, these businesses receive 3-10 times more PayPal disputes and chargebacks than other e-commerce verticals. If you don’t know how to win the canceled recurring billing PayPal dispute, then you are giving up ungodly amounts of money.
Do these simple things, and you can Win all Canceled Recurring Billing PayPal Disputes.
You can take the dispute mitigation actions below to prevent any illegitimate canceled recurring billing PayPal disputes before they happen. And ensure you have enough compelling evidence for your representment when fraudulent cases arise.
Canceled Recurring Billing PayPal Dispute Mitigation step 1: Have a clear pricing matrix and make bill cancellation easy.
When people don’t understand how your pricing works, it can be difficult for them to accommodate such charges. Ideally, you should ensure that your sales receipts clearly show the recurring billing timeframe and frequency.
Equally vital, you should make sure you have a well-written and easy-to-understand customer onboarding policy that specifies your subscription and cancelation terms.
Think about it this way, is it more stressful for your customers to launch a PayPal dispute or chargeback than to change their minds on how they use your services? If your pricing strategies and cancellation policies are complicated, people will find it more convenient to file a canceled recurring billing PayPal dispute.
Here's another pro-tip: People make decisions to either escape pain or get pleasure. If your product or service offers the value it promises, the well-meaning customers will likely come back for more.
And when things change, make it easy for them to opt-out or get further assistance from your team.
Research shows that 86% of customers only contacted the merchant after filing a chargeback or never contacted the vendor at all. With excellent customer service, you can get your customers to discuss their concerns or frustrations with you before taking the next step.
Again, if you are offering a trial service, also consider making the customer aware of how it works. For starters, be specific about the duration of the trial and when the service is about to expire, notify the customer before upgrading them to premium subscribers.
And if you require their credit card details during the trial, it’ll be helpful to notify them they will be moved to a premium plan when the trial service ends.
Canceled Recurring Billing PayPal Dispute Mitigation step 2: Provide a clear order summary to customers before they complete a purchase.
Per definition, “an order summary is a comprehensive, historical snapshot of an order that pulls together all order details into a single, consolidated view.”
An order summary helps you manage the entire order lifecycle and provide superior customer service to your prospects.
Ensure you provide a descriptive order summary that outlines the terms of the subscription to the customer before they complete a transaction. As a best practice, your order summary should include the followings:
- A reminder that the marketing involves a recurring billing
- An explanation of whether the regular transaction amount fixed or variable
- The specific dollar amount that you will charge for each recurring transaction
- The precise dollar amount you will charge on the initial transaction
- The transaction date
- Your communication medium of choice
With this order summary duly acknowledged by the customer in line with your “terms of service” agreement, you can be sure that when any illegitimate canceled recurring billing dispute or chargeback arises, you have a vital tool in your arsenal to fight it and win.
Canceled Recurring Billing PayPal Dispute Mitigation step 3: Notify the customer before each recurring billing and safeguard against frauds.
Experienced e-commerce entrepreneurs will tell you that as a standard practice, you should periodically notify cardholders of impending recurring billing at least ten days before the bill to ensure they are not taken by surprise.
And if the amount to be billed exceeds the initial subscription charge, you must include that information in your notification email as well.
That might seem trivial at first blush. But it’s a smart way to help protect against canceled recurring billing PayPal disputes.
Equally important, we advise that you should be mindful that not all canceled recurring billing PayPal disputes are from real customers. It's wise to anticipate the incidents of fraud and deploy tools that can protect your business against such vulnerabilities, as we discussed in this article.
How to respond to Canceled Recurring Billing PayPal Disputes
When you get a canceled recurring billing PayPal dispute, you must respond on time. If you find that the dispute is legitimate, you can resolve such a transaction dispute by issuing a full or partial refund to the buyer.
To issue a full or partial refund:
- Go to Activity.
- Click the payment you want to refund.
- Click Refund this payment.
- Under 'Refund amount,' enter the amount you wish to refund and then click Continue.
- Review your information to make sure you entered the correct refund amount, and then click Issue Refund.
If you send a full refund for the canceled recurring billing dispute, PayPal will close the case. You can also offer a partial refund to resolve your dispute. If the buyer agrees to your request, PayPal will close your dispute. And if you provide a partial refund for less than the amount that the buyer requests, the buyer will have the option to accept or deny your offer.
In the case of fraudulent or illegitimate canceled recurring billing cases, you can fight the dispute by submitting the above-listed mitigation documents as compelling evidence to support your claim. In addition to those compelling evidence, you can also include other supporting documents such as computer logs and timestamps to show that the customer interacted with and accessed the product or accessed the service after the period they claimed they canceled.
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