Potential Chargebacks - Fight or Flight

[elevate]

I have a SaaS business and have luckily not had to deal with any chargebacks. I am very transparent about the service on my website and try to give all necessary information so the customer can truly decide if the offering is right for them or not. When creating the site I paid an attorney to write my policies, most importantly my terms of service. Like many companies I have the standard "by clicking subscribe you agree to the terms of service" blah blah. It specifically states that there are no refunds and that includes non-use. It also states that if there are issues with the service it is the customer's responsibility to contact support and a remedy will be provided in a timely manner.

That being said, I recently ran into a situation where I had a customer subscribe to the service. The customer immediately emailed me stating that they were unable to log in to the system. I immediately checked out the situation and determined that they had not clicked on link in the email confirmation email. I emailed them back right away (which was outside of business hours) and provided instructions on confirming the email and stated that if there were any other issues to please contact us so we could get them up and running. The next day I saw the their email was confirmed. Due to a deficiency in my system I was unable to see whether they had actually logged into the system or not (I have fixed this issue since by adding logging whenever a user logs in...my fault but lesson learned).

I hadn't heard anything from this customer since, but I did notice through analytics and looking at their database records that they had not been using the system. Perhaps they were busy with other things, etc. I'm not a babysitter and whether they use the product or not is not up to them and not me (perhaps this is wrong to think?). I was kind of nervous with their monthly renewal coming up and I had a feeling that there was going to be drama when the renewal fee was charged. The payment went through and as I suspected the next morning there was an email from the customer wondering why they had been charged and that the account was supposed to have been canceled because they were unable to log in. WTF. What an idiot. I wrote back with a standard sorry about your troubles and had we known you were still having issues we would have fixed them immediately. I offered to credit the current month for their trouble (perhaps I am too nice) and gave them the option to either stay on with a free month or have me cancel the account. I figured I would try to save the situation since I am low on customers as it is (not that this person was an ideal customer for web-based software). I get a reply from the customer stating that they spoke with customer service (in broken English) saying they had requested to cancel immediately because they couldn't log in, and that both months should be refunded because they have been unable to use the software. This is total crap because I handle all support requests and related emails. It's not like there are 15 people that deal with this...just me. So I know they are lying to me.

Since I don't have a lot of experience with chargebacks, and I figured that was what was going to happen, I ended up writing a stern email citing the terms of service and the responsibilities of the customer. However, I ended up choosing flight and refunded both monthly fees as a one-time courtesy. This made me feel terrible. Like I just let this person, who completely lied to me, get off easy just so I didn't have to fight a chargeback. I don't know if it would have even come to that, and if it had maybe I could have won.

I am left wondering what I really should have done. I know that these types of decisions are something that only the business owner can decide. I am looking for some feedback on what I can potentially do in the future if this type of situation arises again. I don't like the idea of giving in to liars and scammers, but I have also read about the horror stories of payment processors withholding funding, etc because of situations such as this.

Any input is greatly appreciated.

 

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[MHP368]

I feel like this early on just giving the refund and moving on was the right move. If you get some traction and get to the point where you can outsource this sort of thing then you can train your workers to fight tooth and nail but don't lose sleep over it. You'll have plenty more dimwitted customers to come.

 

[pawon]

I know the feeling. It sucks, but the best thing is to just refund them and don't look back.

Luckily I don't encounter this often, but just last month, I had a customer make an order. Credit card failed. They re-tried and succeeded. A day later they ask for a refund. Not a big deal, but since my refund rate is like 0.1% it hurts LOL.

I just refunded him and gave a polite reply. In the end, it's just not worth losing sleep over.

 

[elevate]

Thanks for the feedback. It makes me feel a bit better about the decision I made.

 

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[MJ DeMarco]

You made the right decision.

The best way to deal with assholes is to wipe them clean and then get back to your business at hand.

What you experienced was simply a function of business, no matter the industry.

Believe it or not, I deal with the same thing here at Fastlane.

Also of note, chargebacks are extremely hard to fight and win.

 

[Fox]

Ya not worth the time and the hassle.

Look at what could be done differently/better next time and then move on.

There will always be people like this so best to just step up things each time but when one slips through you just move them on as fast as you can.

Hope sales pick up and you get more of the right type of clients soon.

 

[elevate]

Thanks guys! I have definitely learned from this. I think my most actionable step that I will be implementing right away is being more proactive about dealing with situations like this when I spot them. I knew this one was going to be trouble so instead of sitting on the sideline waiting for the inevitable I should have emailed the customer when I noticed they still hadnt used the system to make sure everything was ok. It could have saved me this frustration and the payment processor fees that I lose on each refund. Like you say just move the assholes along as fast as I can and focus on the real customers. I really value the input!

 

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[MJ DeMarco]

I think my most actionable step

Better onboarding processes as well, a walk-thru of the service so they know how to use it properly.

Do you offer an onboarding tutorial for your SAAS? Or do they just join and they're on their own?

 

[MitchM]

I get customers all the time asking for refunds for absolutely ridiculous reasons and I always give it to them - no problem.

It’s just something that every business needs to factor into their costs. I don’t pay attention to it or mind it.

It’s like having a toy store and getting pissed when a kid opens one of the boxes.

In the long run it should be a negligible % of customers who are causing these issues.

Your real struggle is growing to the point where chargebacks don’t matter - not the people who want chargebacks.

 

[elevate]

@MJ DeMarco
Customers can sign up for my service by filling out a few forms. Usually they do it on their own. Not only does it automate the system, but it also acts as a test of online skills. I have made it very easy, so if someone has issues signing up, it is a red flag (can't register? how will they use the software?). Once a user subscribes I get a notification and we send them a personalized welcome email (by hand) letting them know that we will do a free 1 hour session with them to show them around and get them off to a good start. Most people don't take advantage of this, but we offer it anyway. Inside the "members" area there are a number of video tutorials on using the software

 

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[S.Y.]

@MJ DeMarco
Customers can sign up for my service by filling out a few forms. Usually they do it on their own. Not only does it automate the system, but it also acts as a test of online skills. I have made it very easy, so if someone has issues signing up, it is a red flag (can't register? how will they use the software?). Once a user subscribes I get a notification and we send them a personalized welcome email (by hand) letting them know that we will do a free 1 hour session with them to show them around and get them off to a good start. Most people don't take advantage of this, but we offer it anyway. Inside the "members" area there are a number of video tutorials on using the software

Can you have one of those tutorials that automatically start for new sign-ups? Those little pop-ups that give you a quick tutorial? That can remove a layer of friction, rather than having them people act.

As many said, you did the right thing. You get a much higher ROI by just moving on and focusing on growing your business, than by fighting one-off customer.