MLM Chargebacks – Multi-Level Defense

With the explosion of social media such as TikTok and Instagram, it has always been challenging for MLM companies to reach their target audience. While the industry can be extremely profitable, it comes with its risk.

MLM receives some of the highest chargeback ratios as products are often pushed and referred by social media influencers, with some of them needing more personal experience with the products. This results in frustrated customers who are typically expecting unrealistic expectations from social media.

If you operate within the MLM industry, you will need a vast understanding of why chargebacks occur in your industry and what you can do to limit them.

At CB-ALERT, we have over two decades of high-risk payment processing experience, and we understand exactly what goes into the thought process behind a chargeback for this industry.

We can take your chargeback defense to the next level, ultimately saving you money on fees and countless hours dealing with chargebacks.

Key Takeaways

  • MLM businesses face high chargeback ratios, resulting in increased fees for credit card processing and potential account termination/freezes.
  • High turnover rates in MLM businesses contribute to unpredictable growth and potential chargeback risks.
  • Lack of quality control in MLM marketing efforts leads to frustrated consumers and a higher volume of chargebacks.
  • Affiliate marketers are often to blame for unreasonable expectations regarding products/services.

What Are MLM Chargebacks

MLM chargebacks

In your MLM business, chargebacks are reversed transactions when customers dispute charges with their credit card company, often due to dissatisfaction or perceived deception. They occur frequently in the MLM industry, as many companies operate within the industry that are only concerned with collecting money.

Banks and processors are typically wary of working with this industry due to the increased risk of merchants surpassing the chargeback threshold.

Apply Today For Your Multi-Level Approach To Chargebacks

Are you ready to take a stand against your MLM disputes? You’re in the right spot. At CB-ALERT, we take charge of your chargebacks, thoroughly analyze them, and equip you with top-notch anti-fraud tools and chargeback prevention alerts, allowing you to fight fraud in real time.

Below, you’ll find the details we need to kickstart the process with CB-ALERT:

  • Company name
  • Official business address
  • Descriptor for your merchant account
  • Merchant account number issued by your payment processor
  • Access to your sales system for refunds/alert resolutions on your behalf

The more comprehensive the information you provide, the sooner we can get you up and running to tackle those chargebacks head-on.

Why The MLM Industry Has So Many Chargebacks

It’s primarily due to the nature of the business model. MLM companies often have a high turnover rate, with representatives coming and going frequently. This leads to inconsistent quality in product promotion and customer service, causing customer dissatisfaction.

MLMs are often associated with pyramid schemes, which can tarnish their reputation. Customers who feel they’ve been misled may resort to chargebacks to get revenge against the merchant.

Why MLM Chargebacks Are Costly

Chargeback costs can hit your MLM business hard, draining resources and negatively impacting your bottom line. Each time a chargeback occurs, you’re not only losing the sale but also the product shipping costs, and you’re slapped with a chargeback fee. 

While it’s important to note the additional fees with chargebacks, it’s often the reputational damage that proves to be cumbersome for MLMs. Google reviews and social media comments can destroy MLMs just as quickly as they took off.

A strong customer service team is needed when operating within this industry because of this.

Preventing MLM Chargebacks

Preventing chargebacks in the MLM industry largely involves focusing on customer service, monitoring your affiliates, and offering legitimate products/services.

If you’re not offering legitimate goods/services, you will experience disputes until you fix the quality of your offering.

Here’s a quick cheatsheet for preventing chargebacks:

  • Implement Comprehensive Fraud Prevention Tools: Utilize advanced measures like 3DS2 authentication, RDR, and chargeback alerts to strengthen your defense against fraudulent activities.
  • Optimize Merchant Descriptor Clarity: Ensure your company’s presence on statements is unmistakable. Align your merchant descriptor closely with your business name.
  • Collaborate with CB-ALERT: Partner with CB-ALERT and stamp out fraud before it begins.
  • Prioritize Customer Authentication: Give importance to robust customer authentication to combat chargebacks effectively. 
  • Deliver Outstanding Customer Service: Respond promptly to customer inquiries and resolve issues swiftly and satisfactorily. This proactive approach helps prevent chargebacks stemming from customer dissatisfaction.
  • Consider Refunds When Appropriate: In most cases, offering a refund is a more cost-effective solution than facing a chargeback. Refunds also increase the likelihood of retaining the customer.
  • Maintain Accurate Records: Keep thorough records of all transactions, including customer contact information, order details, and communication history. These records serve as crucial evidence in chargeback disputes.
  • Promptly Monitor and Address Chargebacks: Utilize chargeback alert systems to closely monitor and promptly address potential chargebacks, preventing them from escalating into more significant issues.

Choose CB-ALERT For Chargeback Management

At CB-ALERT, we pride ourselves in transparency and the ability to lower our merchant’s monthly costs on chargebacks.

With CB-ALERT, you can identify, track, and manage chargebacks effectively, minimizing the damage to your MLM business.

Our software also provides detailed analytics, allowing you to pinpoint exactly where chargebacks are coming from and tailor your prevention strategies accordingly.

Don’t let chargebacks undermine your hard work and profitability. Make CB-ALERT your ally in the fight against chargebacks so you can focus on growing your business.

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