How To Protect Your Small Company From Dishonest Customers

[This article was written by Dawn Castell.]

Protecting your business means a lot of different things and you probably have a list of things to do each day for this goal. Most business owners know that they need to protect their companies from slow sales periods, environmental disasters and local accidents, but it is also important to protect your business from customers. Not every customer will have the best of intentions with interactions and some will take buyer’s remorse out on your company through fraud, chargebacks and legal action. Luckily, there are laws out there designed to protect both you and your customers from unscrupulous persons and the more you know about these laws, and how to protect you company, the easier it will be to stay out of court.

Avoid Chargebacks

Avoiding chargebacks is a good way to protect your company from fraud and from associated banking fees, but are they and how can you avoid them? In general you will find the chargeback meaning rather straightforward, it is a transaction reversal which is designed to be a fraud protection. Many times, your company will receive this reversal if your customer used someone else’s credit or debit card illegally. Sometimes, however, unscrupulous customers will start a reversal to perpetuate fraud. You can help prevent chargebacks, or prove that the reversal is fraud, by being an honest merchant with quality products and services, by checking payment cards against photo identification and by documenting conversations with customers.

Monitor for Fraud

Having video and audio surveillance of your brick-and-mortar store can help you better monitor for theft as well as have the evidence needed to protect your company in a court of law in a fraud case. This can also help you avoid chargebacks because your interactions with customers in your store will be documented by the surveillance system as well as by any paperwork done for products and services. For instance, if you have a signed paper saying that your customer wants a custom fit blue dress and a video of the customer leaving with the blue dress, then it is less likely that you will get a chargeback because the dress was green.

Hire an Attorney

It is a good idea to seek legal advice when you are starting your company to make sure that you are following all the relevant laws. It is also a good idea to hire an attorney if you are involved in a legal battle with customers. Remember that the consumer protection laws are put in place as much to protect your business as they are to protect your customers, so going to a lawyer when your business has been impacted can help determine which laws are the best to use for your recourse.

Do Your Research

The more you know, the easier it is to spot a problem before it gets out of hand. For instance, the more you know about copyright laws, the easier it will be for you to spot when someone is using your intellectual property illegally as well as for you to properly register this property from the beginning. You can find lists of relevant laws and pitfalls online as you start your company or through talking to a business lawyer.

Know Your Business Partners

Not all of your dangers will come from customers, so it is a good idea to research your business partners before you attach your name to theirs. For example, if one of your suppliers has a practice of selling subpar items without warning you or your customers, then you may get the chargeback for that item and lose reputation with the customers affected by the item. You could also be held liable for any injuries or damages caused by the product in question.

The more you prepare for the worst when it comes to fraud and unscrupulous customers, the easier it will be for your company to survive the event. This means documenting interactions, having the right surveillance and even hiring an attorney before you need one. It can also mean researching relevant laws and your potential business partners.


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