Leanpub Terms of Service Update regarding Chargebacks

by Peter Armstrong

published Jun 02, 2016

Currently when a chargeback happens on a Leanpub purchase, the author sees the purchase as a refunded purchase. (“Chargebacks” are initiated by customers who contact e.g. their credit card company to say they want their money back, and then the funds for the purchase are taken away from the company that made the sale.)

Chargebacks on Leanpub purchases almost always happen within the 45-day refund window, and before the royalty payment for the given purchase has been made to the author (or the publisher or the cause).

I don’t know how often chargebacks occur in the publishing industry generally, but they are very rare on Leanpub, probably because of our 45-day refund period.

However, if a chargeback happens long after the 45-day refund window, and after the royalty for the purchase has already been paid to the author (or the publisher, or the cause), we need a way to handle the situation.

The way that we are going to do this is to just deduct the royalty amount associated with the chargeback from the author’s, the publisher’s, or the cause’s future royalty payments. When this happens, it will be broken out clearly in the purchases pages sometime this month, and we’ll also specify it in the royalty emails.

I’m posting this today since we updated our Terms of Service, effective today, to explicitly cover chargebacks.

I want to be clear that this should have hardly any effect on anyone’s royalties. These cases of post-royalty-payment chargebacks have so far been very rare and appear to be distributed randomly across all books and authors.

(Specifically, we’ve paid over $4 million in royalties, and there have been about $1,000 worth of chargebacks that have happened after the royalty payment has been made. So, this rate is currently less than 1/10 of 1% of our sales.)

Here is the new section of our Terms of Service:

10.1 Chargebacks Despite our generous return policy, sometimes customers (ab)use chargebacks. A chargeback is typically where the customer contacts their credit card company and disputes the charge made on their account. Leanpub almost never contests chargeback claims, since this is a battle we almost always lose. In the case that a purchase is later associated with a chargeback, the funds associated with the purchase are returned, and Leanpub deducts the related royalty payment from the calculation of royalties owing to the relevant author, publisher and/or cause (the “Chargeback-Related Royalty Calculation Adjustment”). In the case that an author has received a royalty payment related to a purchase that is later subject to a chargeback claim (the “Chargeback-Related Royalty Payment”), Leanpub will deduct an amount equivalent to the Chargeback-Related Royalty Payment from the author’s future royalty payments (the “Chargeback-Related Royalty Deduction”).

Thanks for being Leanpub authors!

Peter


Originally published at leanpub.com.