Money Minute: Why Chargebacks Aren’t Refunds

Chargebacks, payment disputes, reversals, etc. are some of the biggest problems in the streaming community, and they are something that nearly every streamer encounters at least once in their career. At GameWisp, since we stand between streamers and subscribers, we encounter these things nearly every day. What we’ve found is that there is a lot of misinformation floating around, especially from the subscriber side. I hope this post can do a little to clear the air.

One of the most perplexing, but common, emails that we receive from subscribers goes something like this:

Email Subject: Refund

Hi, I am subscriber to [insert streamer name], and I want to chargeback and get a refund.

We… don’t love these messages.

First, the person is subscribed to a channel, meaning that they have likely already received several subscription benefits, not least is the recognition they receive on stream as being a subscriber.

Second, they want a refund, which would essentially give them those benefits for free.

Third, they are asking us for a chargeback (which we don’t do because we are not a credit card company/PayPal), and they think a chargeback is the same thing as asking for a refund.

This is the first misconception. The reality is that a chargeback is not a refund, and should never be treated as such. When you file a chargeback or dispute, it has the potential to cost the other party more money than just the charge you want back. In some cases, it can cost many times more.

An example: We occasionally receive chargebacks through credit card companies (not PayPal) for small amounts, such as $4–5. Sure, the subscriber wants their couple of bucks back, but what they may not realize is that if we lose the chargeback, not only is the $4–5 removed by the credit card company, but also a $15-$20 service fee. So, we will fight the chargeback, and fight it as hard as we can.

Chargebacks and disputes are not harmless. Sure, they have their place, but that place is when a truly unauthorized charge has been made. Has your credit card been legitimately stolen? Sure, file a chargeback (or email us first, which is a much better option). Did you have buyer’s remorse about subscribing to someone? Just cancel your subscription so you don’t get charged again, and enjoy your subscription benefits for a month.

In some cases, an unwarranted chargeback request could even be a form of fraud, known as “friendly fraud.”

From Wikipedia:

“Chargeback fraud, also known as friendly fraud, occurs when a consumer makes an online shopping purchase with their own credit card, and then requests a chargeback from the issuing bank after receiving the purchased goods or services.”

Many people want the recognition from the streamer/chat that comes along with subscribing or tipping. They think that once they receive this recognition, it’s fine to file a chargeback. It’s not. You have received something in return for money. The same goes for any type of benefit, whether tangible or intangible, that you might receive from subscribing to a streamer. It is a transaction of money for something. You wouldn’t chargeback after eating at a restaurant or buying a t-shirt at a store; digital goods should be no different.

GameWisp takes a hard stance on fraudulent chargebacks. We have to, because we want GameWisp to be a safe place for streamers to create a sustainable community. Luckily, we’ve become pretty good at fighting chargebacks and disputes, and as we continue to learn how to better fight them, the safer we’ll be able to make GameWisp.

Next time, I’ll cover the different types of chargebacks/disputes/reversals, etc., which is another topic in the misunderstood world of chargebacks. See you then.

Originally published at blog.gamewisp.com. Mar 8, 2016 9:00:00 AM