I’ve been getting a number of chargebacks over the past few days for the SMUpdater application, so I’d like to explain what chargebacks are, and why you should only ever send them as a last resort.
When you purchase something with a credit or debit card, you give authorization for that purchase by signing off (electronically or otherwise) on the transaction. If someone were to steal your payment information, it would be trivial for them to fool the seller and the payment processor in to accepting and approving fraudulent payments. To protect you against this type of fraud, there is a thing called a chargeback. If you choose to dispute a charge, the payment processor will take back the money from the seller, and tack on an additional fee (that the seller has to pay) for the service.
The most important thing to know about a chargeback is that it is fundamentally different from a refund. When you are refunded, the seller credits you the amount you were charged, and everyone goes home happy. When you send a chargeback, your bank forcibly removes the money from the seller’s account, and fines them for making an unauthorized charge. If an account receives too many chargebacks, these fines can get huge (hundreds of dollars per chargeback).
There are a number of legitimate reasons to send chargebacks, but none of them are applicable to this post, so I won’t go in to detail. These include identity theft, duplicate billing, items returned but not refunded, and advertised services not being provided. What I’m focusing on here is simply buyers’ remorse, which is not a legitimate cause for sending chargebacks.
It’s actually very common for people (assholes) to abuse the chargeback system in this way. People will purchase items, change their minds about wanting the product, and send chargebacks to get their money back instead of dealing with the seller in an equitable way. Disputing these illegitimate chargebacks is nearly impossible for online services (it is usually impossible to prove that services were rendered), and when it is possible, it is almost always cost prohibitive.
In the case of the Andriod Marketplace, the chargeback fee is $3.00. As the number of apps that cost more than $10 in market can be counted on one hand, it typically costs more money for a seller to dispute a chargeback than it does to pay the fee, so there is really no point in trying. Because of this, Android application developers bend over backwards to grant timely refunds, usually with no questions asked. It’s simply not worth the risk of having to pay a fee that, usually, is many times more than their profit margin was to begin with. If an app costs $1.00, the developer only takes home $0.70 after Google takes its cut. That means that for every chargeback the developer recieves, they have to sell the app more than 4 more times to make their money back on the chargeback fee – just to get back to zero.
In the case of the old SMUpdater app that I pulled off of market, I have not once refused a refund to anyone that has asked for any reason, and it was made clear in the application description that the money was a donation to the project (Read: buyers’ remorse is not even a legitimate [i]feeling[/i]). By sending me a chargeback, you are not only taking your money out of the pool, but you’re taking an additional $3 out of my personal income. It is a completely unnecessary and insulting step.
Chargebacks are bad for everyone – it’s a lose-lose scenario. They make you (the buyer) look back for sending them, because fraudulent charges mean you were not careful with your personal information. They make the seller look bad, because they approved a fraudulent charge. They’re even bad for Google, because if they receive too many chargebacks, Google will end up making less money (Visa or whoever will rapidly increase the fines associated with each chargeback).
So, the next time you think about sending a chargeback over a tiny charge, you ought to give the seller a chance to do the right thing privately. It will not hurt to ask, and if the seller still refuses to refund you, only then should you consider taking such a hostile action.
PS (from trevorj): If you do request a chargeback, it is legally considered bank fraud, as it was a donation, not a payment for any sort of service or product in any way, shape, or form. It was a donation, get over it.
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