This week on Lendio Business Fuel, I had the opportunity to sit down with Tim Coltrell of Chargeback.com. We talked about chargebacks and how to deal with them. You can watch the video above or read the transcript below.
ERIK LARSON: Hi, it’s Erik Larson. Welcome back to Lendio Business Fuel. Today, we have a very special guest. We have Tim Coltrell, CEO of Chargeback.com. Tim, welcome to the show.
TIM COLTRELL: Well, thank you very much Erik. I appreciate you inviting me to be your participant today.
ERIK LARSON: Great to have you. Hey, so you’re the CEO of Chargeback.com. Maybe you could tell us a little bit about yourself and how you came to be here.
TIM COLTRELL: Sure, I’d be happy to. You know, this is my third startup company. I started my career in the banking industry and worked for a lot of large credit card issuers; and I had exposure to some of the issues that merchant space with chargebacks during that time. Subsequent to my time in the banking industry, I worked for – my first startup was a bank online called Next Bank – Next Card. And my second startup was a prepaid debit card company called the Count Now, and I left there a few years ago. And in the last – about a year and a half ago, I decided it was time to, I had to step back into the startup world. And I started looking around for opportunities, and I found this little company called Chargeback.com that I actually had a small investment in as a limited partner. And I came out to visit the company and to see if I could help them out in any way. And while I was meeting with the CEO, I found out he was planning to leave and it was a perfect fit between my skills and experience and financial services and technology companies with this startup company called Chargeback.com. So yeah, today is January 27th and it was one year ago, today, that I started working here.
ERIK LARSON: Great. All right, so maybe you could tell us a little about Chargeback.com and what exactly is it that you guys do.
TIM COLTRELL: Sure. So we work on behalf of the merchants. If you’re familiar with – anyone that has a credit card is familiar with making a dispute claim to their credit card issuer. And when you call your credit card issuer and you make a dispute, that dispute creates a chargeback for the merchant. Meaning, that the charges that you paid for and the money that they received for the goods that they sold to you gets reversed and taken back from the merchant. So it’s sort of like, in a way, the merchants is sort of guilty until they proved themselves innocent. And if you make a dispute, the money for that charge is taken away from the merchant; and it’s up to the merchant to prove that what they did was legitimate and to recover the money back on that charge. So what we do is we work on behalf of the merchants to show that the charge was completed with approved authorization. That goods and services were delivered and they were received by the party that signed for the card. And by doing that, we were able to recover those revenues back for the merchant from their credit card processor.
ERIK LARSON: Great. Yeah, I’ve also learned that large problems with a lot of merchants are they kind of get in trouble with the credit card companies if there’s too many chargebacks. Is that correct?
TIM COLTRELL: That’s correct. Most of the risk management policies that the credit card processors require merchants to have less than one percent chargeback ready. So they tend to go above that, then they can have their merchant account shut down, and it can literally put them out of business. So we try to give them advice and help them understand ways that they could reduce their number of chargebacks in addition to helping them recover lost funds from chargebacks.
ERIK LARSON: Great, all right. So, maybe you could tell – kind of show us some success stories you guys have had. Like, I mean what’s – what gets you going everyday as a CEO? Like, what are the wins you guys see?
TIM COLTRELL: Yeah, so one of the things that’s on my mind a lot lately is how much opportunity merchants are leaving behind on the table. So merchants – A lot of times, because it’s very difficult for them to respond to a chargeback, they just don’t even bother. So they only respond to about 25% of the chargebacks that come their way. But they probably could recover a large percentage of that revenue if they were to respond. So our products and services are built around helping merchants respond to chargebacks in a much more efficient way to help them recover those lost dollars from their merchant accounts. You know, I guess the thing that I get the most excited about is really helping merchants. Because if you think about the way the dispute process works, it’s kind of ‘the odds are stacked against the merchant’. And we’re trying to change that on behalf of the merchant and help them get the money that they rightly deserve back into their accounts.
ERIK LARSON: Now, are there certain industries that tend to, like you know, these are more prevalent, I’m sure hotels would be a guess of mine who does retail?
TIM COLTRELL: Yeah, it does vary depending on the type of transaction. As you can imagine, when you buy a meal in a restaurant, it’s very unlikely that you’re going to call your credit card company afterwards and say, “I didn’t have that meal.” So an industry like restaurants has a very low chargeback, right. On the other hand, on the other end of the spectrum, we have travel. Maybe somebody buys a trip that is, you know, planned for three months in the future and then they can’t go for some reason. They may just decide to dispute that charge rather than pay for it if the funds are not returned to them. One of the things that happen in our industry and credit cards in general is that it’s sometimes easier for the consumer just to call their credit card issuer and dispute a charge rather than calling the merchant and try to get a refund. So a high percentage of the chargebacks that do come through are not because the merchant didn’t deliver the goods or services. It’s just that the consumer doesn’t contact the merchant. They just contact their credit card issuer.
ERIK LARSON: Okay. Now, is there anything that merchants can do to, you know, help start combating these or preventing these from happening?
TIM COLTRELL: Yeah. I mean, some things they can do in the authorization process. For example, verifying that the address that they’re shipping to matches the address on the credit card that is being used for the transaction. Something simple like that is a very big factor in reducing chargebacks. But mostly, it’s being responsive to your consumers. If you have a consumer that calls you and says, “You know, I didn’t get these goods.” or “I’m not happy with the service.” You’re better off just giving them a refund rather than letting it go to a dispute and become a chargeback for you. Because not only do you lose the money for the transaction that is disputed; you also pay a fee typically to your processor for that chargeback. And those fees could be $35 per transaction.
ERIK LARSON: Wow. Okay, great. That is good to know. So let me ask you then, it’s kind of along those lines. What is the biggest mistake you see small business owners make?
TIM COLTRELL: I think probably just not knowing that they have rights as a merchant. And that if they go to companies like ours to help them with the problem that they have, they can actually make a pretty big difference in their bottomline. So I think they just, you know, it’s often times just complicated and confusing so they don’t bother to try to recover the money. But if they just look around a little bit, they’ll find that there are solutions available to them that can help them recover substantial amounts of revenue for their company.
ERIK LARSON: All right, great. So, a couple more questions for you. Now, you moved into the CEO role. So, what would you recommend – what’s the advice you would have for someone, let’s say, maybe fresh out of college and about half way through the grid and kind of move up into a higher role?
TIM COLTRELL: Yeah, so that’s a good question. And I think about that a lot and I think about my own career. And I guess when I look back; I was always willing and able to take on new responsibilities. Whenever there’s a problem in the company, they would throw me at it because they knew that I could help fix that problem. So I guess for somebody new coming out of school and you start in a company, look around for new opportunities and don’t let yourself to just scope up your job. If you see something that needs to be done, go out and do it. Raise your hand. Ask for more assignments. And by doing so, you’ll get noticed in the company. You’ll build more skills and you’ll make yourself more marketable in the future.
ERIK LARSON: That’s great advice. What’s the best advice you can give to fellow CEO’s or small business owners?
TIM COLTRELL: Yeah. I’d say, you know, really paying attention to the details. You know, in any business, the small dollars add up to big dollars overtime. And you really have to pay attention to the details of your business. If you don’t know how every little new ones of your business works, you don’t know enough about it. So really get into the details. So understand what drives your metrics and your economics for your business. And don’t assume that you don’t have control. For example, you might be paying service from one company that you could go find cheaper somewhere else; and you have to continually do that to remain competitive in your industry.
ERIK LARSON: Great. All right, that’s great advice. Well Tim, that’s about our time. Thank you so much for being on the show. We’ll have more information and a link to Chargeback.com and how you can get started there below. And thanks for watching. We’ll see you next week.
TIM COLTRELL: That sounds great. Thank you.
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