Don’t Let Greedy Patients Walk Away with Your Dental Practice’s Money

The Cranky CollectorChargebacks? I Dare You to Try
by The Cranky Collector

Chargebacks are becoming the darling of patients who wish to get out of payment for treatment after the close of a transaction. This process can throw a wrench into closed Accounts Receivable. Fortunately, there is help for the dental practice that accepts credit cards in payment for services.

What are chargebacks? Essentially, a chargeback is a mandated return of funds to a client. These clients have gone through their bank card or credit card company to request a refund instead of dealing directly with your dental practice that actually provided the service.

How do chargebacks work? First, a patient disputes a transaction on their statement from the issuing bank or credit card company. The bank then issues the patient a provisional credit while contacting you, the merchant. You are now responsible for issuing a response within 15 calendar days that proves delivery of the treatment. This is challenging for dental practices that are lax with documentation. If your documentation does not prove that treatment was indeed provided, then the provisional credit to the cardholder is finalized and you receive a debit to your account.

How long does it take? Unfortunately, chargeback disputes can stream on for months of back-and-forth. Customers who employ this shenanigan are simply waiting for you to miss a response deadline on the 3rd, 4th or 5th time the issuing card company requires more documentation from you. Some of these customers claim a different reason for the chargeback each time. If you choose not to fight these chargebacks, watch out!

What can happen if a practice does not fight chargebacks? A business with too many chargebacks can be declined from processing credit card receipts in the future, may be charged higher processing fees, and generally loses out on obtaining payment for services delivered honestly.

Do laws differ by state? Absolutely! Depending upon your state, this process can be even more arduous and costly. Arkansas has one of the more difficult set of regulations binding the merchant, and as such, has the lowest number of services and professionals who accept credit cards. California has one of the more clearly defined policies. Consequently, even the smallest businesses can be found accepting credit cards in that state.

What can be done? There is good news, too. The credit card companies and bank issuers are as eager to end charge-fraud as they are to end identity-fraud. Chargebacks are a loss of funds to them, increased processing costs and a source of uniform discontent among their merchants. As such, consumers who lose chargebacks to three or more merchants can lose their credit cards and be moved to “The Match List.” Maintained by banks and credit card companies, “The Match List” catalogs both consumers and merchants who have fraudulently used credit cards. Clearly, this is a list upon which your practice wants to appear.

Amex encourages cardholders to dispute transactions like the 14,000 tennis balls charged to a famous Executive Producer on their TV commercials. For the most part, however, companies would prefer that you just pay your bill. Larger corporations such as Google now have entire departments within their Accounting Division specifically formed to fight chargebacks. As consumers can now lose their charging privileges for issuing and losing too many chargebacks, corporations are seeing this as an opportunity to end these shenanigans by fighting each and every chargeback. Dental practices can only win by staying on top of it as well.

What are some of the basic steps to ensure you win a chargeback?

  1. Save all documentation from phone records to faxes to service appointments. Put a statement or timeline together and fax this documentation to the bank or credit card company managing the dispute.
  2. Immediately call the Dispute Manager directly after emailing/faxing off your response. They can tell you immediately whether or not you have provided sufficient documentation to win the charge.
  3. Keep copies of the dispute paperwork. You will need to include it if and when the customer loses the chargeback on their first attempt and tries again.
  4. Once you have won the dispute, file a complaint about fraudulent charging with the credit card company or bank that issued the problem patient the card. The more complaints against a cardholder, the more likely that cardholder is to lose his or her ability to commit further charge fraud.

These steps not only allow you to close your Accounts Receivable for good; they are quite simply good business.

Next time: Closing a collection does not mean ending a patient relationship…

The Cranky Collector is a regular column on financial matters from The Wealthy Dentist. The Cranky Collector is the alias of a business consultant providing processing efficiencies to businesses in California and New York for over twenty years.

About Jim Du Molin

+Jim Du Molin is a leading Internet marketing expert for dentists in North America. He has helped hundreds of doctors make more money in their practices using his proven Internet marketing techniques.

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