Gaming Chargebacks: What are They and How to Manage Them?

ChargePay Team
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January 2, 2024
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Are you running a game development studio or an online gaming marketplace? If so, you've likely encountered a frustrating issue: gaming chargebacks. These chargebacks act like reversed payments and occur when players dispute a gaming transaction with their bank. This headache can result in revenue loss, extra fees, and even damage your reputation.

Imagine players diving into your virtual universe, making in-game purchases to level up their experience. Then suddenly, some transactions are challenged, and your hard-earned funds vanish. This is the challenge of gaming chargebacks. They can disrupt your business and leave you struggling.

But worry not. In this article, we're delving deep into the world of gaming chargebacks. We'll provide practical solutions and expert advice to help you tackle this problem head-on. Let's ensure a smoother gaming experience for both you and your dedicated players.

Why do Video Gaming Chargebacks Happen? 5 Potent Reasons

A video gaming chargeback transpires when a player gets in touch with their bank to initiate a reversal of an in-game transaction.

Chargebacks pose a significant challenge to merchants in various industries, and the world of video gaming is no exception. This vulnerability within the gaming sector can be attributed to several factors, including the handling of payments, data storage, user account intricacies, and permission structures.

1. Cyber Shoplifting

At the heart of gaming chargebacks lies a phenomenon known as "cyber shoplifting." This occurs when players utilize either virtual currency or actual money to make purchases within a game, only to later instigate a chargeback, essentially undoing the initial transaction. 

This action can stem from an array of motivations, ranging from dissatisfaction with in-game acquisitions to an attempt to regain spent funds while retaining the purchased in-game items.

2. Account Takeover

Within the digital landscape of gaming, player accounts can fall prey to takeover attempts by malicious entities. If a hacker manages to gain unauthorized access to a player's account, they may proceed to make purchases within the game without the account holder's consent. 

This scenario can ultimately lead to chargebacks once the legitimate owner detects the unauthorized transactions and disputes them.

3. Friendly Fraud

While the term might sound contradictory, friendly fraud is a genuine concern. Friendly fraud occurs when a player knowingly completes a valid purchase, only to later contest the transaction with their bank. 

This dispute is often made because the purchase was unauthorized. This could be driven by factors such as buyer's remorse or an intent to acquire virtual items without payment.

4. Poor Customer Support

Occasionally, players encounter technical glitches, issues, or subpar experiences within a game. When faced with inadequate assistance from the game's customer support, players might resort to chargebacks as a means of expressing their frustration and seeking a resolution.

5. Buyer Remorse

Amid the exhilaration of gaming, players might make impulsive purchases that they subsequently regret. 

Its primary clearer understanding of the game's mechanics, the realization that the purchased item isn't essential, or a mere change of heart. In these instances, chargebacks are initiated to reverse the transactions in question.

How Do Chargebacks Impact the Video Gaming Industry?

A video gaming chargeback happens when a player contacts their bank to undo an in-game transaction.

Gaming merchants face a serious challenge from chargebacks, which can be even more problematic in the world of video games due to specific factors like payment processes, user details, and permissions.

Here's how chargebacks can impact the video gaming industry:

1. Loss of Revenue: When a chargeback occurs, the merchant not only loses the money from the original transaction but also the fees associated with it. This can be particularly harsh financially, especially for smaller businesses.

2. Increased Administrative Expenses: Chargebacks require thorough investigation and potential disputes with the cardholder's bank. These processes can be time-consuming and costly for merchants, driving up administrative expenses.

3. Reputation Damage: Chargebacks also harm a merchant's reputation. Customers who get their charges reversed might think twice about engaging with the same merchant again. This can lead to lost sales and reduced customer loyalty over time.

4. Risk of Account Closure: Merchants with a high number of chargebacks could face the consequences of account closure. Such a scenario can deprive them of the ability to accept credit card payments, causing significant disruptions to their business operations.

The video gaming industry is especially susceptible to chargebacks due to the following factors:

1. High-Value Digital Goods: Digital items in games, like special in-game equipment, often hold substantial value. This allure attracts fraudsters aiming to capitalize on valuable digital assets.

2. Ease of Chargeback Processing: Making chargebacks, especially in online settings, is relatively straightforward. This simplicity empowers fraudsters to initiate deceitful chargeback claims.

3. Limited Customer Identification: Numerous video games don't necessitate personal information during purchases. This anonymity complicates the process of identifying fraudulent activities and challenging chargebacks.

In a nutshell, chargebacks can have a profound impact on the video gaming industry, leading to financial losses, operational challenges, reputational harm, and even account closures. 

This vulnerability is exacerbated by the high value of digital goods, the ease of initiating chargebacks, and the lack of robust customer identification practices. 

Gaming developers must be aware of these risks and take essential measures to minimize their impact.

Why Are There So Many Chargebacks in Video Games?

Chargebacks have become an all-too-common headache in the world of video games. But why do they keep happening so much? Let's break it down without any jargon.

1. Impulsive Buys Galore: When you're gaming, excitement can get the best of you. That cool armor upgrade or those snazzy emotes seem irresistible, right? But sometimes, that excitement fades, and you hit the "chargeback" button.

2. What's That Virtual Thing Worth?: Unlike a real-world item, virtual stuff in games can be a mystery when it comes to value. It's not like you can touch it or trade it for real cash. So, if you're not happy, it's easier to reverse the charges.

3. Ch-ch-changes: Games change faster than you can say "game over." Updates, new levels, or character changes can mess up what you bought. You might not be getting what you paid for anymore, so you ask for your money back.

4. Easy to Forget: Ever bought something and then, oops, forgot about it? It happens in games too. You might see a charge on your card and not even remember what it was for. Cue the chargeback.

5. Can't Please Everyone: Game developers try hard, but it's tough to please everyone. Some players get mad if the game's too hard, too easy, or just not what they imagined. Instead of dealing with it, they call their bank for a refund.

Chargebacks From Purchases Made by Children

Chargebacks stemming from purchases made by children pose a common issue within the realm of video gaming. The ease with which children can execute unauthorized transactions often catches parents off guard, prompting them to contest the charges with their credit card providers.

Several factors contribute to the occurrence of unauthorized purchases by children. In some instances, the process is simply too straightforward. Many video games permit players to save their credit card details for future acquisitions, and children may exploit this feature without parental consent. 

Moreover, certain games lack an additional layer of security during the purchase process, further simplifying the act of unauthorized buying for children.

When parents initiate charge disputes for their children's purchases, merchants frequently find themselves facing an uphill battle. The Fair Credit Billing Act (FCBA) doesn't explicitly define purchases made by children as unauthorized transactions. 

Consequently, certain credit card companies might align with the parents and reverse the charges, regardless of the merchant's stance on the legitimacy of the charges.

Safeguarding against such scenarios demands a two-pronged approach. First, parents must exercise vigilance by monitoring their children's gaming activities and restricting access to payment information. 

Simultaneously, gaming companies need to fortify their purchasing procedures, incorporating additional authentication steps to curb unauthorized transactions effectively. 

By working in tandem, both parties can significantly reduce the prevalence of chargebacks resulting from children's purchases and foster a more secure gaming environment.

Common Games with Chargeback Issues

Ultrakill and Arknights are both popular video games that have been known to have chargeback issues. Here are some of the reasons why these games are prone to chargebacks:

1. Ultrakill Chargebacks

There have been some reports of Ultrakill chargebacks being made. It is likely due to several factors, including:

  • The game is still in early access, and there may be bugs or other issues that are causing players to be unhappy with their purchase.
  • The game is priced at $25, which is higher than some other indie games. This may be making some players hesitant to purchase it.
  • There have been some reports of fraudulent chargebacks being made against Ultrakill. This is likely due to scammers trying to get free games.

If you are considering making a chargeback against Ultrakill, we recommend that you contact the developer, Merkabah Games, first to see if they can resolve the issue for you. You can contact them through their website or their Discord server.

If you do decide to make a chargeback, be aware that you may be banned from the Ultrakill multiplayer servers. You may also be charged a fee by your credit card company.

2. Arknight Chargebacks

Arknights is a popular gacha game developed by Hypergryph and published by Yostar. Like other gacha games, Arknights allows players to purchase in-game items and currency using real money.

There are a few reasons why a player might initiate a chargeback for Arknights purchases. Some common reasons include:

  • The player did not receive the items or currency they purchased.
  • The player believes they were misled about the game's features or gameplay.
  • The player believes they were the victim of fraud or unauthorized charges.

If a player initiates a chargeback, Arknights may take action against their account. This could include suspending the account, banning the account, or even taking legal action.

It is important to note that chargebacks are a serious matter. If you are considering initiating a chargeback for Arknights purchases, you should carefully consider the potential consequences.

Can You Get a Gaming Chargeback Refund After Losing a Dispute?

No, you cannot get a gaming chargeback refund after losing a dispute. Once a chargeback has been processed and the merchant has lost the dispute, the money is returned to the cardholder, and the merchant is not obligated to issue a refund.

There are a few exceptions to this rule. For example, if the merchant can provide evidence that the cardholder filed the chargeback in bad faith, they may be able to get the chargeback reversed and the money returned to them. Additionally, some merchants may offer refunds to customers who have lost chargeback disputes, but this is not always the case.

If you have lost a chargeback dispute and you are not eligible for a refund from the merchant, you may be able to dispute the chargeback with your credit card issuer. However, this is a complex process and it is not always successful.

It is important to note that filing a chargeback can have negative consequences for the merchant. If a merchant receives too many chargebacks, they may be charged additional fees by their payment processor or they may even have their merchant account terminated.

For these reasons, it is important to only file a chargeback if you have a legitimate reason to do so. If you are not sure whether you have a legitimate reason to file a chargeback, you should contact your credit card issuer for guidance.

10 Expert Insights to Manage Online Video Game Chargeback

When it comes to keeping those pesky chargebacks away from your online video game business, arming yourself with the right strategies can make all the difference. 

We've gathered insights from experts in the field to give you a solid game plan against those unwanted payment reversals and win chargebacks

Here are ten tried-and-true methods that can help you manage online video game chargebacks:

1. Double Up on Authentication

Ensuring that players go through a robust authentication process before making purchases is like putting a lock on the virtual treasure chest. 

By confirming their identity through methods like email verification, SMS codes, or two-factor authentication, you add an extra layer of security that deters unauthorized users from exploiting accounts.

2. Educate Players about Chargebacks

Not everyone is aware of the consequences that chargebacks can bring. Take the time to explain, in simple terms, what a chargeback is and how it affects both them and your business. 

When players understand that initiating a chargeback can lead to repercussions such as losing access to the game or even legal action, they'll think twice before taking that route.

3. Crystal Clear Refund Policies

Your refund policy should be as clear as day. Make it easy for players to understand the conditions under which they can request a refund and the process they need to follow. 

Transparent refund policies can deter players from jumping straight to their bank for a chargeback, as they'll feel confident they can get a legitimate refund directly from you.

4. Be Quick with Customer Support

Prompt and effective customer support can work wonders in managing chargebacks. When players encounter issues, whether it's a purchase problem or a technical glitch, being responsive shows that you value their experience. 

It reduces frustration and the likelihood of them seeking a chargeback as a last resort.

5. Data Detective Work

Keep a watchful eye on your transaction data. Spikes in purchases, unusual patterns, or repeated failed attempts could be indicators of fraudulent activity. By monitoring this data closely, you can identify and address potential issues before they escalate into chargebacks.

6. Employ Fraud Detection Tools

Today's technology offers sophisticated fraud detection tools that can act as a virtual security guard. These tools use complex algorithms to analyze transactions and spot suspicious behavior. 

By integrating such tools into your system, you can automatically flag and investigate transactions that seem fishy.

7. Team Up with Payment Processors

Your payment processor can be an ally in the fight against chargebacks. They often provide services like transaction verification and fraud prevention tools. Collaborate with them to set up filters that identify high-risk transactions and implement measures to avoid them.

8. Tag in Two-Factor Authentication

Two-factor authentication (2FA) is like having a secret code to enter a secret club. By requiring players to provide a second form of identification, like a code sent to their phone, you ensure that the person making the purchase is indeed the account owner. 

9. Stay Current with Security

Just as you update your game with new features, keeping your security measures up to date is crucial. Hackers are persistent, and their tactics evolve. Regularly update your security systems, employ the latest encryption methods, and stay informed about emerging threats.

10. Nudge Players toward Responsibility

Encouraging players to take charge of their spending can significantly reduce chargebacks. Remind them to set spending limits, keep track of their purchases, and resist the temptation of impulse buying. 

By promoting responsible spending habits, you create a community that's less likely to resort to chargebacks.

By following these expert insights, you're not just putting up barriers against chargebacks; you're also cultivating a safe, enjoyable, and trustworthy gaming environment for your players. 

Keep these strategies in mind, adapt them to your specific game and audience, and you'll be well-equipped to navigate the challenge of chargebacks in the world of online video gaming.

Strengthen Your Chargeback Management With ChargePay

When it comes to safeguarding your gaming business from chargebacks, you need a solution that's both efficient and effective. That's where ChargePay's AI-driven automation steps in – a powerful tool designed to enhance your chargeback management strategy seamlessly.

> The Power of ChargePay in Your Hands

Imagine a tool that responds to chargebacks in real time, working tirelessly on your behalf. ChargePay does just that, employing cutting-edge AI-powered workflows to significantly boost your chargeback win rate by up to 3.5 times. With ChargePay, you're not just managing chargebacks; you're winning them.

> Hands-Free Solution, Maximum Results

The beauty of ChargePay lies in its hands-free approach. You don't need to put in extra effort – AI-driven automation takes care of the entire chargeback fighting process for your gaming business. 

This means more time for you to focus on what matters while ChargePay handles the nitty-gritty of chargeback resolution.

chargePay chargeback management process and steps

> Win Big with ChargePay

The numbers don't lie. By incorporating ChargePay into your gaming chargeback management strategy, you open the doors to winning up to 3.5 times more chargebacks. That's revenue you can recover – revenue that might have otherwise been lost to chargebacks. 

With ChargePay in your corner, you're not just recover losses; you're actively reclaiming your hard-earned income.

> Reclaim Lost Revenue

Chargebacks can eat into your profits, leaving a dent in your bottom line. But with ChargePay, you can reclaim up to 80% of the revenue that might have slipped away due to chargebacks. 

It's about maximizing your earnings and minimizing the impact of disputes, all while maintaining a smooth gaming experience for your customers.

> Building Trust Through Results

Trust is essential in the gaming industry. Whether you're a player or a merchant, knowing you're dealing with a trustworthy platform matters. ChargePay's efficient chargeback management and resolution can help you build and maintain trust faster. 

When your customers see that you're actively addressing chargebacks and securing their transactions, they're more likely to feel confident in your services.

Make the smart choice today – let ChargePay take the reins and watch as your chargeback management efforts reach new heights. 

Your business deserves the strength, reliability, and results that ChargePay brings to the table. Explore our fully automated gaming chargeback management solution to with a whooping 3.5 time ROI.

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