[SaaS Series] Navigating Chargebacks and Fraud With Michael Zavet of Shieldify

Michael Zavet is the CEO and Co-founder of Shieldify, an AI-driven software and technology company focused on combating fraud and chargebacks in the e-commerce industry. With prior personal experience in round chargeback challenges in his own nutraceutical company, he offers practical solutions to help businesses retrieve hard-earned revenue and reduce losses. As a serial entrepreneur, Michael has a deep understanding of the complexities in e-commerce transactions and has equipped Shieldify to become an effective dispute management platform.

Here’s a glimpse of what you’ll learn:

• [3:32] How Shieldify simplifies the chargeback dispute process
• [6:12] Michael Zavet’s personal journey that led to the creation of Shieldify
• [7:43] The major mistakes businesses make that lead to chargebacks and how to avoid them
• [14:06] Payment processing alternatives to ensure business continuity
• [16:55] Reversing a chargeback situation
• [20:43] Ending up in a losing financial situation even when dealing with chargebacks in-house
• [21:21] The thought process behind Shieldify’s competitive and customer-friendly pricing model
• [22:48] How a billion-dollar enterprise saves millions annually on chargebacks with Shieldify
• [26:56] The benefits of bootstrapping versus raising capital
• [29:43] How customer demands led to the evolution and addition of new features at Shieldify

In this episode…

Is reversing a chargeback simply a pipe dream, or can businesses wrestle their way out of this costly nightmare? When credit cards are involved and the stakes are high, the drama unfolds with hidden fees and lost merchandise piling up. But is there a light at the end of the tunnel for merchants bogged down by disputes?

E-commerce is riddled with the complexities of chargebacks and fraud, however, serial entrepreneur Michael Zavet says there’s hope for merchants looking to shield their sales. He delves into the intricacies of handling chargebacks, recounting his own harrowing experience of a major business setback. This led Michael to create Shieldify, a platform that streamlines the dispute management process and equips merchants with the tools necessary for combating friendly fraud and unfounded chargebacks.

In this episode of Inspired Insider Podcast, host Dr. Jeremy Weisz sits down with Michael Zavet, Co-founder and CEO of Shieldify, to discuss the financial dilemma of e-commerce chargebacks. Michael delves into the various services Shieldify offers, including chargeback alerts and dispute management, the importance of spreading transactions across multiple processors, and valuable advice ranging from enhancing customer service to the significance of terms and conditions in safeguarding businesses.

Resources mentioned in this episode:

• Michael Zavet on LinkedIn
• Shieldify

Special Mention(s):

• Sam Moses on LinkedIn
• Nick Penev on LinkedIn
• Zero to One: Notes on Startups, or How to Build the Future by Peter Thiel and Blake Masters
• Never Split the Difference: Negotiating As If Your Life Depended On It by Chris Voss and Tahl Raz

Related episode(s):

• “Automation Solutions with Wade Foster Founder of Zapier” on the Inspired Insider Podcast
• “Pipedrive: Brain Surgery, Married, & Moved Company from Estonia to U.S. All at Once – with Urmas Purde [Inspiration]” on the Inspired Insider Podcast
• “The Impact of Automation and Email Marketing with Tom Kulzer Founder of AWeber” on the Inspired Insider Podcast
• “[SaaS Series] Tips To Thrive in the SaaS Space With Sujan Patel” on the Inspired Insider Podcast
• “Negotiation Tactics From FBI Agent Christopher Voss, Founder of Black Swan Ltd” on the Inspired Insider Podcast

Quotable Moments:

• “The unfortunate truth is that chargebacks are a ubiquitous problem across any direct-to-consumer, or any consumer-touching business.”
• “The biggest mistakes that lead to chargebacks involve not having straightforward terms and conditions and poor record-keeping.”
• “Communication is super key when it comes to service in general.”
• “It is important to have several merchant IDs spread across a few processors, which helps mitigate risks.”

Episode Transcript

Intro 0:01 

You are listening to Inspired Insider with your host, Dr. Jeremy Weisz.

Jeremy Weisz 0:22 

Dr. Jeremy Weisz here founder of inspiredinsider.com where I talk with inspirational entrepreneurs and leaders today is no different. I have Michael Zavet of Shieldify. And Michael before I formally introduce you, I always like to point out other episodes, people should check out the podcast. Since this is part of the SaaS series, there’s a couple other episodes to check out. I interviewed Wade, the co-founder of Zapier, and that was a great interview, they talked about the journey, and it’s quite a journey. Pipedrive, when I had him Michael on I think they had 10,000 customers now they have over 100,000 customers. So it was really interesting. AWeber, Tom, the founder of AWeber.

And then another one was Mailshake, I had Sujan Patel. And they grew to I think, over 70,000 customers, and they’ve been acquiring companies to which was an interesting journey for them. And a shout out to Sam Moses of Sockrates. It’s in the b2b space and not a software but they do custom socks for clients referral partners, I’m gonna definitely be buying some. Everyone could check out Sam site Sockrates, it’s a really cool product. And this episode is brought to you by Rise25. At Rise25 we help businesses give to and connect to their dream 100 relationships and partnerships. And the way we do that is we help you run your podcast.

We’re an easy button for a company to launch and run a podcast. We do the accountability, the strategy and the full execution. And Michael, we call ourselves the magic elves that work in the background and make it look easy for the hosts in the company. So they can create great content and great relationships and run their company. So for me, the number one thing in my life is relationships, I’m always looking at ways to give to my best relationships, I’ve found no better way over the past decade to profile the people and companies I most admire and share with the world what they’re working on. So if you’ve thought about podcasting, you should you have questions go to rise25.com, to learn more.

And thank you big thank you to Nick Penev who is a master of partnerships. He actually introduced Michael to me, he does management for a lot of companies, Hellotax, and they have a product Scayul. And you could check that out too. I’m excited to introduce Michael. Michael Zavet is a serial entrepreneur. He’s co-founder of Shieldify. Shieldify is an AI-driven software and technology company addressing fraud and chargebacks in e-commerce. You spend all that time energy and money getting a sale, and then someone charges back. And that company should probably ship the product, they spent a lot of time and energy and the customer service to that product. And they help people collect what they do. Right. So, Michael, thanks for joining me.

Michael Zavet 3:18 

Thank you for having me here.

Jeremy Weisz 3:19 

So talk a little bit more about Shieldify and what you do. And while you’re doing now bring up if you’re listening to the audio, there is a video piece. And I’m going to share a little bit as he’s talking.

Michael Zavet 3:32 

Yeah, so I mean, you hit the nail on the head. I mean, one of the big issues for a lot of merchants is they fulfilled a product or service, and then the customer goes ahead and charges back. And sometimes, it’s a sincere misunderstanding. Other times, it’s what we call friendly fraud. And sometimes it’s actually just fraud. And essentially, our goal is to help companies claw back some of that hard-earned revenue and mitigate their losses. So, as an example, when a company handles these things internally, as a lot of them do, they’re spending quite a bit of time and resources doing that.

And sometimes that doesn’t end with a good result. And the average person takes 45 minutes to an hour to compile what’s called an evidence package to dispute a chargeback. The reason for that is you’re jumping from your various platforms, whether it’s your CRM, processing, 3PL or your customer service, and you’re, you know, looking for and compiling the data to produce a good evidence package. Now, that’s time-consuming. So what we’ve done is we’ve taken it a step further, and built out technology that automatically aggregates all of that data, and then compiles it into an effective evidence package — a compelling evidence package, as we call it.

And then the goal for us really is to become better and better at doing that with time and the way we do that is by leveraging AI an LLM. So essentially, each time a dispute is submitted and we get the feedback for that dispute we learn, who’s the payment processor? Who’s the issuing bank? What’s the product? Who’s the customer, and all of that goes into our databank, which helps us constantly get better at this.

Jeremy Weisz 5:17 

Who are, I mentioned e-commerce to the front who are ideal customers for you.

Michael Zavet 5:24 

Yeah, so our sweet spot today is e-commerce, we’re a fairly young company. So we’ve found success there for sure. And e-commerce can be anything from physical goods to digital subscriptions to reservation bookings, like travel, etc. and other types of digital goods, we are looking at retail now as a new sector. It’s not something we’ve addressed, but we’re pretty confident that we can make an impact with retail as well. slightly different process that we’re right now figuring out, but when I speak to e-commerce, we’re talking, everything from your Shopify merchant, all the way up to other software companies.

Jeremy Weisz 6:02 

What gave you the idea for this company? I mentioned, you’re a serial entrepreneur. Why Shieldify?

Michael Zavet 6:12 

Yeah. So it was from a personal experience. I had a nutraceutical company that was direct-to-consumer e-commerce. And we grew this company super rapidly through our relationships with marketers, etc. And then one day we got hit with what’s called a TMF, a terminated merchant file. This was an alert essentially sent out by MasterCard that essentially made us unprocessable. So basically, all payment processors at that point are supposed to drop you. And they did. And then we were scrambling to get payment processing back up and running. It was an absolute nightmare.

That was my first introduction to how important it is to stay on top of your chargebacks. And that all happened simply because we had a new marketing campaign that we had launched, and it had attracted a lot of interest. But all of a sudden, we were getting a lot of chargebacks. Subscription businesses, like this nutraceutical company, in particular, are exposed to those types of chargebacks almost all the time. But the truth is, and the unfortunate truth is that chargebacks are a ubiquitous problem across any direct-to-consumer, or any consumer-touching business.

Jeremy Weisz 7:31 

What are some of the mistakes people should know about, maybe they can avoid, maybe they can avoid, but at least they can look out for them?

Michael Zavet 7:43 

Yeah, one of the biggest mistakes that we see frequently is not having your terms and conditions straightforward and really correctly compiled. So when fighting a dispute, many companies can’t point to their terms and conditions. And if they’ve clearly stated their sort of protocols and how their service works, then usually they have a better chance at winning that chargeback. Another thing is record keeping. So some companies just don’t track the customer journey very well. And that’s very important when it comes to disputing because when you can show that a customer went through a very clear and concise journey where everything was communicated to them and they still filed chargeback, you have a much better chance at winning that chargeback.

Jeremy Weisz 8:32 

So those are the two biggest mistakes. I’m curious, because you’re going in, right, company’s like, okay, Michael, we need help. We got a bunch of chargebacks. What are some of the things, I don’t know if your company does like an audit of their terms and conditions and what you’re seeing that what’s in there that that shouldn’t be or what’s in there that needs to be something added?

Michael Zavet 8:59 

Yeah, absolutely. So I have a prime example for this. So what we do is, as we aggregate data, we provide reports to the companies we service. And those reports involve actionable insights. So we want to make them better at doing business, essentially, our goals, help us help you help us right, because if they have their ducks in a row, that helps us do what we need to do. And it also helps them it helps their bottom line. So as an example, we had a company recently that was receiving a number of chargebacks related to refunds, and basically, they had agreed to provide the refunds it was within their terms and conditions, the customer was in the right, they should have received the refund.

But for whatever reason, maybe it was a gap in customer service, which is what it appeared to be. Those refunds weren’t issued in a timely manner. So by the time the refund was issued, the chargeback had already been filed and it was too late. Now, this all could have been remedied either by being more diligent with Customer Service or having a grace period within your terms and conditions that states, you will be refunded within X amount of days, that way, both sides are clear on what the sort of length of time before the refund is delivered. But in this case, they didn’t state the time for the refund. So this customer waited over a month to be refunded, and then ultimately filed the chargeback. And they were completely right for doing so.

Jeremy Weisz 10:27 

Yeah, so communication was key in this situation, if they would have just been communicated, even if, obviously, it shouldn’t be probably in their terms and conditions. But even if they were overly communicating there, maybe the person didn’t feel heard and they didn’t get a response, or whatever it is.

Michael Zavet 10:47 

Yeah, that’s right. Communication is super key when it comes to, you know, service in general. And that’s why it’s so important for merchants to have good customer service.

Jeremy Weisz 10:58 

How hard was it? Because there’s a lot of technology that’s built on the back end, when you were starting this company, where did you start with the team?

Michael Zavet 11:09 

Yeah, so we started, I mean, just the two of us, my partner and I, who’s now my CTO, his name’s Dennis and Dennis and I initially connected, he was actually building it out for his own clients, he runs a dev shop with around 30 employees. And they have a pretty solid list of customers. And they noticed, after COVID, in particular, that the chargebacks had spiked, and a few of them had Stripe accounts shut down. So he saw an opportunity to make a few extra bucks for his dev shop, he had built out part of a dashboard to provide what’s called chargeback alerts.

That’s a product that we offer today. It’s from eat the gut and verify depending on which card you’re using. But essentially, that product allows merchants to have around 12 to 72 hours to read usually refund or address a chargeback, before it actually solidifies on their merchant account. So it hasn’t materialized yet. It’s been filed by the customer and an alert is sent out, it will become a chargeback if you don’t address it. And that was the initial plan. And that’s what we built out to start. Then as we started speaking to a wide range of customers, we saw that there was a gap or opportunity to service merchants that they weren’t worried about having their merchant accounts shut down.

Their ratios were in line — they were fine there. But they were still losing money to the chargebacks. And that’s where we started to think about, how can we make the dispute process more effective and easier, and essentially become their in-house dispute mechanism. And so that’s where we built out the dispute management platform. And, of course, we saw an opportunity to leverage the evolution of AI to make that process smoother, cheaper and more effective.

Jeremy Weisz 13:05 

So Michael, do you still have that, so as a separate app that actually does the alerts and Shieldify actually does the resolution? Or is it combined in the Shieldify now?

Michael Zavet 13:16 

it’s combined, and to Shieldify, they’re just separate products. So we have some customers that are using both, and some that are using one or the other, it really depends on the company strategy and what their biggest problem is, for example, we have some companies that aren’t interested in disputing, they are okay to refund low ticket price plus their volume play. And so they’re located just refund any dispute that comes through. And in that case, we’ll do alerts for them. And specific types of alerts, like RDR allow you to set rules. So, you can say transactions between these amounts or between these dates or with this processing ban or CAID can be refunded. And so yeah, it really depends on the merchant profile. And then we will find what product is the right fit for that.

Jeremy Weisz 14:06 

From a dispute standpoint, obviously, they can go to Shieldify from the chargeback alerts. Is that on, like Shopify apps, or where can people find the apps for the alert piece?

Michael Zavet 14:20 

Yeah, so that all goes through Shieldify. So alerts is something that you would require integrations which we built out, right. So we’re integrated via API to Ethica, and verify who provide all the alerts for all the major credit cards between the two companies. And they’re owned by MasterCard and Visa respectively. So essentially, through us, you can simply reach out and we can register you for alerts. It’s quite quick on our website, there’s an info button or an email and we can set up a quick meeting. The integration process is super-fast. I mean, really, it’s just an agreement. You provide us with a few pieces of information for alerts and we get going with dispute management, it’s basically the same process except what you’re providing us is access to your various platforms, your CRM, payment processor, etc.

[Continue to Page 2]