Elective may adjust your payouts in the cases of cancellations, reversals, or chargebacks. These cases are outlined in your merchant agreement which can be found under Settings in your Elective portal but we have also created this article to outline all of the cases where adjustments may occur and how they are calculated and handled.
Payout Adjustments
Refunds can be initiated from the "Orders" dashboard. Once an order is refunded, we will adjust your next payout to account for the refund.
It is your responsibility to process refunds for your customers. However, if we receive a refund request we will reach out to you to to confirm the request using the email(s) we have on file. If we don't hear back within 3 business days we will approve the request. This ensures that all of your customers receive a seamless experience.
Adjustment Calculation
The adjustment for a refund is calculated as follows:
Adjustment = -[Order Total]
A cancellation ends a customer's loan prematurely and stops collecting on all future payments.
Cancellations can be initiated from the "Orders" dashboard.
If a customer reaches out to Elective directly to request a cancellation, we will always ask you for approval before initiating the cancellation. However, if we do not hear back within 3 business days, we will approve the request. This ensures that all of your customers receive a seamless experience.
Adjustment Calculation
The adjustment for a cancellation is calculated as follows:
Adjustment = -[Sum of All Future Payments]
Example
A customer emails you informing that they had a medical emergency and can no longer participate in your program. They want to be removed from the program and stop making payments.
Payment Schedule:
- Payment 1: $100 - Paid
- Payment 2: $100 - Paid
- Payment 3: $100 - Future
- Payment 4: $100 - Future
In this case, we would cancel payments 3 and 4. This means their statuses would be set to “Canceled”.
The adjustment for this calculation is: -[100 + 100] = -$200
This means that your next payout will be adjusted by -$200 to reflect this cancellation.
A reversal occurs when a customer fails to successfully pay the first payment (down payment) and/or second payment (first monthly payment) of their loan.
If the customer fails to pay either of these payments despite extensive attempts from Elective to work with the customer to recover the payment - including multiple emails, text messages, and phone calls - then Elective will initiate a reversal.
A reversal will only ever occur for the first or second payment of a loan. Once the second payment has been paid, Elective assumes all payment and collections risks.
Notifications
Elective will notify your team using the email we have on file for your account ~15 days before a reversal occurs. At this time, we will still be making efforts to collect from the customer, but this is to give you prior notice before the payout adjustment occurs.
We will send you an additional notification once the reversal is finalized.
You can also find out which orders are reversal candidates directly in your 'Orders' dashboard. An order that is a potential reversal candidate will have the 'Reversal Candidate' tag added next to its status.
Additionally, once a reversal is completed, the order status will be changed to 'Reversed'.
Adjustment Calculation
The adjustment for a reversal is calculated as:
Adjustment = -[Sum of All Failed and Future Payments]
Example
A customer fails to make the second payment of their loan 30 days from their effective purchase date. Elective will immediately notify you that this customer is a reversal candidate. 15 days later, after having attempted to contact them through every communication channel across a span of two weeks, their order will be reversed.
Payment Schedule:
- Payment 1: $100 - Paid
- Payment 2: $100 - Failed
- Payment 3: $100 - Future
- Payment 4: $100 - Future
The adjustment for this calculation is: -[100 + 100 + 100] = -$300
This means that your next payout will be adjusted by -$300 to reflect this reversal. The status of the order in your 'Orders' dashboard will be adjusted to 'Reversed' to represent the reversal as well.
Chargeback Reversals
Chargeback reversals occur when a customer initiates a chargeback within 60 days of the effective purchase date.
In these cases, Elective will make the same adjustment as above to your next payout, but will also need to apply an additional $25 per chargebacked installment to cover the chargeback fees levied against our payment processor.
The status of the order in your 'Orders' dashboard will be adjusted to 'Reversed' to represent the reversal as well.
Please check the 'Chargebacks' section for an example of a chargeback reversal.
Timeline for Response
If a chargeback is issued more than 60 days after the original purchase date, Elective will contact your team via the registered email(s) to request supporting evidence. This is crucial for us to contest the chargeback on your behalf.
Action Required
You have five business days to provide the requested evidence. Please note, failing to respond within this timeframe will hinder our ability to dispute the chargeback. In such cases, Elective will proceed with a chargeback reversal.
Adjustment Calculation
The adjustment for a reversal is calculated as:
Adjustment = -[Sum of All Chargebacked and Future Payments] + $25 * [Number of Chargebacked Payments]
Example
A customer pays their first and second payments but charges back the second payment within 60 days of the original order date.
Payment Schedule:
- Payment 1: $100 - Paid
- Payment 2: $100 - Chargebacked
- Payment 3: $100 - Future
- Payment 4: $100 - Future
In this case, we would cancel payments 3 and 4. This means their statuses would be set to “Canceled”.
The adjustment for this calculation is: -[100 + 100 + 100] + $25 = -$325
This means that your next payout will be adjusted by -$325 to reflect this reversal. The status of the order in your 'Orders' dashboard will be adjusted to 'Reversed' to represent the reversal as well.
Need More Help?
We're happy to answer any questions you might have. Reach out to us at help@elective.com and we'll help you get up and running in no time!