A dispute or chargeback can appear on your merchant account for a number of reasons:
- The cardholder does not recognize the charge on their statement
- An unsatisfied customer disputes a transaction with their issuing bank to force a refund instead of coming to you directly to resolve the issue
When you see the dispute in the merchant portal, it is very important to check the Dispute Date and the Response Due Date. Do not issue any new refunds to the customer. The disputes process will take care of returning any funds owed to the cardholder. If a refund was created before the dispute date, you can submit proof of the refund and request for the dispute to be cancelled (see Responding to disputes).
The best thing you can do is reach out to your customer as quickly as possible to try to find out what happened.
If they did not recognize the charge on their statement, you can explain it was a legitimate charge and ask them to contact their issuing bank to cancel the dispute with the card brand. This can also help you and your business prevent future disputes. Depending on the situation, you may want to consider changing how the business name appears on statements or adding a message to emails to explain what customers will see on their statement.
If the customer was not satisfied with services rendered, it's not too late! This is a great opportunity to work through a resolution that both of you can agree on. If you have ask them to reach out to their bank to cancel the dispute, be sure to check the merchant portal regularly to make sure their bank follows through and officially cancels the dispute with the card brand. You can submit a response that says you spoke with the cardholder and they agreed to cancel the dispute but you are not able to cancel it on their behalf.
Fraud really just means the transaction was unauthorized. There are a number of situations that can fall into this category. If you know your customer base and do in-person work for them on-site, the risk of having a truly fraudulent customer is fairly low. If a cardholder account was compromised around the time of the original transaction, it is possible some legitimate charges were also disputed my mistake. You can simply ask your customer to make another payment with the new card. If the customer denies disputing the charge, consider asking them to review their statement to confirm they see the original charge. If they do not see a charge or a dispute on their statement, the card number may have been entered incorrectly and charged someone else's card in error. In that situation, it is best to let the chargeback return funds to the original cardholder and collect another payment from your customer.
If you are not able to resolve the issue with your customer before the Response Due Date, formally respond to the dispute to explain why the charge is legitimate and funds should not be returned to the cardholder (see Responding to disputes). If you do not submit your response before the due date, the dispute is automatically awarded to the cardholder.