How to Dispute a Credit Card Chargeback

A credit card chargeback is a forced transaction reversal, initiated by a cardholder through their bank, rather than directly with the merchant. This process pulls funds from a merchant’s account and returns them to the cardholder. Merchants often dispute chargebacks to protect revenue, prevent fraud, and maintain a positive standing with payment processors. Effectively disputing these reversals is important for managing financial operations.

Understanding Chargeback Reasons

Chargebacks are categorized by reason codes provided by card networks like Visa, Mastercard, American Express, and Discover. These codes explain the cardholder’s justification for disputing a transaction. Understanding the reason code is essential for a merchant to formulate an effective response and gather evidence.

Common reason codes include “fraud,” covering unauthorized transactions or unrecognized charges. Another frequent reason is “merchandise not received” or “services not provided,” indicating the cardholder claims they never received goods or services. “Duplicate processing” codes are used when a cardholder asserts multiple charges for a single transaction. “Credit not processed” occurs when a cardholder expects a refund or credit that has not been applied. Each code provides insight into the claim, guiding the merchant on how to prepare their defense.

Gathering Your Dispute Evidence

Collecting evidence is important in disputing a chargeback, as documentation must directly refute the cardholder’s claim based on the reason code. For “Merchandise Not Received” or “Services Not Provided” chargebacks, evidence includes proof of delivery, such as tracking numbers or delivery confirmation signatures. Records demonstrating service completion, like signed contracts or work orders, are also useful.

For alleged “Fraud,” evidence can include the IP address and device ID used during the transaction, timestamps, and results from Address Verification Service (AVS) and Card Verification Value (CVV) checks. Proof of past purchase history by the same customer, along with communication logs like emails or chat transcripts, can further demonstrate transaction legitimacy. For “Duplicate Processing” claims, merchants should provide transaction IDs for both charges and timestamps to show they were distinct transactions or that one was a voided attempt. If a refund was issued for a duplicate charge, proof of that refund is needed.

When a “Credit Not Processed” chargeback is filed, provide refund receipts or documentation of the credit being issued. Communication logs showing the refund was discussed or confirmed with the customer also support the merchant’s position. General evidence that strengthens any dispute includes terms of service agreements, clearly stated return policies, and detailed product descriptions available to the customer at the time of purchase. Each piece of evidence should directly counter the cardholder’s claim.

Submitting Your Chargeback Dispute

After gathering evidence, submit your chargeback dispute. This process occurs through your payment processor’s online portal, the main channel for dispute management. In some instances, submission might be via email or physical mail, depending on the processor’s requirements. Merchants should verify the preferred submission method to ensure documentation reaches the appropriate parties.

A rebuttal letter is a component of the submission package, serving as a cover letter that concisely summarizes your case and highlights the evidence enclosed. This letter should identify your business, the dispute, and briefly explain why the chargeback is invalid, pointing to supporting documents. Adhere to deadlines for submission, set by the payment processor or card network, which can range from 20 to 45 days from the chargeback notification date. Missing these deadlines can result in an automatic loss of the dispute.

Receiving a Resolution

After a merchant submits a chargeback dispute, the resolution process begins, varying in timeline. Resolution may take 30 to 90 days, differing by card network and case complexity. During this period, the issuing bank reviews the evidence provided by the merchant and makes a determination.

There are several possible outcomes for a chargeback dispute. The merchant may win, leading to the chargeback reversal and funds returned to their account. Alternatively, the cardholder may prevail, and the chargeback stands with funds remaining with the cardholder. If the initial dispute is unsuccessful and the merchant believes their case is valid, the dispute might escalate to arbitration. Arbitration involves the card network reviewing all evidence and making a final, binding decision. Pursuing arbitration is often a last resort due to potential additional fees and time commitment.