Chargebacks and inquiries (2024)

FAQs

What is a chargeback inquiry? ›

When a cardholder has an issue with a charge on their credit card, they can contact their bank to dispute the charge. The bank then makes a chargeback or inquiry. The cardholder can be one of your customers or someone who believes that their card was used on your store without their permission.

From your Shopify admin, go to Orders. Click the order that's being disputed. In the chargeback banner, click Submit response.

The transaction was fraudulent or unauthorized, perhaps using stolen credit card information. It may also happen if the cardholder doesn't recognize the payment. The cardholder was issued a duplicate credit for a transaction. The cardholder claims you continued to charge them after a recurring payment was canceled.

Yes, when done intentionally, chargeback fraud is illegal. When investigating chargeback fraud, it's important to keep in mind that there are legitimate reasons for chargebacks that do not constitute fraud. Let's explore those cases to understand the difference between chargeback fraud and legitimate chargebacks.

Compelling evidence: If you have strong compelling evidence that shows the customer's dispute is unwarranted, then you have a good chance of winning the chargeback dispute and keeping the sales revenue (because the consumer won't receive the chargeback refund).

If the merchant fails to submit a response by the deadline, the merchant will accept the chargeback by default. Merchants may decide to accept chargebacks for several reasons. Sometimes the chargeback is based on true fraud or some other valid and inarguable reason, and there is no point in trying to fight it.

Yes, a company can ban you for a chargeback, especially if you have a history of frequent or unjustified disputes.

To fight a chargeback, you need compelling evidence. Compelling evidence is documentation that proves the original transaction was valid or disproves claims made in the dispute process. If you have compelling evidence, you can and should fight. If you don't, you have a low probability of winning.

How do I appeal a chargeback decision? ›

First, contact your acquiring bank to initiate the chargeback dispute. Then, submit your documented evidence, along with your rebuttal letter, proving the chargeback invalid. Defending your small business against chargebacks can take time, so give yourself plenty of it to put it all together.

(A list of players in the payments ecosystem, like acquiring and issuing banks, payment processors etc.) As consumer protections favor the customer, merchants often find themselves in an uphill battle to win a chargeback abuse dispute.

You might not always get a fair outcome when you dispute a chargeback, but you can increase your chances of winning by providing the right documents. Per our experience, if you do everything right, you can expect a 65% to 75% success rate.

Generally, these bank chargebacks occur when an error or problem with the transaction is detected by the bank. The issuing bank sees these as a preventive measure made to protect them from further issues later on.

Common reasons for chargebacks

The card was deemed to be fraudulent. Cardholder disputes the quality or receipt of merchandise. The product or service was not received.

What's the difference between chargebacks and refunds? Chargebacks are bank-initiated transaction reversals that withdraw funds deposited into your merchant account and return them to the cardholder. Refunds are merchant-led, voluntary repayments to the customer.

You file a chargeback request. Your card issuer reviews the dispute and will decide if it's valid or if you have to pay. If your issuer accepts the dispute, they'll pass it on to the card network, such as Visa, Mastercard, American Express or Discover, and you may receive a temporary account credit.