Chargebacks Explained

Chargebacks can cost you time and money – so it's important to understand what you can do to protect your business against them. Below is information on chargeback basics, management and what to do to prevent them from happening.

What You Know Could Save You Money

A “chargeback” (sometimes referred to as a "disputed charge") describes the process that occurs once a cardholder refuses to accept responsibility for a charge on their credit or debit card. It may also result from violations of the rules and regulations established by the Payment Brands. For example, a technical issue,  such as no authorization approval code received.

Chargebacks are something every business owner wants to avoid, as they can result in lost revenue. Subscribe to the online chargeback management system to receive notification of your chargebacks through our online reporting tools.

Why Did I Receive a Chargeback (Dispute)?

The cardholder may have filed a dispute because they:

  • Did not receive a product or service.
  • Do not recognize the charge or payee on their credit or debit card statement.
  • Believe the product or service was defective, damaged or not as it was described.
  • Were a victim of fraud – their credit or debit card was stolen or used without their consent.
  • Were charged twice.

What You Can Expect When You Get a Chargeback

The chargeback process involves many players: the cardholder, their issuing bank, the payment brand (for example, Visa or MasterCard), the acquirer/processor (such as Merchant Services) and you, the business.

Step 1)

When the cardholder disputes a charge, the card provider makes a temporary refund or credit to the cardholder if the claim is found to be reasonable. This begins the process. Funds for the credit to the cardholder are debited from your merchant account while the claim is being reviewed.  

The Chase difference: When a chargeback happens, we’re here for you. We can’t change the card association’s decision to allow the chargeback or approve your challenge. However, Chase experts research and submit all available documentation on your behalf, resolving as many claims as possible up front. We also provide you with the tools and knowledge to avoid and manage chargebacks.

Step 2)

You’ll be notified when a formal dispute claim has been made and we don’t have the documentation needed to challenge. You have a limited time to submit proof that the charge was legitimate. Visit our Chargeback FAQ page for specific timeframes. Because of the time sensitivity, it’s best to monitor your account online frequently and sign up for alerts.

Step 3)

If you submit proper documentation and successfully challenge the dispute in the necessary timeframe, the disputed funds will be returned to you.

Tips for Preventing a Chargeback

  • Never use an authorization code on more than the transaction intended, or without actually processing the card.
  • Always process a refund back to the original card number.
  • Do not refund by check or cash.
  • If credit is due on more than one sale, process each credit individually.
  • Never attempt to receive an authorization multiple times. If declined, ask for an alternate method of payment.

Read more chargeback prevention tips and answers to frequently asked questions.