Merchant Services Account Dispute Management

Stages of a dispute

The dispute process includes multiple stages, which can vary by card brand.

Table of Stages of a dispute and descriptions

Stage	Description
Inquiry/Retrieval Request	Amex/Discover only A cardholder requests additional information regarding a transaction processed to their debit or credit card. Inquiry/Retrieval requests are optional. If information supplied satisfies the request for information, the process ends; otherwise, the cardholder may choose to initiate a dispute.
Dispute	All card networks A cardholder disputes a transaction processed to their card. If information supplied satisfies the dispute, the process ends; otherwise, the dispute may be advanced to Pre-arbitration.
Pre-arbitration	Visa, Mastercard, Discover When either party continues to challenge the validity of the dispute. Pre-arbitration provides both parties with another attempt to resolve the dispute prior to Card network involvement and can be initiated by the cardholder or the merchant. If information supplied satisfies the dispute, the process ends; otherwise, the dispute may be advanced to Arbitration.
Arbitration	Visa, Mastercard, Discover When the parties involved are unable to resolve the dispute on their own and the Card network is asked to intervene to make a ruling to determine liability. Arbitration can be initiated by the cardholder or the merchant. Arbitration rulings are final; however, a right to appeal exists in certain instances for Visa & MasterCard networks.

Inquiry/Retrieval requests

An inquiry (also called a retrieval request) occurs when a cardholder disputes a transaction and the bank that issued the card submits a request for information or documentation to assist the cardholder in validating the transaction prior to initiating a chargeback. It is non-financial. 

If you don’t reply to the retrieval request, you don’t reply on time, or you don’t supply all the requested information, Discover and American Express will automatically file a chargeback, resulting in a financial impact to your account.  In these situations, chargeback response rights might be revoked---you might not be allowed to challenge the dispute.

When responding to an inquiry/retrieval:

• Select Unable to Fulfill if you do not have the information or documentation requested to assist the cardholder in validating the transaction. 
• Select Fulfill when you will provide the information or documentation requested.

Pre-Compliance and Compliance disputes

Card networks created the compliance process to help resolve situations where a chargeback reason code does not exist or a Card network rule violation has occurred which has caused a financial loss as a direct result of the rule violation. Compliance generally comes into play after a dispute has been addressed but one of the parties disagrees with the outcome and has no chargeback rights. 

• Pre-compliance occurs when one party has violated the Card network operating regulations and none of the predefined dispute conditions cover the violation that occurred. Pre-compliance provides both parties a way to resolve the dispute prior to Card network involvement. Can be initiated by either the issuer or acquirer. Applicable to Visa and MasterCard.
• Compliance occurs when the parties involved are unable to resolve the dispute on their own and the Card network is asked to intervene to make a ruling to determine financial liability. Can be initiated by either the issuer or acquirer. Applicable to Visa, MasterCard and Discover.

How do I avoid disputes?

Most chargebacks happen because the customer was not satisfied with a service or product, they did not understand the charge on their statement, or they were charged incorrectly. To assist in avoiding these types of chargebacks, it can help to do the following: 

• Resolve customer issues promptly.
• Review transactions to ensure that the charges are correct.
• Configure your internal processes to capture signed documentation with a clear description of the services or products that the cardholder is buying, acknowledgment of your refund or cancellation policy, and any signed receipts acknowledging that services were rendered. 
• Use a secure point of sale (POS) that accepts EMV cards and contactless payments, one of the most common reasons for fraud chargebacks are in the card-not-present space.
• Always obtain proper authentication, such as customer signature, PIN, address verification codes (the 3- to 4-digit code on the back or front of the card), and do not bypass the authentication fields when entering transactions. 
• For online purchases, verify that the cardholder was advised of the purchase details and given the option to confirm or cancel at the time of the transaction. 
• Wait to process transactions until the merchandise is shipped or delivered.
• Ensure all transactions are processed accurately with the proper transaction code and in a timely manner.
• Make sure your registered business name on the payment system matches or is at least similar to the one on the cardholder’s statement.
• Obtain the customer or other designated person’s signature for proof of delivery when merchandise is delivered. 
• For subscription-based transactions, obtain customer acknowledgment and agreement to your recurring transaction agreement, and provide notice to the cardholder prior to each recurring transaction.
• Clearly state your refund, return, and cancellation practices and ensure that they are highly visible. Have a detailed and reliable process for handling returns and credits.

Am I charged for disputes?         

Yes, in addition to the debited transaction amount,  there is a fee assessed for each chargeback. Additional fees for arbitration or compliance-related rulings may also apply. If your business receives excessive disputes, you may be subject to fees or assessments.

To access Dispute Management

1. Log in to your Merchant Services account in Business Advantage 360 online banking. 
2. Within your Merchant Services Account(s) list, click Dispute Management.
   

Table of dispute management user access levels

User Access Level	Dispute Management Access
Full Access	Full access to Dispute Management. Can review and respond to disputes.
View Only	View only access to Dispute Management. Can view disputes but will not be able to respond.
Virtual Terminal	No access

View Dispute details