Understanding disputes (chargebacks) and how to view disputes and take action on them in Dispute Management
What's in this article?
A dispute (also known as a chargeback) is a transaction reversal meant to serve as a form of consumer protection. It takes place after a customer disputes a card transaction. Disputes generally occur when a customer believes that the transaction was not authorized or was not satisfied with the product or service provided by the merchant. A dispute can move through many stages that can vary by card brand or type and can be for the full or a partial amount of the transaction.
When an issuing bank initiates a dispute or if a dispute moves to a new stage, you will be notified in an emailed alert and a case will be created in Business Advantage 360 Disputes Management about the disputed transaction. It is your responsibility to monitor, update, and respond to disputes within the required timelines.
Why should I respond? When a dispute is initiated, your account will be debited immediately. If you fail to respond to the dispute within the agreed upon timeframe, you are agreeing to the 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 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 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.
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.
Card networks created the compliance process to help resolve situations where a chargeback reason code does not exist or a 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 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 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 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.
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.
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.
Access Dispute Management
As a business owner or user with full access to your Merchant Services account within Business Advantage 360, you can access Dispute Management to view and respond to disputes or chargebacks.
Provides the next steps to move the dispute forward. This page also includes details on the previous task to provide you with case history, if applicable.
Provides pertinent case-related information about the dispute, which will vary by card network.
Respond to a dispute
When you select Dispute Management, the Case View defaults to disputes that require action, ordered by Respond By date with the oldest cases first. You can also view cases that are under review or closed by selecting from the Case Status menu. Cases under review are ordered by Respond by date while closed cases are ordered by case ID. Dispute responses are time sensitive.
Accepting the dispute means that you accept liability for the dispute. You will not have the option to add comments or documents. Once your response is submitted, you will have no further recourse.
Add documents to support your claim, then click Upload. You can upload five files at a time, with a maximum of 99 files. Each card network has different evidence upload requirements. The Dispute Management tool will help you provide the right document type and size for the network. Attachment guidelines are also provided below.
IMPORTANT! Provide a rebuttal letter that addresses all items within the dispute. Example documentation may include: proof of delivery, bill of lading, sales receipt, and any additional information to support concerns within the dispute. Do not include any high risk confidential information in your response comment, rebuttal letter or documentation such as personal cardholder account details, credit or debit card numbers, expiration date or CVV or other personal merchant account details.
Confirm that you have uploaded all of the supporting documents. You will not be able to add additional documents once the case is submitted.
NOTE: Use your PC or desktop to upload attachments. Attachments cannot be added using a mobile device.
Review and then select the agreement to pay the fees associated with the case.
Click Submit. If you declined or rejected the chargeback, the chargeback is reviewed and decided on based on the card network rules within required timeframes. Please note that we may ask for additional clarification and/or documentation depending on the review or card issuer response.
Once submitted, your case will move into Under Review status.
Expired Response Timeframe
Try to respond to your disputes as soon as possible. If the timeframe to respond to the dispute has passed, you will receive a warning message when you respond. It may still be possible to attempt to submit your response to the card network, although there is a risk that your response may be rejected.
To continue, accept the acknowledgement of risk and liability and then click Continue to proceed.
Chargeback times can vary depending on the card network. Response times below are calendar days from the initial dispute date..
Card Network
Days to Respond
Visa
15
Mastercard
23
American Express
15
Discover
15
PIN Debit
23
NOTE: You have 15 days to respond to Retrieval Inquiry requests from American Express or Discover.
Dispute attachment guidelines
Ensure that your attached documentation is clear and legible and provide supporting documents in a supported file type. The file name cannot contain special characters (~ ` ! # % & = ,). Do not submit password protected files.
The file size of the attachments you provide when rejecting a dispute must conform to card brand requirements for file type and size. There is a maximum file size for each file and a maximum total file size for all the attachments. Files cannot be removed once uploaded and additional documents cannot be added once the response is submitted.
Documents Submitted in Error Cannot Be Deleted Once you click the Upload button, files cannot be deleted; however, you can attach the correct file as long as you have not submitted the case. Before submitting, please add additional comments advising of the incorrect file. If you have already submitted the case, please contact us at 833.344.2324.
Table of dispute supporting documentation by card type
