Understanding disputes

A dispute occurs when a customer contacts their credit card company to question a charge on their account. This might happen if they don't recognize the transaction, received damaged goods, weren't satisfied with a service, or believe they've been charged incorrectly. When a customer files a dispute, their card issuer temporarily returns the funds to them while investigating the claim. As a merchant, you'll have the opportunity to respond with evidence showing the transaction was legitimate and the goods or services were delivered as promised.

Why am I seeing a dispute in my account?

Disputes can happen even to the most reputable businesses, and typically fall into these categories:

Goods or services not received: The customer claims they never received what they paid for, or the delivery was significantly delayed.

Goods or services damaged: The customer received their purchase but claims it arrived damaged, defective, or not as described.

Fraud or unauthorized charge: The customer doesn't recognize the transaction or claims someone used their card without permission.

Incorrect or duplicate charge: The customer was charged the wrong amount or was charged multiple times for a single purchase.

Canceled order or recurring services: The customer canceled their order or subscription but was still charged.

Remember that disputes aren't personal and are a normal part of accepting card payments. Most can be resolved quickly with clear communication and proper documentation.

Record-keeping for dispute protection

Good record-keeping isn't just about compliance—it's about protecting your revenue and reputation. We recommend keeping all transaction documentation for at least 3 years (5 years for healthcare related businesses). This includes:

• Customer receipts and order confirmations

• Shipping and delivery information

• Customer communications

• Terms of service agreements

While each card network may have different requirements, this timeframe will generally keep you covered.

Just as important as keeping these records is being able to find them quickly. When a dispute comes in, you typically have only 10-14 days to respond with evidence. Having an organized system—whether digital or physical—will save you valuable time and potentially thousands in disputed transactions.

Consider implementing a backup system for your records as well. Many business owners have learned this lesson through experience: computer crashes and other unexpected events can make critical documentation inaccessible when you need it most.

Understanding chargebacks

The cardholder and the issuer both have the right to question or dispute a transaction. When a customer successfully disputes a transaction with their bank, a chargeback is initiated. This means the disputed funds are immediately reversed from the merchant's account back to the customer. The merchant then has the opportunity to either accept this reversal or challenge it with supporting evidence.

Unlike refunds, which you control and process directly, chargebacks happen when customers bypass you and go straight to their financial institution with a complaint. This process was originally designed as a consumer protection mechanism, giving cardholders a way to recover funds in cases of fraud or significant merchant errors.

Chargebacks are costly and too many chargebacks can increase your processing rates or even put your merchant account at risk. This is why it's important to respond promptly with compelling evidence when disputes arise.

Remember that many chargebacks begin as simple misunderstandings that could have been resolved through direct communication. Maintaining clear policies, descriptive billing statements, and responsive customer service can significantly reduce your chargeback rate.

What happens when a chargeback is initiated?

If a chargeback is initiated, the chargeback amount will be debited from your Moov wallet. You will be notified of the specific transaction, the reason the transaction is being disputed, and a deadline for your response. You are responsible for all chargebacks, any chargeback fees, and related costs arising from your transactions. Card networks give you just 10-14 days to respond, so it's essential to address the dispute before the due date provided in your notification.

Important to note: Once a chargeback has been initiated, don't process a refund for that same transaction. Any refunds issued after a chargeback has started typically can't be recovered, meaning you could lose those funds twice.

Under no circumstances should you bill a cardholder after a chargeback is received for that transaction, even if the cardholder has provided you with authorization. We recommend instead that you contest the chargeback and provide supporting documentation that substantiates the charge.

Responding to a chargeback

If you choose to respond to a chargeback, the information provided must be timely and sufficient to warrant a reversal of the chargeback. This reversal is called a representment. If it’s determined that the information you provide is sufficient, we will initiate a representment on your behalf. The act of submitting a representment is not a guarantee that the chargeback will be resolved in your favor. Ultimately, the decision on the representment is up to the issuer.

In the event the representment is declined by the Issuer, it is possible to escalate the case to a pre-arbitration or even an arbitration status, which requires card network intervention. These escalation steps can be expensive and often do not result in a change in the original decision. To avoid costly fees, we recommend providing all pertinent evidence during the initial response.

Preparing documents for a chargeback response

When responding to a dispute, include the right documentation to make your case:

• Provide clear, readable copies of transaction receipts showing all required information

• Label each page with the case number from your chargeback notification

• Include supporting evidence such as delivery confirmations, signed authorization forms, email exchanges with the customer, and any relevant agreements

• If you previously issued a refund, attach the refund receipt as proof

• Add a brief explanation of your case, but remember that your actual documentation will carry more weight than written statements alone

The strongest responses include specific evidence addressing the customer's particular dispute reason. For example, if they claim they never received the item, your delivery confirmation becomes your most important piece of evidence. Organizing your response in a logical order helps the reviewing bank representative follow your reasoning more easily.

If we don’t receive clear, legible, and complete copies of the transaction documentation prior to the “Due Date” on the notification, the documentation may not be forwarded and a representment may not be initiated.

Chargeback prevention and evidence strategies

Below are recommendations on how to reduce the risk of chargebacks within five main categories of disputes, and what types of evidence we recommend you submit if you choose to respond. These are recommendations only and are not a guarantee that you will be able to prevent chargebacks. There may be additional chargeback reasons not addressed here.

Regardless of the reason for the chargeback, refunds should not be submitted on transactions that have already been charged back.

Goods/services not received or returned

Cardholders indicating that they either never received the goods and services or that the items were returned. The following could cause a not received or return-related chargeback to occur:

• Cardholder received damaged or defective merchandise.

• Services were not provided or merchandise was not received by the cardholder.

• The cardholder was charged prior to merchandise being shipped or merchandise was not received by agreed upon delivery date or location.

• Credit transaction was not processed.

Reducing your risk

• Provide services or merchandise as agreed upon and described to the cardholder; clearly indicate the expected delivery date on the sales receipt or invoice.

• Issue credit to the cardholder for the same account as the purchase in a timely manner.

• Ensure delivery of the merchandise or services ordered to the cardholder.

• Do not charge the cardholder until the merchandise has been shipped.

• Ship according to the agreed-upon terms and obtain signed proof of delivery from the cardholder.

• Contact the cardholder in writing if the merchandise or service cannot be provided or is delayed, and offer the cardholder the option to cancel if your internal policies allow.

• If applicable, display the words “NO EXCHANGE, NO REFUND,” etc., on the website on the same page as check-out requiring the cardholder to click to accept prior to completing the transaction.

• If unable to provide services or merchandise, issue a credit to the cardholder in a timely manner.

Recommended evidence to submit

• Proof of delivery: Tracking number with delivery confirmation, recipient signature, delivery coordinates, or delivery photo.

• Delivery terms: Shipping policy and estimated delivery timeframes shown at checkout.

• Customer communication: Emails or messages showing the customer confirmed receipt or acknowledged the delivery.

• Return policy: Proof refund policy was presented and that the customer agreed to during checkout.

• If item was returned: Date received, condition of returned item, and any restocking or refund policies communicated.

Goods/services damaged, defective, or not as described

Cardholders indicating that they received the items; however, they were damaged, defective, or not as described. The following could cause these types of disputes to occur:

• Cardholder received merchandise that was defective, damaged, unsuited for the purpose sold, or did not match the description on the transaction documentation/verbal description presented at the time of purchase.

• Cardholder billed for a transaction that was not part of the original transaction document.

• Cardholder claims to have been sold counterfeit goods.

• Cardholder claims the terms of sale were misrepresented by the merchant.

Reducing your risk

• Provide services or merchandise as agreed upon and described to the cardholder; clearly indicate the expected delivery date on the sales receipt or invoice.

• Contact the cardholder in writing if the merchandise or service cannot be provided or is delayed, and offer the cardholder the option to cancel if your internal policies allow.

• In the event that the cardholder received defective merchandise or the merchandise received was not as described, resolve the issue with the cardholder at first contact.

• If the merchandise is being picked up by the cardholder, have them sign for the merchandise after inspection that it was received in good condition.

• Do not charge the cardholder until the merchandise has been shipped.

• Ship according to the agreed-upon terms and obtain signed proof of delivery from the cardholder.

• If unable to provide services or merchandise, issue a credit to the cardholder in a timely manner.

• Do not bill the cardholder for loss, theft, or damages unless authorized by the cardholder.

• Ensure that a description of the service or merchandise provided is clearly defined.

Recommended evidence to submit

• Product/service description: Screenshots of product listings or service descriptions indicating condition or features

• Photos or proofs of quality: If available, showing the item before shipping or the condition upon return.

• Customer communication: Emails or messages where the customer acknowledges the product matched the description or failed to raise concerns.

• Repair or replacement offer: Proof that the merchant offered to remedy the issue.

• Return/refund policies: Documented policy and acknowledged by the customer.

Fraud and/or unauthorized charge

Cardholders indicating that the transaction was not authorized. The following could cause fraud/unauthorized chargebacks to occur:

• Multiple transactions were completed with a single card without the cardholder’s permission.

• Counterfeit card was utilized, and proper acceptance procedures were not followed.

• Cardholder states that they did not authorize or participate in the transaction.

• The cardholder does not recognize or is unfamiliar with the transaction due to the merchant name and/or location not matching the name and/or location where the transaction took place.

Reducing your risk

• Participate in recommended fraud mitigation tools:

  • Address Verification Services.

  • CVV2, CVC2, and CID Verification.

• Ensure you ship to the AVS-confirmed address (bill to and ship to should match).

• Obtain authorization for all transactions.

• Ensure the merchant descriptor matches the name of the business and is displayed correctly on the cardholder statement.

• Ensure the descriptor includes correct business address and a valid customer service number.

Recommended evidence to submit

• Proof of authorization: CVV match, AVS match, 3D Secure result, or IP address/device fingerprint matching customer info.

• Customer history: Previous successful transactions with the same cardholder.

• Login records: IP address, device ID, geolocation of account access.

• Any signed agreements or order confirmations

Incorrect amount, duplicate charge, or paid by other means

Cardholders indicating that they were charged an incorrect amount, they were charged more than once, or they paid by other means and were still charged. The following could cause these types of chargebacks to occur:

• A single transaction was processed more than once to the cardholder’s account.

• Cardholder initially presented card as payment for the transaction; however, the cardholder decided to use an alternate form of payment.

• Cardholder was issued a Credit Draft; however, the transaction was processed as a sale.

• The account number or transaction amount utilized in the transaction was incorrectly entered.

• Transaction was to be processed in a currency other than the currency used to settle the transaction.

Reducing your risk:

• Process all transactions within the card organization specified time frames.

• Ensure all transactions are processed accurately and only one time.

  • In the event a transaction was processed more than once, immediately issue voids, transaction reversals, or credits.

• Ensure that credit transaction receipts are processed as credits and sale transaction receipts are processed as sales.

• Ensure all transactions received a valid authorization approval code prior to processing the transaction.

• Do not alter transaction documentation or make any adjustments unless the cardholder has been contacted and agrees to any modifications of the transaction amount.

Recommended evidence to submit

• Invoice and receipt: Showing the correct amount charged and agreed upon by the customer.

• Communication: Customer acknowledgment of the correct amount or explanation if a partial payment (e.g., paid in installments).

• Transaction records: authorization logs with amounts & transaction times. Evidence documenting multiple distinct purchases (if applicable)

• Refund record: If a correction was made, include refund date, amount, and method.

• Alternative payment proof: Internal reconciliation showing no other payment method was used.

Canceled order and/or recurring services

Cardholders indicating they canceled their order or their recurring service. The following could cause these types of chargebacks to occur:

• Cardholder continued to be billed for canceled recurring transaction.

• Cardholder canceled service or merchandise, and their card was billed.

Reducing your risk

• Issue credit to the cardholder for the same account as the purchase in a timely manner.

• Ensure customers are fully aware of the conditions for recurring transactions. Cancel recurring billings as soon as notification is received from the cardholder or as a chargeback, and issue the appropriate credit as needed to the cardholder in a timely manner.

• Pre-notify the cardholder of billings within 10 days (domestic) and 15 days (international) prior to billing, allowing the cardholder time to cancel the transaction.

• Provide proper disclosure of your refund policy for returned/canceled merchandise or services to the cardholder at the time of transaction in accordance with applicable law.

• Provide cancellation numbers to cardholders when lodging services are canceled.

• If applicable, display the words “NO EXCHANGE, NO REFUND,” etc., on the website on the same page as check-out requiring the cardholder to click to accept prior to completing the transaction.

Recommended evidence to submit

• Cancellation/refund policy: Shown clearly at the time of sign-up or order.

• Signed agreement or terms of service: Customer agreed to auto-renew or recurring billing terms

• Proof of non-cancellation: No cancellation request received, or cancellation occurred after the billing date.

• Email confirmations: Subscription renewal reminders, cancellation instructions, or acknowledgement of terms

• Usage logs: Showing the customer accessed or used the service after the supposed cancellation