Disputes and Chargebacks and How to Respond

This article will provide a general overview of disputes (chargebacks), what happens, how to respond, and best practices. The information below will be helpful to you regardless of the processor you’re using. If you’re using CivicPlus Payments, you will find all relevant details below. However, if you’re using an external processor, please reach out to them for any assistance with disputes or chargebacks.

What is a Dispute (Chargeback)?

A dispute (commonly called a chargeback) occurs when a cardholder questions a transaction and asks their bank to reverse it. Instead of contacting the merchant first, the issuing bank pulls the funds back temporarily while the claim is reviewed. A dispute can be initiated up to 180 days after the purchase.

Disputes can happen for a variety of reasons:

• The customer doesn’t recognize the charge

• Fraud or stolen card use

• Dissatisfaction with the product or service

• Clerical or processing errors

When a dispute is filed, funds are withdrawn from your account and held until the case is resolved.

How Chargeback Funds are Pulled from Your Account

When a chargeback is received, there will be an adjustment made to your deposit the following business day. In this adjustment, you will see that the total adjustment equals the amount of the chargeback, plus any chargeback fees. If you do not have a deposit for the next business day due to a lack of activity, the amount will be debited.

Why Responding Matters

Responding promptly and with strong documentation increases your chance of winning a dispute. If you do not respond by the deadline, the case is automatically lost, and the funds are permanently deducted. If you’re using CivicPlus Payments, then please follow the next section for steps on responding to a dispute.

Respond to a Dispute in the Payments Portal (CivicPlus Payments Customers)

1. Log in to the Payments Portal

2. Select the Gateway Configurations tab

3. Click the Actions menu (three vertical dots icon) and select the Reports option next to the applicable gateway

4. Select the Chargebacks tab

5. Location and click on the disputed transaction

6. Review the information and click Respond

7. Either Accept or Dispute (if you select Dispute, please provide a response and any appropriate documentation to support your claim)

8. If you decide to Dispute, select an option from the Add evidence dropdown

9. On the pop-up window, describe the evidence and choose a file to upload to support your evidence

10. Click Save

11. Review and click Submit Dispute

Tips for Strong Responses

• Provide clear proof that the transaction was valid.

• Use multiple pieces of documentation (receipts, invoices, delivery confirmation).

• Keep your explanation concise and professional.

Next Steps After Submission

1. The cardholder’s bank reviews your evidence.

2. A decision is made, either in your favor (funds returned) or the cardholder’s favor (funds permanently debited).

3. You’ll see updates in the portal under the Chargebacks reports section outlined previously.

How to Prevent Chargebacks

Receiving a chargeback is never ideal. While never completely avoidable, you can take a few steps to lower your chargeback risk. The list below highlights some best practices for avoiding chargebacks.

• Have a clear refund policy: Have a plan in place for when a refund is requested by your customer. Make sure that the policy is clear on your website or in your terms and conditions. Merchants who have no refund policy tend to have higher chargeback rates.

• Make it easy to contact you: If a customer can settle the issue with you, they are much less likely to charge back a transaction. In fact, issuing banks always request that customers attempt to settle disputes with merchants before filing a chargeback.

• Step up your customer service game: Having a great customer service experience can reduce chargebacks. When you have a team that is responsive, accurate, and empathetic, your customer will feel like they were able to get their issue resolved.

• Upfront product descriptions: Represent products and services accurately by offering detailed descriptions and clear pictures. This helps customers have confidence in what they are purchasing and avoid a chargeback because the customer feels deceived.

• Avoid manually keying credit card information: Everyone makes mistakes, and keying in the wrong information could result in a chargeback. It’s always best to avoid manually keying in cards when it’s possible.

• Have clear billing descriptors: If a customer doesn't recognize your business on their credit card statement, you increase the likelihood of them filing a chargeback.

• Cancel Recurring Transactions: If a customer files a chargeback, even for a non-subscription-related reason code, make sure to cancel any future recurring transactions. Additional transactions can lead to additional chargebacks.

Chargebacks can be expensive and time-consuming. By focusing on prevention, you can reduce financial losses, protect your reputation, and maintain a positive relationship with your residents.