Chargeback: what to do when the customer disputes the purchase?
Posted: Sun Jan 19, 2025 5:12 am
Have you ever heard of a chargeback? In general, this type of situation occurs when a customer disputes a purchase that was paid for using a credit or debit card at a physical or virtual commercial establishment.
However, these cases deserve attention from store owners, because they can represent a risk to the financial health of the business, especially when due to fraud and other scams.
In order to help you understand chargebacks and how to protect yourself from this type of situation, we have prepared this post with several details on the subject. Keep reading and check it out!
What is a chargeback?
A chargeback is when a consumer disputes a purchase made with the bank . A practical example occurs when you make a sale, the money arrives in your account, your product is shipped and then for some reason the money disappears from your account.
When a customer receives their card statement and sees nepal mobile phone number a purchase they do not recognize, they can notify the bank. The bank, in turn, upon noticing any irregularity in the purchase, cancels it and the refund is issued.
The goal is to ensure greater confidence and security for the buyer. However, for entrepreneurs, this can be a problem, as the business ends up at a loss.
What is the purpose of a chargeback?
Chargebacks aim to protect consumers, especially in the case of cloned cards or sales that do not comply with the credit operator's regulations.
However, due to the popularization of the internet and the public's trust in online shopping, chargeback is not only a security tool, but can also pose a problem for business owners.
This is because there are malicious people who use this resource to defraud credit transactions and ask for a refund of the money for products and services that they actually purchased.
Why are chargebacks so worrying?
Chargebacks can cause damage, especially financial damage, to a company. In large businesses, their effects are usually smaller, but small entrepreneurs can suffer irreversible losses.
In addition to the loss of merchandise and the purchase amount, entrepreneurs may also suffer penalties from card companies if they receive too many chargeback requests.
Another factor that must be taken into consideration and that makes chargebacks worrying is the consumer experience. The process of paying for and disputing a purchase usually involves bureaucracy and is time-consuming.
In this case, the business's reputation is also put at risk, even if the company is not to blame for what happened, because the consumer may associate their bad experience with the establishment.
How is a chargeback request made?
When there is a commercial disagreement or when the cardholder does not recognize a transaction, to request a chargeback, all they need to do is contact the operator and report what happened.
Although it is not very common, financial institutions may open a chargeback if they notice problems with the transaction. In this case, the issuer sends arguments to the operator to explain that the refund of the amount to the cardholder is due, requesting documents for defense, such as proof of delivery, invoice, recorded conversations, etc.
After analyzing all the documents provided, if the chargeback is considered valid, the disputed amount must be returned to the cardholder.
The biggest problem that usually occurs is that, nowadays, card operators do not assume the risks of this type of transaction and, consequently, leave the loss to the retailer who, in turn, makes a sale and later discovers that the amount will not be credited to their account.
This fact leaves traders exposed to the actions of fraudsters, who look for this type of loophole to obtain some kind of advantage for themselves.
What are the main reasons for chargebacks to occur?
There are different situations in which chargebacks occur. They are all present in our daily lives and can occur frequently. We have listed the 4 main ones!
Purchase made with cloned card
The buyer's card has been cloned and different purchases are made with that card. When faced with this situation, in addition to canceling the card, the purchases made are also canceled. In other words, a chargeback has been made.
Fraud, but in bad faith
The purchase process occurs normally and the product arrives at the customer's home, but the customer still cancels the purchase. This is a completely fraudulent action. The customer demands a refund, claiming that the product did not arrive. And what happens to the seller? At a loss, without money and without the product.
However, these cases deserve attention from store owners, because they can represent a risk to the financial health of the business, especially when due to fraud and other scams.
In order to help you understand chargebacks and how to protect yourself from this type of situation, we have prepared this post with several details on the subject. Keep reading and check it out!
What is a chargeback?
A chargeback is when a consumer disputes a purchase made with the bank . A practical example occurs when you make a sale, the money arrives in your account, your product is shipped and then for some reason the money disappears from your account.
When a customer receives their card statement and sees nepal mobile phone number a purchase they do not recognize, they can notify the bank. The bank, in turn, upon noticing any irregularity in the purchase, cancels it and the refund is issued.
The goal is to ensure greater confidence and security for the buyer. However, for entrepreneurs, this can be a problem, as the business ends up at a loss.
What is the purpose of a chargeback?
Chargebacks aim to protect consumers, especially in the case of cloned cards or sales that do not comply with the credit operator's regulations.
However, due to the popularization of the internet and the public's trust in online shopping, chargeback is not only a security tool, but can also pose a problem for business owners.
This is because there are malicious people who use this resource to defraud credit transactions and ask for a refund of the money for products and services that they actually purchased.
Why are chargebacks so worrying?
Chargebacks can cause damage, especially financial damage, to a company. In large businesses, their effects are usually smaller, but small entrepreneurs can suffer irreversible losses.
In addition to the loss of merchandise and the purchase amount, entrepreneurs may also suffer penalties from card companies if they receive too many chargeback requests.
Another factor that must be taken into consideration and that makes chargebacks worrying is the consumer experience. The process of paying for and disputing a purchase usually involves bureaucracy and is time-consuming.
In this case, the business's reputation is also put at risk, even if the company is not to blame for what happened, because the consumer may associate their bad experience with the establishment.
How is a chargeback request made?
When there is a commercial disagreement or when the cardholder does not recognize a transaction, to request a chargeback, all they need to do is contact the operator and report what happened.
Although it is not very common, financial institutions may open a chargeback if they notice problems with the transaction. In this case, the issuer sends arguments to the operator to explain that the refund of the amount to the cardholder is due, requesting documents for defense, such as proof of delivery, invoice, recorded conversations, etc.
After analyzing all the documents provided, if the chargeback is considered valid, the disputed amount must be returned to the cardholder.
The biggest problem that usually occurs is that, nowadays, card operators do not assume the risks of this type of transaction and, consequently, leave the loss to the retailer who, in turn, makes a sale and later discovers that the amount will not be credited to their account.
This fact leaves traders exposed to the actions of fraudsters, who look for this type of loophole to obtain some kind of advantage for themselves.
What are the main reasons for chargebacks to occur?
There are different situations in which chargebacks occur. They are all present in our daily lives and can occur frequently. We have listed the 4 main ones!
Purchase made with cloned card
The buyer's card has been cloned and different purchases are made with that card. When faced with this situation, in addition to canceling the card, the purchases made are also canceled. In other words, a chargeback has been made.
Fraud, but in bad faith
The purchase process occurs normally and the product arrives at the customer's home, but the customer still cancels the purchase. This is a completely fraudulent action. The customer demands a refund, claiming that the product did not arrive. And what happens to the seller? At a loss, without money and without the product.