What is a chargeback?
A chargeback occurs when a cardholder contacts their issuing bank (e.g. Capital One, American Express, Chase) and disputes a purchase made on their credit card.
Chargebacks can be filed within 180 days after a purchase, can be initiated by the cardholder or their bank. When the cardholder initiates a chargeback, they request their bank to withdraw the funds from the business who processed the payment and transfer it back to their bank account. If the cardholder's bank triggers the chargeback, the bank typically refunds them directly and then debits the amount from the business. The card network associated with the transaction will then set a deadline so that the business has a chance to dispute the chargeback.
How to prevent chargebacks
Chargebacks are never ideal for a business. They force refunds, reduce brand reputation, and ultimately cost you money. While never completely avoidable, chargeback risk can be mitigated by all businesses. The most common reason people will file a chargeback is when they believe they were wrongfully charged for a transaction. However, keep in mind that a chargeback can be filed for an invalid reason. To prevent chargebacks, businesses can take a few steps to lower their risk:
Have a clear refund policy - Customers sometimes get confused in the terms and conditions. Having a crystal clear refund policy allows them to distinguish what can be returned and what can't.
Include good contact information on your website - If a customer is able to 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 businesses before filing a chargeback. If there is a clear phone number and email address for customer support, it is likely you can handle all disputes before they escalate into chargebacks.
Be detailed in your product descriptions - Represent products and services accurately by offering detailed descriptions and clear pictures.
Avoid manually keying credit card information - Everyone makes mistakes and punching in the wrong information could result in a chargeback.
*Note; A customer may file a chargeback if they don't recognize your business on their credit card statement, with Keap Pay this is dependent on the DBA name on your application.*
What can I do
When a chargeback is initiated for one of your transactions, there are two different ways to dispute it.
Gather the necessary documents and information to initiate a dispute
Coordinate with the customer directly and have them cancel the chargeback
It is up for you to decide on how to proceed. If the chargeback is valid and you accept the fees that are incurred, you can leave the chargeback as is. However if you would like to dispute it through Keap Pay, please see below.
Chargeback dispute guidance
Chargebacks can be frustrating and financially challenging for businesses. However, it's essential to remember that you have the right to dispute chargebacks that you believe are unjustified or erroneous. This guide will walk you through the process of disputing a chargeback and provide you with steps to increase your chances of a successful resolution.
Step 1: Gather Documentation
Collect all relevant documents related to the disputed transaction. This may include the original order receipt, proof of delivery, communication with the customer, tracking information, and any other evidence that supports your case.
Step 2: Understand Chargeback Reason Codes
Each chargeback comes with a reason code, which explains why the customer initiated the chargeback. Familiarize yourself with these codes, as they will help you build a solid case for your dispute. Common reason codes include "Item Not Received," "Unauthorized Transaction," and "Item Not as Described." For more information and for a full list of all the possible chargeback reason codes, please see the PDF linked here.
Step 3: Review the Chargeback Details
Carefully examine the chargeback notification, as it will provide information about the transaction, the customer's claim, and the requested amount. Cross-reference this information with your records to ensure accuracy.
Step 4: Submit your chargeback dispute
Provide the collected documentation and supporting information to Keap prior to the chargeback deadline.
Step 5: Monitor Communication
Stay vigilant for any updates regarding the chargeback. We may request additional information or clarification. Respond promptly to any requests to avoid delays in the resolution process.
Chargeback dispute documentation
Successfully disputing a chargeback hinges on the ability to present compelling evidence. In essence, you're presenting documentation to the card network that the transaction was valid. The more solid and precise evidence that you present, the more likely you are to win the chargeback dispute.
Below, we've listed the vital types of documentation you should assemble to bolster your case against unwarranted chargebacks. Not all chargebacks are the same and not all the documents listed will apply to every chargeback. Review the reason code to determine what may work best.
Order Confirmation and Receipt: Start with the original order confirmation and receipt. These documents offer proof that the customer authorized the transaction, which is crucial when countering claims of unauthorized purchases.
Proof of Delivery: For physical goods, proof of delivery is invaluable. It establishes that the customer received the items they ordered, thus challenging any claims suggesting non-receipt.
Communication History: Retain any correspondence you had with the customer, especially if they acknowledged receipt or expressed satisfaction. These interactions can debunk claims of dissatisfaction.
Tracking Information: Provide tracking numbers and shipping details. This substantiates that the order was fulfilled and dispatched to the correct address, dispelling doubts about order processing.
Product Descriptions and Images: Include detailed product descriptions and images. These illustrate that the delivered items match what was advertised, offering a strong defense against claims of misrepresented goods.
Terms of Service and Return Policy: Attach your terms of service and return policy documents. They confirm that the customer was aware of your policies before finalizing the transaction.
IP Address and Geolocation: Where applicable, include evidence of the customer's IP address and geolocation during the transaction. This helps verify their identity and location.
Refund and Exchange History: If you attempted to resolve the issue through refunds or exchanges, provide documentation of these actions. This demonstrates your commitment to customer satisfaction.
FAQ’s
Q - How will I be notified of a chargeback?
A - When a chargeback is filed against you, the payments team will reach out via email to the owner listed on the Keap Pay application. If a chargeback has been filed, please have the owner check if they received an email from [email protected].
Q - When are funds pulled when I have a chargeback?
A - Once a chargeback is received, the funds from the chargeback will be debited from your deposit or deposit account the next business day. You will have until the chargeback deadline date to dispute it.
Q - How do I track a chargeback's status?
A - You can track the status of a chargeback that has been filed through the Payments dashboard in your app. Simply hover over the “type” header, then filter by chargeback. The status column will show if the chargeback is still pending, or if it’s been won or lost.
Q - I won the chargeback dispute, when do I get my money back?
A - Once a chargeback has been won, you can expect to get your funds deposited within the next 2-4 business days.