Chargebacks – Why Was one Filed and How do I Avoid Them in the Future?


There are many reasons a consumer may file a chargeback. There are over 50 Chargeback Reason Codes between the card brands. The list is too long to cover them all, but with the list below covers the most used and sometimes abused reasons.

  1. Fraud:

How to avoid this in the future: There are many tools available to merchant’s today to alleviate the fraud in the online payments world.

iSpy Fraud Tools: iSpyFraud is a rules-based fraud prevention tool merchants can use to screen suspicious transaction activity, helping merchants to stay one step ahead of fraud.

Verified-byVisa/MC SecureCode: Both Visa and MasterCard’s programs that allow you to add an additional layer of security to your sales.

3D Secure: 3D Secure was created by Visa and MasterCard to add an additional layer of security for Card Not Present (CNP) merchants.

Gateway Tools: Utilize the standard gateway tools at your disposal. Be sure you turn on and make use of AVS (Address Verification Services) and CVV (Card Verification Value).


  1. Transaction Not Recognized:

Processes to implement to prevent this: Your payment descriptor is the merchant name and other identifying details that appear on the customer’s statement when they make a purchase from you. If the customer doesn’t recognize the name it is unlikely they will know what the charge was for.  The solution is to be sure your descriptor reflects what the consumer will recognize.


  1. Incorrect Transaction Amount / Fraudulent Multiple Transactions:

What to look for: You may run into a system error that can lead to the customer’s credit card being charged twice. Occasionally, a customer accidentally pressed the “Check Out” button twice leading to a duplicate charge. If you happen to see a duplicate order, assume that it was a mistake and contact the customer to ensure there was no mistake. If there is a manual process, the person processing the credit card might make an error.  Avoid doing manual processing of orders if possible.


  1. Not as Described or Defective Merchandise:

Here is what you should do: You can’t make everyone happy, and that goes double for consumers. Make sure you have a responsive customer service team with short hold times. Only one thing infuriates a consumer more than long wait times; that is speaking with a customer service rep for a company with too strict of a return policy. Make sure your return policy is clearly located on your website and is fair for both parties involved.


  1. Services Not Provided or Merchandise Not Received:

The resolution: Start with clear expectations with a visible shipping policy on your website. You’re your customers updated by emailing order status updates. Sometimes there are circumstances out of your control causing a delay in shipping. It could range from unexpected whether causing shipping delays to an unexpected turn in sales causing you to run out of product; advise the customer of the delay and give them the option to cancel.


  1. Cancelled Recurring Transaction:

The solution: If a customer requests cancellation of a recurring transaction which is billed periodically (monthly, quarterly, annually), always respond to the request and cancel the transaction immediately or as specified by the customer. As a customer service, advise the customer in writing that the service, subscription, or membership has been cancelled and state the effective date of the cancellation. Failure to respond to customer cancellation requests almost always leads to Chargebacks.


  1. Credit Not Processed:

How to dodge this problem: Always refund in a timely manner and to the same credit or debit card the consumer paid with. Failure to do so can result in chargebacks. And make sure you communicate to your custom