Best practices for handling credit card disputes

When cardholders dispute a payment with their bank, they provide evidence to support their claim. Banks often prioritize protecting customers, addressing issues like product damage, misleading charges, or unauthorized payments, which lead to disputes. As a business owner, you have the right to respond to these disputes by submitting strong evidence to counter the claim and recover your funds.

Understanding dispute response factors

Several factors influence the outcome of a dispute:

1. Reason for the dispute: Fraudulent claims, for instance, are more challenging to win.

2. Strength of evidence: Include clear shipping records, communication history, and proof of delivery.

3. Payment details: The type of payment (credit card, debit card, gift card) and card issuer can affect the response process.

4. Product type: Disputes for physical goods, digital goods, or services may require specific evidence.

Best practices for dispute responses

Follow these guidelines to prepare a strong and effective dispute response:

1. Respond promptly: Each dispute has a limited response timeframe (usually 14–21 days). Missing the deadline forfeits your opportunity to submit evidence, so always respond on time.

2. Provide a concise and targeted response: Credit card issuers process numerous dispute responses daily. Lengthy or irrelevant responses reduce the impact of your argument and may obscure critical evidence. Use neutral language and focus on evidence relevant to the dispute. Verify the legitimacy of customer claims by cross-checking delivery locations, social media activity, or other tools, such as Google Maps.

• Use a clear and professional tone.
• Focus on why the claim is invalid, supported by concise evidence.

Example:
Jessica Brown purchased [product] on [date] using a [card type]. The product was shipped to the address provided and delivered on [date] (tracking number: [tracking number]). Attached is proof of delivery confirming receipt, demonstrating the claim is unfounded.

3. Submit only relevant evidence: Credit card issuers don’t review lengthy exhibits. Include only relevant portions of your policies or terms and highlight key points with callouts or arrows. For example, if the dispute involves a return policy violation, submit only the section of your policy related to returns.

4. Ensure evidence is sufficient and comprehensive: Each evidence type should address the specific dispute:

5. Proof of customer authorization:

• Fraud-related dispute:
  • For fraud-related disputes, proving that the legitimate cardholder was aware of and authorized the transaction is essential. Acceptable evidence includes:
    • AVS (Address Verification System) matching.
    • CVC confirmation.
    • Signed receipts or contracts.
    • Matching IP addresses and billing addresses.
    • 3DS verification.
• Proof of service or delivery
  • For disputes such as "Item Not Received" or "Not as Described," merchants can counter disputes by providing proof of service or delivery.
    • For Physical goods:
      • Provide shipment and delivery confirmation that includes the full delivery address.
      • If the shipping address differs from the billing address (e.g., a gift purchase), submit documentation explaining the reason for the discrepancy.

• • • For Digital goods:
      • Submit evidence, such as IP addresses or system logs showing that the customer downloaded the content or accessed your software or service.
• Terms of service and refund policy documents
  • The most important evidence for return or refund disputes is proof that the customer agreed to and understood your terms at checkout or failed to comply with your policies.
    • Include a clear screenshot showing how your terms were presented during checkout, with the relevant policies clearly emphasized.
    • Avoid submitting the entire terms and policies document, as card issuers won’t review lengthy files to locate relevant information.

6. Ensure evidence is clear and legible: Merge files of the same evidence type and format documents into one file. Use clear, bold text and a font size of 12 or larger to emphasize critical information. Avoid using color highlights, and ensure all uploaded images are high resolution. Cropped screenshots should focus on relevant areas, with accompanying text fields explaining their relevance.

Responding to different dispute types

Shoplazza Payments identifies eight main dispute categories, each requiring tailored responses. Below is a guide for responding to common dispute types:

Some evidence, such as communication records or delivery confirmations, universally applies to all disputes. Ensure these are included when relevant.

Handling unique scenarios

1. Accepting disputes: If the claim is valid (e.g., a product wasn’t shipped due to stock issues), disputes can be accepted. Funds will be returned to the customer, but dispute handling fees remain.

2. Withdrawing disputes: If a misunderstanding occurs and the customer contacts their bank to cancel the dispute, continue responding as usual. Attach communication records confirming the customer’s withdrawal to strengthen your case.

3. Partial refund disputes: Occasionally, disputes for the full amount may arise even after issuing a partial refund. If you’ve already issued a partial refund but received a dispute for the full amount, include the following:

• The refund amount and date.
• The Refund ARN number.
• Screenshots of refund details from your system.

By following these best practices and tailoring your response to the dispute type, you can effectively handle disputes and improve the likelihood of retaining disputed funds while maintaining professionalism.