If you’ve ever looked in your bank account and saw money missing or opened your email to find a message from your payment processor saying a customer has filed a dispute, you’re not alone, and you’re not doing anything “wrong.” But knowing why disputes happen and how to respond the right way can save you a lot of time, money, headaches, frustrations and anger.
Let’s break it down.
🧐 Why Businesses Get Credit Card Disputes
A dispute happens when a cardholder contacts their credit card company (not the processor) to challenge a charge. It could be because of a misunderstanding, a bad actor, or fraud. Either way, the funds are pulled from your account while the situation gets reviewed. Again this is a dispute between the card issuing bank and you, not the processor.
Here are the most common reasons you might receive a dispute:
- Fraudulent Transactions
The cardholder claims they didn’t make the purchase (or someone else used their card without permission). - Product or Service Not Received
They say they never received what they paid for or it was delivered way later than promised. - Item Not as Described
The customer received the item but claims it wasn’t what they expected based on your description. - Recurring Charges
The customer forgot they signed up for a subscription or they thought they canceled it. - Duplicate Charges
They were accidentally charged more than once for the same thing. - Customer Service Issues
They tried contacting you, didn’t get a response, and felt the charge was their only option for resolution.
⛑️ How to Respond to a Dispute: Step-by-Step
When you get a dispute, don’t panic—but act quickly. You usually have a short window (about 7–14 days) to respond. The dispute process is controlled by the card brands, Visa/MC/Discover/Amex and have very specific guidelines that need to be met. For instance if the card issuing bank does not receive the requested information in the allotted time, the dispute changes to a chargeback and you, as a business owner, has lost the ability to fight that charge.
Here are the steps you can take to protect your profitability.
Step 1: Gather Your Evidence
You’ll want to provide clear proof that the transaction was valid. Depending on the situation, this may include:
- A signed receipt or order confirmation
- Tracking information showing delivery
- Screenshots of product/service descriptions
- Email or message exchanges with the customer
- Refund or return policy that the customer agreed to
Step 2: Submit Your Rebuttal
Go through your payment processor’s dashboard and upload the supporting documents. Be polite, factual, and to the point. Stick to the facts as this isn’t personal. The Key is to provide any and all information that you have concerning the disputed charge as you will not be able to speak with anyone to plead your case.
Step 3: Wait for a Decision
The card issuer will review your response and make a decision. This process can take 30–90 days. If you win the dispute, the money will be returned to you. If not, it’s permanently reversed. Again, you do not have the opportunity to speak with the card issuing bank so ensure you are thorough in your submission.
🕵️♀️ Tips to Prevent Future Disputes
You can’t avoid every dispute or resulting chargeback; however, you can definitely lower your risk.
- Be clear in your product/service descriptions. No surprises = fewer disputes.
- Use delivery tracking and require signatures when possible.
- Send confirmation emails after every purchase, when possible.
- Display your return and refund policy clearly (on your website, receipts, and checkout pages).
- Make your business name is recognizable on billing statements. (If a customer doesn’t recognize a name, they may think it’s fraud.)
- Respond to customer inquiries quickly to resolve issues before they escalate.
- Use a secure payment gateway, for card not present transactions, and verify high-risk orders manually.
- Trust your gut if something sounds and looks fishy
Final Thoughts
Disputes are frustrating, but they’re also part of doing business in the card payment world. The good news? With the right processes in place, you can minimize the risk and be ready to respond effectively when one comes your way.
And if you ever feel overwhelmed by the process, we’re here to help. Whether it’s understanding your chargeback data or setting up systems to prevent them in the first place, having the right payment partner in your corner can make a big difference.