Chargeback FAQs

What is a chargeback? Is a dispute the same thing?

When we describe chargebacks, we often utilize chargeback and dispute interchangeably. However, they are best defined as:

Chargebacks: Are a forced transaction reversal initiated by the cardholder’s bank. They are meant as a consumer protection mechanism but are often overutilized.

Dispute: An action taken by a cardholder to challenge a transaction appearing on the cardholder’s statement.

Are all chargebacks the same?

No. There are two different kinds of fraud:

True fraud: Payment information that is stolen from a cardholder to make unauthorized purchases by a third-party. 

Friendly fraud: Committed by the cardholder themselves, be it intentionally or unintentionally. 

Some common causes of friendly fraud:

• Forgetful fraud: Cardholder simply doesn't remember making the purchase
• Family fraud: Another household member made an unauthorized purchase
• Buyer's remorse: Cognitive dissonance, shame, and utilize the chargeback process to get refunded. 
• Chargeback fraud: Cardholder knowingly 

Although chargebacks are designed to protect consumers, they can also be exploited by scammers to fraudulently obtain goods or services. When a cardholder makes a purchase and then files a chargeback just to get something for free, it constitutes chargeback fraud. It is important to address all chargebacks no matter the type.