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.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
- Statement descriptor: Initiating a chargeback due to not recognizing the statement descriptor
- Buyer's remorse: Cognitive dissonance, shame, and utilize the chargeback process to get
refunded.refunded - Chargeback fraud: Cardholder knowingly manipulates the system to get a refund
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.
What are steps I can take to prevent chargebacks?
There are several steps you can take to minimize the threat of a chargeback:
- Use clear billing descriptors
- Be responsive to customer issues before they escalate to chargebacks
- Keep good records of merchant receipts
What do I do when I get a chargeback?
It is critical that you respond to a chargeback notice immediately. Contact INGAGE Payments Support at payments@ingageit.com.