It’s a cardholder’s right to dispute any transaction they do not recognize or believe was done in error; for example, the wrong amount was charged, the item was not received, or the items or services received were not as described. When a customer disputes a charge for one of these reasons, this is known as a chargeback.

The chargeback system and process are run by the card brands (Visa, MasterCard, Discover, American Express, etc.)—they make all decisions concerning chargebacks. But if you get a head start, you can improve your chances of successfully contesting a disputed charge:

  • If there is a chargeback on your merchant account, your corporate address will be mailed with instructions on how to contest it. Each of the card brands have their own steps, so be sure to follow their instructions closely.
  • Check your mail frequently. Often, chargeback notifications come in nondescript envelopes and are missed.
  • Respond to the chargeback as quickly as possible. There are often time limitations imposed and if the date has passed, a merchant is left with little recourse.

Note: Now that the October 2015 EMV liability shift has occurred, if a counterfeit EMV card is processed through a traditional magnetic stripe card reader in-store, the merchant is liable for any chargebacks. To update your system for EMV, click here.