How to Prevent Chargebacks

Visa’s Dispute Management Guidelines for Visa Merchants (June 2024) says disputes can cost you both the amount of the sale and the merchandise, plus the time it takes to respond. It also says many disputes are avoidable with training and attention to detail. The practices below come from that document, with the CFPB’s consumer-side view at the end.

If you take cards in person

• Get an authorization. Do not complete a transaction without one, and do not complete one that was declined.
• Imprint key-entered sales. If you must type in a card-present sale, Visa says to make an imprint of the card. Without it, a fraud dispute can be sent back to you even if the sale was authorized.
• Do not accept a card without the card. If the customer has the payment credential but not the card, Visa says do not accept the transaction, because it can be disputed even with an approval.
• Keep receipts complete and legible. An illegible receipt can be returned because it cannot be processed.
• Enter each sale once. Duplicate entries or deposits cause duplicate-charge disputes.

If you take cards online or by phone

• Use the checks. Visa says AVS and CVV2 checks give your acquirer grounds to respond to some disputes. For an AVS match, you need proof of the shipping address and signed proof of delivery when the billing and shipping addresses are the same.
• Authenticate with Visa Secure. Merchants that authenticate a card-absent sale with Visa Secure are protected by their acquirer from certain fraud-related disputes when the transaction is processed correctly.
• Ship before you deposit. Do not deposit a card-absent transaction until the merchandise has shipped. Customers who see a charge before they receive the goods may dispute it.
• Track card-absent separately. Visa recommends tracking card-present and card-absent disputes separately, and tracking disputes as a share of sales.

Make your name recognizable

Cardholders must be able to recognize you on their statement. Visa tells merchants to check with their acquirer that the doing-business-as name, city and state are correct, and suggests buying something yourself to see how it appears. Square’s chargeback guide gives the same example: a bakery whose receipts carry a different company name risks being mistaken for fraud. If you are the customer, our charge lookup explains how to read a statement line.

Customer service practices

• Disclose your policies. You set your return, refund and cancellation policies. Visa says clear disclosure at the time of purchase, printed on the receipt for card-present sales, helps avoid disputes.
• Tell customers about delays. If goods or services will be delayed, tell the cardholder in writing about the delay and the new date. If an item is out of stock, do not substitute another unless the customer agrees.
• Cancel recurring charges on request. When a customer cancels a recurring charge, cancel it immediately or as they specify, confirm the date in writing, and do not bill the card after the request.
• Act promptly on valid complaints. If a cardholder with a valid dispute contacts you directly, issue a credit as appropriate and let them know.

If a dispute arrives anyway

Visa says each step has a time limit that may vary by acquirer, and that a prompt response with all available documentation at the first notification is essential. Evidence must be legible. Although many disputes are resolved without losing the sale, some cannot be remedied, and accepting those can save you the time and expense of contesting them.

What the cardholder is told to do

The CFPB advises cardholders to contact the seller first and explain the problem, then to contact their card company about a dispute, which it says is sometimes called a chargeback. For billing errors it says to send a notice within 60 days of the charge appearing on the statement. A fast, fair reply to a customer’s first contact is the cheapest way to avoid a dispute.