Mitigating the Chargeback Risk
Recommendations to reduce the risk of disputes and a chargeback
Businesses see an uptick in sales during the holidays but, unfortunately, they often also see a rise in chargebacks, too. With the 2024 holiday season quickly approaching, we wanted to offer chargeback mitigation strategies you can share with your team to tip the balance in their favour.
What Is A Chargeback?
A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account transactions report. Consumers might dispute a transaction for numerous reasons.
Here are some common reasons:

- Your customer might dispute a transaction for many different reasons. Some common ones include:
- The cardholder doesn’t recognize the transaction
- The transaction is a duplicate (meaning, the same amount was run multiple times to the same card in a short timeframe)
- The transaction was for a different amount than the cardholder expected
- Identity theft (for example, if the card used for the transaction was stolen or lost)
- The cardholder never received the product or service they ordered
- The cardholder is unhappy with the product or service or feels like it was misrepresented
- Additionally, the bank can submit retrieval requests or chargebacks for transactions that meet criteria for potential fraud (for example, if a large number of transactions are processed to the same card at the same time, or transactions that are far outside the cardholder’s normal spending patterns).
First and foremost, attentive and proactive customer service can be a great way to prevent chargebacks from happening. It’s also important that businesses put practices in place that are hard to dispute so their customers are inclined to return an item rather than initiate a chargeback.
Recommendations to reduce the risk of disputes:
- Make it easy for shoppers to get their money back. A generous return policy can build trust with customers.
- Provide clear online descriptions and photos of products or services to avoid confusion.
- Keep customers informed through the order-to-deliver process.
- Use clear payment descriptors so customers recognize a transaction on their card statement.
- Make cancellation and return policies clear and easy to find on a website.
- Include “click to accept” with cancellation policies before cardholders are able to check out on the website.
- Even though a cardholder has opted in and agreed to recurring payments, notify the customer each time before charging the recurring payment.
- Consider varying return times for certain conditions, like damaged or malfunctioning merchandise, or during the holidays.
Following these simple methods can dramatically reduce your chargebacks and increase revenue at the same time by instilling confidence with your customer by having clear policies around payments, terms, refunds and service guarantees. Lack of communication is usually the culprit for many customer-business disputes so clear guidelines are critical to minimzing your risk.