What are chargebacks?
A chargeback is a credit card transaction that is forcibly reversed, for the full or partial amount, by an issuing bank when their cardholder does not agree with the transaction.
It is best practice for the cardholder to reach out to the merchant prior to filing a chargeback. In fact their issuing bank will suggest customers do so, but there are cases where the customer decides to bypass this outreach and continue to dispute the transaction.
Why did I receive a chargeback?
Generally, cardholders file chargebacks when they don't recognize a transaction or are dissatisfied with their purchase. Listed below are the most common reasons you may receive a chargeback.
Reasons for Chargebacks
A customer's credit card details were stolen and used to make purchases without the customer's consent. Not all stolen cards will be declined depending on the situation. It is your responsibility to do your due diligence to prevent these fraudulent transactions. We do provide a guide here that will help you watch out for these transactions.
A customer makes a legitimate purchase, but files a dispute with their credit card company, claiming that they didn't initiate the transaction. This is called friendly fraud because in these cases, customers may not be aware their product/service arrived as promised, may not recognize the business name on their statement, or they simply forgot about their purchase.
Examples of friendly fraud can include if the customer:
- Unknowingly entered into a regular billing cycle for a subscription product
- Thought that they had canceled an ongoing service but didn't
- Doesn't recognize business name on their credit card statement
- Experiences memory loss or confusion about a transaction
- Has a miscommunication on purchases made on a shared credit card
- Customer wants to bypass a merchant's "no refunds" policy.
The product received was not what the customer had expected. The product could be defective, damaged or not as advertised.
The product either:
- Never arrived
- Arrived damaged
- Was subject to unexpected shipping delays
Refund not received
If the customer insists they returned the product or the transaction was canceled but they haven't received their refund.
Duplicate transactions/Processing Error
When a duplicate transaction occurs or the wrong amount is charged, the customer may file for a chargeback instead of contacting the business for a refund.
How do I know I've received a chargeback?
In the event a chargeback has been filed against your business, you will receive an email from
firstname.lastname@example.org to the email address you registered for your account.
If you haven't viewed the chargeback from your dashboard 5 days before the response expiry date, our Trust & Safety team may attempt to contact you through email. However, it is your responsibility to respond in a timely manner.
What should I do?
We strongly recommend reaching out to your customer first if you're able to, as this is proven to be the most efficient way to clear up a chargeback case. When communicating with your customer, try to clear any misunderstandings regarding the transaction. We would also advise that you record your interactions (e.g. call recordings, email logs) with the customer, so that in the case they decide to cancel the chargeback, you can respond to the chargeback with the appropriate evidence. Regardless of what happens, you should navigate to your Helcim Dashboard to view the chargeback.
Viewing your chargebacks
If you feel the chargeback was unwarranted, you may respond to the chargeback through your Helcim Dashboard.
Below we'll walk you through how to review your dashboard and respond to a chargeback.
- Navigate and log in to your Helcim account .
- Click on the dice menu located on the top left hand corner, scroll down and click My Business
- On the left hand side click on Chargebacks, then select the chargeback you want to respond to.
The chargeback table has multiple fields that provide brief context about the chargeback.
|New Case||New chargeback against the merchant. Has not been viewed.|
|Viewed||Chargeback has been viewed by the merchant.|
|Awaiting Response||Chargeback is waiting for a response from the merchant.|
|Accepted||Merchant accepted the chargeback.|
|Pending Submission||Evidence from the merchant has been sent and awaiting a verdict.|
|Declined||Issuing bank has declined the evidence and the merchant from further review. Merchant's funds are not credited back.|
|Reversed||Chargeback in favor of the merchant and funds are credited back.|
|Expired||Merchant did not respond to the chargeback in time. Merchant's funds are not credited back.|
|Lost||Chargeback has been closed and the merchant was not refunded.|
|Won||Chargeback won in favor of the merchant and they will be refunded.|
|Draft||Chargeback has a draft of submission of evidence from the merchant.|
The description field is based on Chargeback reason codes which can be found here depending on the card brand.
The type field gives context to what stage the chargeback is in.
|Retrieval||Also known as a copy request. The cardholder's bank is reaching out for specific information regarding the transaction i.e. receipts, invoices, description of services.|
|Chargeback||The dispute has officially been filed as a chargeback with the cardholder's bank and the funds have been returned to the cardholder. The merchant now has an allotted time period, within which they can submit a rebuttal to this dispute.|
|Pre-Notification||Helcim has received early notice of a chargeback dispute before it has officially been filed as a chargeback. Gives the merchant extra time to respond to the dispute and potentially prevent it from becoming a chargeback.|
|Arbitration||The initial case was ruled in favor of the merchant, but the cardholder is choosing to enter arbitration. The case will now go to a neutral party at the card brands who will make their own verdict.|
Date the chargeback was received.
The date by which you must respond if you are planning to dispute the chargeback.
The disputed amount.
After selecting the chargeback you want to respond to, you can proceed in two ways:
1. Dispute the chargeback
If you feel that the chargeback is unwarranted, you may dispute the chargeback by clicking Respond .
This will give you the opportunity to upload supporting documents that detail your side of the exchange.
If your customer says they did not receive the product, you can provide:
If the customer says the product is not as expected, you can provide:
- Communications between your business and the customer
- Product Description
If the customer does not recognize the charge or suspects fraud, you can provide:
- CC Authorization Form
If the customer is disputing your return policy, you can provide:
Signed Return Policy
If a signed return policy is not available, you can provide any written proof that the sale is final or non-refundable (e.g. receipts, communications with the customer, screenshots etc...)
To upload these supporting documents, click on the respective dropdown and fill out the information as well as attach any additional documents.
For example if you wanted to attach shipping information, click on the
Shipping Information dropdown and then fill out the fields as shown below.
Once you are finished, click
2. Accept the chargeback
If the chargeback is warranted, you can click
Accept Chargeback .
What happens next?
Whether you accepted or disputed the chargeback, that information will be passed to the issuing bank. At the first stage of a chargeback, the disputed amount is withdrawn from your bank account until a decision is made, in accordance with card brand rules.
If you accepted the chargeback:
In the case where you accepted the chargeback, a notification will be sent that you do not wish to dispute the charge and you accept that the money belongs to the cardholder.
If you responded to the chargeback:
In the case of a response, you will need to wait for the issuing bank to review the case. The process can take 2-3 weeks on average , but the issuing bank has up to 60 days to review each case.
We will pass your response to the cardholder's issuing bank. When a decision has been made as to who the dispute falls in favor of, the issuing bank will send us a notification which we will then pass onto you via email.
If the verdict is in your favor, the acquiring bank will let us know. Following this, we will change the status of the chargeback to "reversed ". We will then credit the disputed amount plus the $15 chargeback fee to your account. In addition, an email will be sent to you with information of the chargeback's verdict, as well as the amount of the credit and when to expect it.
If the verdict is towards the cardholder, you could be presented with two options - to accept the chargeback or, given the option, to enter arbitration. Arbitration is when a neutral party, the Card Brand, will review the case. To proceed with arbitration you will need to pay a fee of approximately $400 - $500 dollars which will be refunded to you if you win. If you lose arbitration, these funds will not be reimbursed . To proceed with arbitration, you will need to sign a "Pre-arbitration notification", which we will send you by email. This document states that you accept the costs and are willing to enter arbitration.
If arbitration is in your favor, the funds will be credited back into your account. However, the cardholder has the option to file for arbitration again. Below we have included a breakdown of the specific time frames in which customers may file for arbitration again. If they do not file for arbitration within these time frames, you have officially won the case and the returned funds from the original transaction plus the arbitration fees are yours to keep..
The time frames vary by card brand.
- Visa = 30 Days
- Mastercard = 45 Days
- Amex = 1 year
- Discover = 1 year
If the arbitration is towards the cardholder's favor, you will have to accept the chargeback. This means that money withdrawn from your account at the beginning of the process will not be refunded and you will not be refunded the arbitration fee.
There are cases where the process can take longer than 2-3 weeks, depending on the complexity of the chargeback. We are diligent in getting updates for you on these longer cases, but ultimately we can only act as a mediator and cannot expedite the process.