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Chargebacks are a necessary tool for protecting customers from losing their money due to fraudulent or unauthorized transactions, but they can be really damaging for businesses. Luckily, there are some steps that you can take to increase your chances for winning a chargeback dispute – and we will explain them in this article.

What is a chargeback?

Before we dive deep into the topic, it is important to ensure that the concept of chargebacks is clear.

A chargeback is a form of customer protection that enables customers to file a dispute against the merchant as a result from not recognizing a transaction on their statement. If the cardholder chooses to file a dispute due to concerns for fraudulent transactions, the issuing bank will investigate the case to determine its legitimacy before making the final conclusion.

As a seller, if a customer decides to file a dispute against you, it will be in your hands to provide enough evidence for proving that the transaction was legitimate. If the issuing bank is not convinced by your evidence and concludes that the transaction was indeed fraudulent, the amount of the purchase will be taken from your account and given back to the customer (and you will probably have to pay an additional fee of up to $100 or more, depending on the bank).

From customer protection to Friendly Fraud

The first mechanism for credit card chargebacks appeared around 1968 with the implementation of the Truth in Lending Act. It was created with the purpose of protecting cardholders from criminals or unscrupulous merchants who took advantage of them to get hold on their money without delivering the promised goods or services. In other words, it was a mechanism that ensured that the cardholder´s money was safe.

However, despite the initially good intentions, not much time passed before chargebacks evolved into something entirely different: the so-called Friendly Fraud.

This type of fraud, which is anything but friendly, happens when a customer makes a purchase, consumes the product/service, and then disputes the transaction with the bank instead of asking for refund from the merchant. In this cases, users file an illegitimate chargeback dispute, claiming that the item was not delivered, the original transaction was not authorized, or the item did not arrive as described.

It is important to understand that not all customers that file illegitimate disputes have malicious intentions. Sometimes, the cardholder simply didn’t understand the payment process, the product, or the purchase was made by a family member without letting him know about it. In other cases, the return policy wasn’t easily accessible or was impossible to understand, frustrating him to such an extent that he chose to file a chargeback instead. to According to Chargebacks911, however, about 30% of all disputes are fraudulent or from users with malicious intentions.

how to win a chargeback dispute as a seller


Whether the chargeback dispute was legitimate or not, having a high volume of chargebacks can be really damaging for your business. In fact, if chargebacks account for over 1% of your total transactions, you could be classified as a high risk business by the payment processors, incurring in high costs, high fees, and other damaging consequences such as being put on a MATCH list (Member Alert To Control High-risk Merchants).

How to increase your chances of winning a chargeback dispute as a merchant

Considering that this mechanism was created for customer protection, winning a chargeback dispute can be a really challenging and exhausting task for businesses.

For this reason, merchants should do everything possible to reduce the risk for getting disputes; by improving customer service, using fraud detection tools, and implementing a secure Payment Gateway to ensure that they have full control over their payment logic.

Chargeback disputes will happen, and as a merchant, you will lose some of them; this is completely normal for online businesses. However, this doesn’t mean that you should not take action – in fact, in 50% of the successfully executed cases of Friendly Fraud, customers will file another illegitimate chargeback within the next 90 days. Among with the consequences that come with high chargeback volumes, this is just another reason why you should defend your rights as a seller.

These are our tips for increasing your chances of winning a chargeback dispute:

1. Maintain accurate records and gather compelling evidence

Disputes are usually much less favorable for merchants than they are for customers. In this situation, it will be in your hands to provide enough solid evidence to prove that the transaction was legitimate.

For this reason, it is extremely important to maintain accurate and detailed records from the very beginning. Carefully documented transactions are crucial for winning a chargeback dispute – confirmation emails, automated invoices, and follow-up emails with the relevant tracking details once the purchase was processed are a must for maintaining a compelling record to present during the dispute. Upon delivery, always ask for signature – if the seller isn’t able to prove that the item was shipped, he is much less likely to win the dispute.

Other evidence that might be favorable for winning a dispute includes any communication (email, phone, etc.) between you and the customer concerning the transaction, the customer’s IP address and download time and date (if the service is digital), and proof that the customer lives or works at the delivery address, among others.

2. Check the reason code

When a new chargeback has been filed against you, the first thing you need to do is check the reason code. Reason codes provide you with valuable details on the reason why the customer decided to file a dispute in the first place. It is important to know that each card network (MasterCard, VISA, Discover, AMEX, etc.) has developed its own reason code system, that’s why you need to check carefully the card that was used for the transaction.

A lot of times the reason code will not actually provide accurate details on the true motif behind a chargeback, but the dispute will be based on it – therefore, as a merchant, you need to be familiar with the reason code in order to argue effectively against it.

To prepare for winning a dispute, make sure to check the reason code system of the corresponding card issuer, and study carefully the one that correlates with the disputed transaction. 

3. Resolve issues through customer service

Proactive customer service can go a long way towards resolving and preventing disputes from clients. Usually, chargebacks are initiated by a frustrated user who was unable to easily recover funds from the company’s customer service department. By providing clear contact information details and making refund policies available to customers, you can significantly reduce your chargeback volume. Instead, clients will be more encouraged to resolve their issue directly with you instead of having to go to the credit card issuer.

When a chargeback has been filed against you, you will usually have about 7 to 10 days to accept it or fight it through the card issuer’s channels. During this period of time, you can contact the customer directly and work with him on resolving the problem efficiently. If satisfied, he will most probably undo the chargeback by contacting the corresponding card issuer.

If the customer’s problem is legitimate, it is always better to issue a refund instead of fighting the chargeback. However, if you still consider that his reasons were not valid, you might have to go to a dispute process.

4. React quickly

Once the dispute has been filed, you will have a very limited time to gather your evidence and prepare a winning response. Take note of all applicable deadlines, format your documentation properly according to the requirements, study carefully the reason code, and prepare a chargeback rebuttal letter to accompany your evidence. It might be helpful to prepare a response template with all the general information ahead of time, and just fill in with specific-case evidence when a chargeback happens.


Chargebacks can cause such a serious damage to businesses that simply having a high volume of chargebacks can lead to the termination of your merchant account. For this reason, winning a dispute is important, but preventing disputes from happening in the first place is even more important.

This said, it is your responsibility to take the necessary measures for ensuring excellent and attentive customer service, high-quality products, and making refund policies easily available for customers. And when some of the disputes that you get are illegitimate, follow our 4 steps to increase your chances of winning a chargeback process as a merchant.