Occasionally a business has to deal with the unexpected notice of a credit card dispute from a customer. A cardholder dispute can come with any number of reasons. Sometimes they are legitimate and other times they are not. It is up to the business to defend itself against the dispute and prove that there is a valid reason for charging the customer’s card. It should be noted that there are times a credit card dispute cannot be successfully resolved in favor of the business.
A cardholder dispute begins with what is known as a chargeback. The reason for initiating a chargeback can be as simple as the business name on the credit card bill not matching a receipt or the customer’s memory of where he shopped. You can ask the merchant provider that the name used on the bill match your business name to prevent this from happening in the future. Another possible issue is the customer claims he did not receive their goods, or did not get what was ordered. Keep meticulous delivery documentation on hand for shipped items. Doing so saves you money in the case of a cardholder dispute.
When a cardholder initiates a dispute, the card issuer takes action regardless if it feels the reason is valid or not. Normally, credit card companies prefer that a customer and a business work the issue out together but, if resolution is not satisfactory, the dispute is initiated. Keep in mind that the card company is going to investigate the issue for the customer no matter how spotless your merchant account record may be.
The issuing bank informs the merchant of the chargeback via a retrieval request. There may or may not be an actual chargeback of the monies at the time of the request. A retrieval request contains the amount, the customer, some of the card information and the reason for the dispute. You are given the opportunity to investigate the matter and provide proof that your business performed as expected. Sometimes simply presenting a signed receipt with an explanation is enough to settle the credit card dispute in your favor. Other types of disputes may require shipping receipts, transaction pages and more.
Sometimes the business loses the cardholder dispute and is out the money and the merchandise. The only way to avoid this is to be as thorough as possible with records and accept that a loss can happen.
Be aware that accepting credit cards means that a credit card dispute can happen. A cardholder dispute can happen even with excellent customer service. Back up your side with solid record keeping in order to retain your funds.