Fraud and chargeback guidelines for merchants
Overview of card payment chargebacks, common dispute reasons, fraud prevention steps, and internal response procedures for handling chargebacks.
Understanding chargebacks
A chargeback occurs when a credit card transaction is reversed and deducted from our bank account. The chargeback process begins when a credit card holder disputes a charge posted to their credit card statement. The cardholder must communicate the dispute to their bank (issuer) within 120 days, and the issuer files the complaint with our bank (acquirer).
The process is governed by Visa, MasterCard, Discover, and American Express. Upon receipt of the chargeback request, our bank (acquirer) will prepare a retrieval request on our behalf.
Managing chargeback disputes
To manage chargeback disputes, you need access to the Commerce Control Center.
If you do not already have access to the Commerce Control Center, you may submit a request for access or contact merchant_support@ur.rochester.edu
.
Frequently asked questions
A chargeback occurs when a cardholder disputes a charge with their bank or card issuer, and the funds from that transaction are returned to the cardholder. This can happen for several reasons, including an unrecognized charge, a service or product not received, a duplicate transaction, or suspected fraud.
Excessive chargebacks can result in financial losses, additional fees, and potential suspension of a merchant’s ability to accept payment cards. Promptly monitoring and responding to disputes is essential to protecting your department’s merchant account.
A refund is voluntarily issued by the merchant to the customer. A chargeback is involuntary, initiated by the cardholder through their bank, and often incurs fees for the merchant.
- Fraud: The card was used without authorization (stolen card).
- Item Not Received: Customer claims they never received the product.
- Defective/Not as Described: The product or service did not meet expectations.
- Duplicate Processing: The customer was charged multiple times for one purchase.
- Unrecognized Charge: The billing descriptor is unclear
- Initiation: The cardholder disputes the charge with their bank.
- Provisional Credit: The bank investigates and often credits the cardholder immediately.
- Notification: The merchant is notified, and funds are deducted from their account.
- Dispute/Representment: The merchant submits evidence to challenge the chargeback.
- Final Decision: The bank reviews the evidence and decides in favor of the merchant or customer.
The entire process can take months. Merchants typically have a short window (10–30 days) to respond, but the final investigation can take up to 12 weeks or longer.
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