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Respond to a chargeback

by Intuit• Updated 1 week ago

Learn what a chargeback is and what to do if you get one.

A chargeback is when a transaction you processed gets disputed and the money goes back to the payer. In other words, the sale is "charged back" to you.

Chargebacks can happen for a variety of reasons. They may be the result of a mistake, fraud, or an unhappy customer. If you don't handle them properly, they can cost you time and money. Here’s what to do if you get a chargeback for a payment you processed with QuickBooks Payments.

Important: If you get a chargeback, don't give the customer a direct refund yourself, such as a cheque or cash. Follow these instructions instead.



Prerequisites

When you get a chargeback email, it’s because a customer disputed a charge. QuickBooks was then unable to match the disputed charge to a recorded credit on your account back to your customer. The financial institution charges us for a refund to the customer.

We then charge your account for the cost of the refund. We also include a $25 fee to cover related costs. This occurs automatically, as stated in the QuickBooks Online Terms of Service.

Note: If an international chargeback is valid, the chargeback amount will be based on the most current CAD exchange rate on the day the final decision is made.



What to do when you get a chargeback

We'll email you instructions and deadlines if you get a chargeback notice. These include the case number, transaction details, why the charge was disputed, and how to challenge the dispute. Follow the instructions in the email.

If you didn’t miss the initial retrieval request deadline, you can contest the charge. This is called a rebuttal. You’ll have up to the date provided in the email to send a rebuttal. 

If you want to rebut the chargeback, you’ll need to reply with an explanation and documents that respond to the reason for the cardholder’s dispute. Get corroborating documentation in PDF form to answer the customer’s claims. Useful examples include:

  • If they claim not to have gotten the product or service: proof of delivery or a signed pick-up form.
  • If they claim products or services were wrong or defective: Proof the merchandise or services matched the description, that the cardholder didn't attempt to return the merchandise, or of ongoing negotiations between you and them. You may also want a supporting opinion from a third-party expert.
  • If they claim suspicious activity or an unauthorized charge: A copy of the signed receipt (if applicable) and compelling evidence (like photographs or emails), to show they made the purchase and got the product or service.
  • If they claim a duplicate transaction: proof of both transactions, such as multiple receipts.
  • If you issued a refund outside of QuickBooks Payments: proof of that payment.
  • If you already issued a refund before the chargeback was posted to your account: Send a copy of the credit issued to the card or proof that a refund was given, such as the front and back copy of the cashed refund cheque.

Note: Financial institutions set page limits for your response.

  • Mastercard’s limit is 15 pages.  
  • Visa’s limit is 21 pages. 
  • Discover’s limit is 2 pages. 
  • American Express’ limit is 50 pages.

Once we get your documents, we’ll check that they meet your financial institution’s requirements. This can take up to 2 to 5 business days. If everything is in order, we’ll send it to your financial institution.



Before or during the rebuttal, you can try to fix your customer’s issues. If so, keep records of each interaction. 

If they feel you’ve resolved the situation:

  1. Ask them to write you a letter stating that, and include it with your other documents. 
  2. Ask them to contact their financial institution and cancel the chargeback.
  3. Request a copy of the letter of retraction their bank provides. It should be on the bank’s letterhead and state the dispute has been dropped or resolved in the merchant’s favour. 
  4. Contact our support team. They’ll help you add the letter to your supporting documentation.

There are some cases when you can't challenge a chargeback. These are called no recourse cases. Here are some common causes:

  • If the charge happened after a customer asked you to stop billing their credit card, any future charges are charged back with no rebuttal.
  • If the customer’s card was declined at time of sale but you forced the sale through anyway.
  • Undelivered goods or services your customer never got, including if they were returned to you. This could be because the shipper had problems, or the cardholder refused the delivery.
  • The merchandise was defective or not as described.
  • The sale wasn’t properly authorized:
    • The cardholder claims they didn’t authorize the transaction.
    • The issuing bank certifies the customer's info doesn't match the cardholder's info. This includes the name, bill-to or ship-to address, phone number, email address, or IP address.
    • The ship-to address differs from the bill-to address. This is often the case if the product is sent overseas.
    • Multiple cards were used to split a transaction into smaller amounts.
    • Funds were wired to pay for shipping costs.
  • No proof of proper disclosure:
    • The cardholder didn't sign or initial near your business’s return or cancellation policy to show they have read and agreed to the policy.

A retail merchant must have the policy printed on the sales draft below the signature line and be at least 1/4 inch in size. An online store must put their rules on their website and have the cardholder agree to the rules during the checkout process.
Important: A link to the terms and conditions that takes the cardholder away from the sequence of website pages to checkout isn't considered a proper disclosure.

An authorization code doesn’t always prevent a chargeback, because a customer can dispute a transaction for any reason. An authorization code only checks that the card is in good standing, hasn't been lost or stolen when the sale was made, and has enough money.

You may also get a chargeback if the full card number turns out to be invalid. For some transactions, especially smaller ones, the system only checks the first six digits of a card (which identifies the bank) at the time of the sale, and provides authorization on behalf of the card issuer.

Your best option is to get the cardholder's signature. Have them sign your cancellation or return policy on all orders. It's also very important to manage the customer’s expectations up front. Document your efforts and work with your customers to resolve issues.

Disclaimer: QuickBooks Payments account subject to eligibility criteria, credit and application approval. Money movement services are provided by Intuit Payments Inc., licensed as a Money Transmitter by the New York State Department of Financial Services.

Next steps

The card issuer can take up to 50 days to decide based on the information you and your customer give them. 

We'll email you the results of the decision. 

  • If the issuing bank decides you can't dispute the chargeback, you’ll receive a no-recourse notice that explains why.
  • If the issuing bank decides in your favour, you’ll be refunded the debit. If the customer wants to dispute the charge again, they can start the pre-arbitration process, usually within 120 days from the date of expected delivery of products or services. 

If the case goes to arbitration, it’ll take more time for it to be reviewed and processed.

Note: If you are looking for additional chargeback protection, sign up for Payments Dispute Protection.

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