If you decide to accept credit cards in your store, then it's likely you need to deal with chargebacks or inquiries.

When a cardholder has an issue with a charge on their credit card, they can contact their bank to dispute it. The bank then makes a chargeback or inquiry.

The cardholder can be one of your customers or someone who believes their card was used in your business without their permission.

If the cardholder's bank makes a chargeback, then the bank takes the disputed amount from you right away. The cardholder's bank also takes a chargeback fee from you. If the cardholder's bank makes an inquiry, then they don't take the disputed amount or a fee right away.

You can try to resolve the chargeback or inquiry in a few ways:

Chargeback process

This is the typical process for a chargeback:

1. The cardholder disputes a credit card charge with their bank

2. The cardholder's bank sends a chargeback request to the credit card company and takes the disputed amount and a chargeback fee from you

3. The credit card company asks you for evidence that the charge was valid

4. You and ChatFood gather evidence to figure out whether the charge was valid or not

5. ChatFood sends a response to the credit card company

6. The credit card company reviews the evidence; it can take up to 75 days after the response is submitted

7. The credit card company resolves the chargeback.

  • If you win the chargeback, then the cardholder's bank returns the disputed amount to you, and you only pay the chargeback fee.
  • If the chargeback is a partial win, then the cardholder's bank returns some of the disputed amounts to you and you pay the chargeback fee.
  • If the cardholder wins the chargeback, then the disputed amount, you pay the chargeback fee.

⚠️ ChatFood is not liable for chargebacks that occurred when using ChatFood Payments. ChatFood is not involved in the decision making of chargeback outcomes.

If you're using ChatFood Payments, and you're issued a chargeback, then the amount is deducted from your next available payout.

If you're using ChatFood Payments, and your payout doesn't have enough funds for a return, the remainder of the refund is deducted from the next payout until the refunded amount is covered.

Chargeback fee

When a bank sends you a chargeback, they will also charge you a processing fee of USD 25.

Inquiry process

This is the typical process for an inquiry:

1. The cardholder disputes a charge with their bank

2. The cardholder's bank sends an inquiry request to the credit card company. The credit card company does not take the disputed amount from you

3. The credit card company asks you for evidence that the charge was valid

4. You and ChatFood gather evidence to figure out whether the charge was valid or not

5. ChatFood sends a response to the credit card company

6. The credit card company reviews the evidence; it can take up to 120 days after the transaction is made

7. The credit card company resolves the inquiry.

If the inquiry is closed in your favor, then the disputed amount is returned to you. If the cardholder wins, then the credit card company takes the disputed amount and a fee from you.

Resolve a chargeback or inquiry

You can help to resolve a chargeback or inquiry in the following ways:

Contact the customer

You can talk to the customer who made the order by phone or email to see if you can resolve the issue. If the customer agrees that the chargeback isn't necessary, they must contact their bank and ask them to drop the chargeback. You should also submit evidence that shows that the customer agreed to drop the chargeback.

Add additional evidence

After the cardholder's bank makes a chargeback or inquiry, you have a limited time to submit evidence that the charge was valid. The amount of time that you have to submit evidence depends on the credit card company and the reason for the chargeback. Check with the credit card company to find out the chargeback time limit.

The type of evidence you should submit depends on the reason that the cardholder asked for a chargeback or inquiry.

Keep your evidence relevant and to the point. Consider including proof of customer authorization, service provided, or item delivery. You can also add your terms of service and refund policy. If you are adding any documents or images, then make sure you have formatted them clearly so that they can be viewed without zooming or cropping.

If you use ChatFood Payments, then ChatFood collects evidence from you and sends a response to the credit card company for you before the due date. You can send such evidence to the response before the due date by email to finance@chatfood.io. The due date is 5 days after the chargeback or inquiry is filed.

Accept the chargeback or inquiry

If you think that a chargeback is justified, you can accept it by not submitting any evidence. The disputed amount is returned to the customer, and you aren't refunded for the chargeback fee.

Issue a refund to end an inquiry

If you think the reason behind an inquiry is justified, you can issue a full refund for the order to end the inquiry. If you issue a partial refund, then a full chargeback can still occur. If you issue a full refund, then the cardholder won’t be able to initiate a chargeback.

Reasons for a chargeback or inquiry

The type of evidence you should send to the credit card company to resolve a chargeback or inquiry depends on the reason the customer gave for the chargeback or inquiry. A customer might dispute a charge for one of the following reasons:

  • Fraudulent
  • Unrecognized
  • Duplicate
  • Product not received
  • Product unacceptable
  • Credit not processed
  • General

Fraudulent

The chargeback is marked as Fraudulent if the cardholder didn’t authorize the charge. This is the most common reason for a chargeback and can happen if the card was stolen.

To deal with a fraudulent charge, you can try to contact the customer who placed the order. The customer might have forgotten about the purchase, or the purchase might have been made by a spouse, friend, or family member. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback. You should still submit evidence to the credit card company, including the statement where the customer said they would drop the charge.

If you think that the customer is mistaken or not telling the truth, then you should submit the following evidence to the credit card company:

  • the date and time that the order was fulfilled
  • the billing information that the customer used
  • the IP address and country used for the order
  • shipping and tracking information for the order.

We suggest you examine all of your orders before they are fulfilled and completed.

By reviewing high-risk orders, you can avoid potential chargebacks.

Fulfilling high-risk orders can result in a higher number of chargebacks.

If you receive a high number of chargebacks then payment processing will be disabled and you might be removed from ChatFood Payments.

Credit card companies can reverse funds for stolen cards after orders are fulfilled. However, the decision to reverse funds is made by the bank that issued the credit card, not by ChatFood. ChatFood does not cover charge reversals from banks.

Unrecognized

The chargeback is marked as Unrecognized if the customer doesn’t recognize the merchant name or location on their credit card statement.

To deal with an unrecognized charge, you should try to contact the customer. Sometimes the customer might have forgotten about the purchase, or the purchase might have been made by a spouse, friend, or family member. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback.

You should still submit evidence to the credit card company, including the statement where the customer said they would drop the charge. You could include some of the following pieces of evidence:

  • the date and time that you fulfilled the order
  • the billing information that the customer used
  • the IP address and country used for the order
  • shipping and tracking information for the order.

Duplicate

The chargeback is marked as Duplicate if the customer believes that you charged them twice for the same product or service.

If you didn't charge your customer twice, then you should try to get in touch with them. You can show them that the two charges were for separate products or services. If the customer agrees that the charge was justified, then you should tell them to contact their bank and say that they want to drop the chargeback.

If the customer does not drop the chargeback or inquiry after you talk to them, then you need to submit evidence that the two charges were for separate products or services. You could include some of the following pieces of evidence:

  • an explanation of the reason for the two charges
  • receipts that show that the two charges were for different products or services
  • any communication with the customer where you let them know about the two charges.

If you did charge your customer twice for the same product or service, then you have to accept the chargeback.

Product not received

The chargeback is marked as Product not received if the customer believes that they did not receive the goods or services they purchased.

You should try to get in touch with the customer first to figure out the problem. If you can resolve the problem with your customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also include evidence that the customer agreed to drop the chargeback in the response you send to the credit card company.

If you can't resolve the issue with your customer, then you should submit evidence to the credit card company that proves that the customer received the product or service before the chargeback was made. You could include some of the following pieces of evidence:

  • the date and time that you fulfilled the order
  • the billing information that the customer used
  • shipping and tracking information for the order
  • if the product or service was digital, an activity log shows that the customer accessed the product or service.

Product unacceptable

The chargeback is marked as Product unacceptable if the customer feels that the product was received but was defective, damaged, or not as described.

Start by trying to get in touch with the customer. If you can resolve the problem with the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence to the credit card company that the customer agreed to drop the charge. If the customer didn't try to return the product or cancel the service before the chargeback was made, or if you provided the customer with a replacement product or service, send evidence of that as well.

Whether you resolve the issue with the customer or not, you should still send any relevant evidence to the credit card company. You could include some of the following pieces of evidence:

  • the date and time that you fulfilled the order
  • the billing information that the customer used
  • shipping and tracking information for the order
  • descriptions or pictures of the products from your store that prove that they were as described.

Credit not processed

The chargeback is marked as Credit not processed if the customer informed you that the purchased product was returned or that the transaction with you was canceled, but you have not yet refunded or credited the customer.

Start by trying to get in touch with the customer. You can't issue a refund after a chargeback has been made, but you might be able to explain the situation or figure out another way to solve the problem. If the customer asked for an inquiry, then you can issue a refund. If you can resolve the problem with the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback or inquiry. You should also send evidence to the credit card company that the customer agreed to drop the chargeback.

If you can't resolve the issue, and you think that the chargeback is not valid, then you should send evidence to the credit card company that you either gave the customer a refund before the chargeback or inquiry was made, or that the customer was not entitled to a refund. You could include some of the following pieces of evidence:

  • your refund and return policies
  • an explanation of when and where the customer was shown the refund policy
  • any emails or notifications you sent to the customer about the refund
  • an explanation of why the customer was not entitled to a refund.

General

A chargeback is marked as General if it doesn't fit into one of the other categories.

To resolve a general chargeback, you should start by trying to contact the customer so you can figure out what the problem is. If you can solve the problem for the customer, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence to the credit card company that the customer agreed to drop the charge.

If the customer doesn't want to drop the chargeback, then you should send evidence to the credit card company that the charge was valid. You could include some of the following pieces of evidence:

  • details about the products that were ordered
  • the date and time that the order was fulfilled
  • the customer's billing information
  • the customer's IP address and country
  • emails or other communication you had with the customer
  • USPS/FedEx/UPS or other online tracking or shipping confirmations
  • proof of prior refunds or replacement shipments.

If you need more help, send us a message!

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