Chargebacks and inquiries

If you accept credit cards on your store, then you'll have to deal with chargebacks or inquiries. When a customer has an issue with a charge on their credit card, they can contact their bank and dispute the charge. The bank will then make a chargeback or inquiry. A customer might dispute a charge for a variety of reason. For example, they might not remember making a purchase, or they might feel that the product they got was not what they expected.

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

You can try to resolve the chargeback or inquiry in a few ways. The customer's bank will review any evidence and close the chargeback in either your favor or the customer's favor. If you win the chargeback, then you get the disputed amount back, and Shopify will refund the chargeback fee. If the customer wins the chargeback, then the disputed amount is returned to the customer.

Chargeback process

This is the typical process for a chargeback:

  1. The customer disputes a charge with their bank.
  2. The customer's bank makes a chargeback, and takes the disputed amount and the chargeback fee from you.
  3. You and Shopify gather evidence to figure out whether the charge was valid.
  4. Your payment provider sends a response to the customer's bank.
  5. The bank reviews the evidence.
  6. Within 60 days, the bank resolves the chargeback.

If you win the chargeback, then the customer's bank will return the disputed amount to you, and Shopify will refund you the chargeback fee. If the chargeback is a partial win, then the customer's bank will return some of the disputed amount to you, and Shopify will still refund you the chargeback fee. If the customer wins the chargeback, then the disputed amount and the fee won't be returned to you.

Chargeback fee

When a bank sends you a chargeback, they'll also charge you a processing fee. The fee is 15 USD in the United States, 15 CAD in Canada, 10 GBP in the UK, 25 AUD in Australia, and 15 EUR in Ireland. If the chargeback is resolved in your favor, then Shopify will refund this fee.

Inquiry process

This is the typical process for an inquiry:

  1. The customer disputes a charge with their bank.
  2. The customer's bank makes an inquiry and sets a due date. The bank does not take the disputed amount from you.
  3. You and Shopify gather evidence to figure out whether the charge was valid.
  4. Your payment provider sends a response to the customer's bank.
  5. The bank reviews the evidence.
  6. Within 60 days, the bank resolves the inquiry.

If you the inquiry is closed in your favor, then the disputed amount will be returned to you. If the customer wins, then the customer's bank will take 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 by phone or email to see if you can resolve the issue. If the customer agrees that the chargeback isn't necessary, then the customer must contact their bank and ask them to drop the chargeback. You should also send evidence to the customer's bank that shows that the customer agreed to drop the chargeback.

Add additional evidence

After the customer's bank makes a chargeback or inquiry, you'll have time to submit evidence that the charge was valid. The type of evidence you should submit depends on the reason that the customer asked for a chargeback or inquiry.

If you use Shopify Payments, then Shopify collects evidence and sends a response to the customer's bank for you on the due date. You can add additional evidence to the response before the due date. Due dates are usually 10 days after the chargeback or inquiry is filed.

If you're using a third-pary payment provider, then you should contact your provider to find out how to send evidence to the customer's bank.

Accept the chargeback or inquiry

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

If you think that the reason behind an inquiry is justified, then you can issue a refund for the order to end the inquiry.

Reasons for a chargeback or inquiry

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

Fraudulent

The chargeback will be marked as Fraudulent if customer 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. 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 customer's bank, including the statement where the customer said they would drop the charge.

If you think that the cardholder is mistaken or not telling the truth, then you should submit the following evidence to the customer's bank:

  • 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.

Unrecognized

The chargeback will be marked as Unrecognized if the customer doesn’t recognize the merchant name or location on the 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 customer's bank, including the statement where the customer said they would drop the charge. You could include evidence such as:

  • 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 will be 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'll need to submit evidence that the two charges were for separate products or services. This evidence could include:

  • an explanation of the reason for the two charges
  • receipts that shows 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'll have to accept the chargeback.

Subscription canceled

The chargeback will be marked as Subscription canceled if the customer believes that you charged them for a subscription after it should have been canceled. It can also mean that the customer expected a reminder before each recurring charge but didn’t receive one.

To resolve the chargeback, you should get in touch with your customer. It's possible that you can explain the misunderstanding, or come to an agreement with the customer. If you come to an agreement, then you should tell the customer to contact their bank and say that they want to drop the chargeback. You should also send evidence of this conversation to the customer's bank.

If you think the customer didn't cancel the subscription before the charge, you should submit evidence to the customer's bank that proves that the customer canceled their subscription after the last charge. This evidence could include:

  • your subscription cancellation policy
  • any emails or notifications sent to the customer about their cancellation
  • an explanation of when and where the customer was shown the cancellation policy
  • if the product or service was digital, an activity log that shows that the customer accessed the product or service after the date when they said they canceled their subscription.

If you did charge your customer after they canceled their subscription, then you'll have to accept the chargeback.

Product not received

The chargeback will be 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 customer's bank.

If you can't resolve the issue with your customer, you should submit evidence to the customer's bank that proves that the customer received the product or service before the chargeback was made. This evidence could include:

  • 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 that shows that the customer accessed the product or service.

Product unacceptable

The chargeback will be 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 customer's bank 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 customer's bank. This evidence could include:

  • 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 will be 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 customer's bank 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 customer's bank 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. This evidence could include:

  • 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 above 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 customer's bank 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 customer's bank that the charge was valid. This evidence could include:

  • 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.

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