How to resolve a Stripe dispute

One of the most popular and important payment processors on the internet is Stripe, and what Stripe has done is revolutionised  the payment process online. Years ago if you wanted to sell online you had to apply to your bank for a merchant account and then go through a mountain of paperwork before you could accept payments.

Nowadays all you have to do to accept payments is sign up for a Stripe account and you can be taking payments in a matter of minutes, Stripe is very developer orientated which means that they provide a lot of documentation and eases the integration on your website.

But

What happens when someone lodges a dispute

Down to no reason of your own and sometimes unbeknownst to you a past customer could of lodged a dispute and the first you know of it, is when you login to your stripe dashboard and you see a blue dot on the screen beside disputes.

A dispute occurs when a customer initiates a chargeback with their bank or credit card issuer. However, a dispute can be overturned by the customer’s bank if they receive enough information showing that the chargeback isn’t justified.

When the bank or issuer finds the dispute in your favor, you are refunded the disputed amount that had been withdrawn, including the chargeback fee.

stripe dispute

 

Note that you cannot issue a refund once a charge is already disputed. If you believe that your customer was owed a refund that you did not provide, you can simply choose to not submit evidence which will guarantee that they get their money back.


What do you do next

This is what’s after happening, someone has gotten in contact with their bank and said that this charge on their account is wrong, some people are very quick to jump straight to their bank without ever contacting the vendor who in most cases would issue a refund and that’s the unfair part of the process. So now you have a dispute pending on your account.

All disputes fall into one of these categories:

  • Fraudulent: The owner of the card says that they didn’t authorize the charge. This is the most common reason for a dispute and can happen if the card was lost or stolen. It can also happen if the cardholder doesn’t recognize the charge as it appears on the billing statement from their bank.
  • Unrecognized: The customer doesn’t recognize the charge appearing on their card statement.
  • Product not received:The customer says they did not receive the products or services purchased.
  • Product unacceptable: The customer says they did not receive the products or services purchased.
  • Credit not processed:The customer says that the purchased product was returned or the transaction was otherwise canceled, but you have not yet refunded or credited the customer.
  • Duplicate:The customer says you charged their card multiple times for the same product or service.
  • Subscription canceled:The customer says that you continued to charge them after a subscription was canceled.
  • General: This is an uncategorized dispute. Since these are most commonly fraudulent, we recommend following the suggestion listed for that type.

Your next steps

For Fraudulent, Unrecognized

Get the cardholder to withdraw the dispute by helping them identify the charge or prove to the bank that their cardholder did authorize the transaction (this is the hardest type of dispute to win).
First, try to get in touch with the cardholder.

Sometimes people forget about charges they make.

It’s also possible that someone they authorized to use the card –  for instance, their spouse –  made the charge and they were unaware of it at the time.

If this is the case, ask them to let their bank know that they want to drop the dispute.

Getting the cardholder to close the dispute from their end is by far the best way for you to make sure a dispute is resolved in your favor.

If they agree to do this, you should still submit evidence for the dispute.

The evidence should include a statement that the cardholder said they would withdraw the dispute (including the email if you corresponded by email), as well as the suggested fields below.

If you believe the charge was actually made using a stolen credit card, unfortunately you will need to accept the dispute.

The credit card networks assign liability for accepting fraudulent online transactions to you, the business. However, if you believe the cardholder is mistaken or lying, you can attempt to prove this with the following information:

Required to overturn dispute: As with fraudulent disputes, get your customer to withdraw the dispute by helping them identify the charge.

 


Didn’t receive the product

First, get in touch with your customer. Understanding why they filed the dispute will be important for helping make sure your customer gets the product and will give you critical information to prevent this from happening to other customers.

If you are able to resolve the issue with your customer, getting your customer to close the dispute from their end is by far the best way for you to make sure a dispute is resolved in your favor.

Required to overturn dispute: Demonstrate that the customer received a physical product or offline service prior to the date the dispute was initiated, or made use of a digital product or online service prior to the date the dispute was initiated.

 


Product unacceptable

How to respond: First, get in touch with your customer. If you understand why they’re dissatisfied, there is a chance for you to explain the misunderstanding or to make it right.

If you’re able to resolve the issue with your customer, getting them to close the dispute from their end is by far the best way for you to make sure a dispute is resolved in your favor. If they agree to do this, you should still submit evidence for the dispute.

The evidence should include a statement that the cardholder said they would withdraw the dispute (including the email if you corresponded by email), as well as the evidence below.

If your customer made no attempt to return the product or cancel the service, or if you provided a replacement product or service, make sure to note that as well.

Required to overturn dispute: Demonstrate that the product or service was delivered as described at the time of purchase.

 


Credit not processed

Get in touch with your customer.

If you understand what their complaint is, there is a chance for you to explain the misunderstanding or to make it right.

If you’re able to resolve the issue with your customer, getting them to close the dispute from their end is by far the best way for you to make sure a dispute is resolved in your favor. If they agree to do this, you should still submit evidence for the dispute.

The evidence should include a statement that the cardholder said they would withdraw the dispute (including the email if you corresponded by email).

Required to overturn dispute: Demonstrate that you refunded your customer through other means or that your customer is not entitled to a refund.


Duplicate

Determine if your customer was incorrectly charged multiple times. If they were, you should accept the dispute, which you can do by not submitting evidence. It is not possible to issue a refund once a charge has already been disputed.

If there were two or more separate transactions, get in touch with your customer.

If you understand what their complaint is, there is a chance for you to explain the misunderstanding or to make it right. If you’re able to resolve the issue with your customer, getting them to close the dispute from their end is by far the best way for you to make sure a dispute is resolved in your favor.

If they agree to do this, you should still submit evidence for the dispute. The evidence should include a statement that the cardholder said they would withdraw the dispute (including the email if you corresponded by email).

Required to overturn dispute: Demonstrate that each charge was for a separate product or service.


Subscription canceled

First, get in touch with your customer.

If you understand what they believe happened, there is a chance for you to explain the misunderstanding or to make it right.

If you’re able to resolve the issue with your customer, getting them to close the dispute from their end is by far the best way for you to make sure a dispute is resolved in your favor. If they agree to do this, you should still submit evidence for the dispute.

The evidence should include a statement that the cardholder said they would withdraw the dispute (including the email if you corresponded by email), as well as the evidence below.

Required to overturn dispute: Demonstrate that the subscription was still active and that the customer was aware of, and did not follow, your cancellation procedure.


 

General

What it means: This is an uncategorized dispute. Since these are most commonly fraudulent, we recommend following the suggestion listed for that type.


Submitting Dispute Evidence

To help resolve disputes in your favor, submit evidence about the legitimacy of a charge to your customer’s bank or card issuer through Stripe. If you need help after reading this, check out our answers to common questions on the stripe website.

What evidence to provide depends upon the type of dispute. While it’s not required that you include every piece of information to submit your evidence, providing as much evidence as you can greatly improves your chances of overturning a dispute.

Using the Dashboard

You can manage disputes in the Dashboard and it’s the recommended route for most users. The Dashboard guides you through the submission process, step-by-step — automatically formatting the information you provide.

You’re asked to provide different pieces of evidence and upload any necessary files, depending on the dispute type. All this works to increase the likelihood of a dispute being found in your favor.


FAQ

I want to just give the customer a refund instead. Can I do that?

Unfortunately, once a dispute has arrived, there’s no way for you to refund the charge. Your customer has already gotten the amount of the dispute back from their bank, so if you agree with the decision to refund, you don’t need to take any action and your customer will keep their funds.

However, as mentioned above, some disputes are not full chargebacks, and can be refunded. Look at the dispute in the Dashboard to see if you can refund it. If you successfully refund a charge before the dispute escalates into a full chargeback, the dispute will be closed with status charge_refunded.

My customer said the dispute was a mistake. How do I get the dispute reversed?

If you’ve talked to your customer and they’ve agreed to drop the dispute, there are a couple next steps. First, have your customer call their bank and let them know. This is critical, since the bank won’t know your customer has dropped it unless your customer tells them.

Secondly, even though the customer has already agreed to withdraw the dispute through their bank, you must still submit evidence for the dispute.

Your evidence should indicate to the bank that your customer wishes to drop the dispute, and must include any email evidence you have where the customer may say that.

If your customer had specific complaints that led to the dispute, be sure to address those in the evidence.

Failing to provide evidence even though the customer agreed to drop the dispute could still result in you losing the dispute.

Once you’ve done those two things, we need to wait for the bank to let us know that the dispute has been closed in your favor. As soon as they do that, we will return the full amount of the charge and the associated €15.00 fee to you.

Do note that this process can take quite a while — it’s not unusual for a bank to take up to 60 days to notify us of their decision. As soon as we know that the dispute is closed in your favor we will send you an email.

Is there a fee for disputes?

Yes, you incur a €15.00 fee when there is a dispute on one of your transactions. If the dispute is resolved in your favor, however, we refund the fee.

How can I prevent disputes?

Disputed charges are an unfortunate fact of doing business, but you can do a few broad things to reduce your risk:

  • Regularly monitor your dispute rate using the fraud prevention metrics in the Dashboard, adjusting your fraud prevention strategy as needed.
  • Use a recognizable name for your card statement text. You can set this in your account settings. We recommend using your website’s domain name.
  • Have clear return and refund policies and make them easy to find on your website.
  • Avoid using the same Stripe account for separate businesses. Each Stripe account should represent a single business. Instead, create additional accounts for each business you operate so that the business information is accurately reflected.
  • Communicate accurate delivery times and keep customers updated throughout the process. If possible, use online tracking and delivery confirmation.
  • Post customer service contact information prominently and respond to customer inquiries quickly.

 

 

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