Chargebacks: Why They Happen and How to Prevent Them

Chargebacks: Why They Happen and How to Prevent Them

Online fraud has become a real threat to many consumers, especially those who pay for goods and services using credit cards. That is why there has been a sudden upsurge in the number of complaints among cardholders concerning wrong charges from merchants. Online traders must consider chargeback protection to minimize any losses associated with such happenings. Additionally, as a merchant, you need to understand the causes of chargebacks and how you can prevent them.

Why Do Chargebacks Happen?

There are several reasons why this reversal occurs, which is why you need to work closely with a chargeback company to ensure you get refunded. These reasons include:


In this scenario, a consumer may dispute transactions on their credit cards that they did not authorize. Additionally, fraud occurs when a counterfeit or expired credit card number is used to make purchases. 

Consumer Dissatisfaction

A customer may raise a dispute if they are not satisfied with what was delivered. For instance, when the items delivered are defective, damaged, or not as described. 

Merchant Errors

Errors, such as authorization and processing mistakes, can be a cause of dispute with the consumer. This includes incorrect transaction billing and a lack of valid authorization.


This happens when a buyer cancels an order or returns the purchased items, but the merchant does not correctly process the credit.

Chargebacks: Why They Happen and How to Prevent Them

Preventing Chargebacks

Despite the above causes, there are a few processes and practices you can follow as a merchant to minimize or even eradicate cases of chargebacks. These include:

Develop a Clear Return Policy

Your customers should understand what options they have concerning returning and cancellation of orders. Make them feel free to contact you first before initiating the return process. You can make your return policy clear by:

  • Adding a return FAQ section
  • Automating the return process
  • Give your customers more ways to reach you
  • Consider free return shipping

Detailed Product Reviews

Your customers have varying needs and preferences when it comes to purchasing different items from your online store. Creating detailed product descriptions gives them a chance to buy what suits their needs better. 

Use Shipping Insurance and Confirmation

Fraud is a leading chargeback cause, which includes false claims of undelivered products. In this case, having shipping insurance and confirmation allows you to track the shipment. You also get a way to prove that the order was delivered to the consumer who made it. 

Accurate and Prompt Order Fulfillment

This is a sturdy chargeback prevention technique that can save you substantial amounts as a merchant. As mentioned above, customer dissatisfaction resulting from damaged, defective, or late deliveries is a common cause of chargeback. Adhering to timelines, educating your team, using adequate supplies, and monitoring your inventory are some of the best ways to reduce late or missed deliveries and ensure consumer satisfaction. 

Outstanding Customer Care

It is advisable to promptly and accurately respond to any complaints from your clients. This includes being active on social media, quick email responses, and fast phone answering. 

Running a business can be your way to financial freedom, but it can also be your downfall if you don’t do it correctly. Chargebacks have become prominent, which is why you should understand what causes them and the prevention measures, as explained above.

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