Question 1

What are the most common merchant error chargebacks?

Accepted Answer

The most frequent merchant error chargebacks stem from duplicate charges, unclear billing descriptors, late or failed delivery, and processing refunds incorrectly or too slowly. Subscription billing issues are also common, particularly when merchants fail to send renewal reminders or make cancellation difficult. Poor customer service ties these together: when customers can't reach you to resolve a problem, they call their bank instead.

Question 2

Can all chargebacks be avoided?

Accepted Answer

Some chargebacks, such as those caused by merchant error, can be prevented by adhering to best practices. Friendly fraud chargebacks, however, are post-transactional, meaning there&acirc;s no way to anticipate them beforehand. That makes it critical for merchants to combat charges from both sides, preventing as many as possible while actively representing any that are filed.

Question 3

Will providing better customer service help with chargebacks?

Accepted Answer

It will help, and it&acirc;s certainly a good place to start. However, while customers are required to contact the merchant before taking action with the bank, research shows that only 14% of cardholders actually do. Even the best customer service can&acirc;t help if you&acirc;re not even aware of the problem until after the chargeback is filed. Again, a two-pronged approach is the most effective strategy.

Question 4

Do I need to tighten my fraud filters?

Accepted Answer

It probably won&acirc;t help as much as you think. It&acirc;s easy to assume criminal fraud is the greatest risk, but overly-stringent fraud filter rules will dramatically increase the number of false positives. The value of these missed sales can be twice as great as the value of actual criminal fraud.

Question 5

What reason codes indicate merchant error?

Accepted Answer

Several reason codes point directly to merchant error. For duplicate charges, look for Visa reason code 12.6.1 or Mastercard reason code 4834. Incorrect transaction amounts fall under Visa 12.4 or Mastercard 4834. Non-receipt of goods triggers Visa 13.1 or Mastercard 4853, while late presentment (submitting a transaction too long after authorization) uses Visa code 11.3 or Mastercard code 4834.

Question 6

How do I know if a chargeback is merchant error or friendly fraud?

Accepted Answer

Review the transaction details carefully. If you find evidence of a genuine mistake on your end, such as a duplicate charge in your records, a confirmed shipping delay, or a refund that never posted, it's likely merchant error. If your records show the transaction was processed correctly and the order was delivered as promised, you're probably dealing with friendly fraud and should consider representment.

Question 7

Can I prevent duplicate charge chargebacks?

Accepted Answer

Yes. Implement checkout controls that disable the "Pay" button after the first click to prevent accidental double submissions. Configure your payment gateway to reject duplicate authorization attempts within a short time window. Regularly audit your transaction logs for duplicate charges and refund them proactively before the customer notices, since a fast refund costs far less than a chargeback fee.

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