Fraud Prevention Month – Chargeback Management

Every year in March we take an opportunity to remind you of some of the risks associated with processing electronic payments. Chargebacks continue to be a hot topic in the payment industry. Our goal is to make sure you know how to reduce the risk of getting a chargeback at your business.

Let’s start with some basics:

Chargeback Fraud

When does a chargeback occur?

Chargebacks occur when the cardholder disputes the charge to their credit card and refuses to accept responsibility (refuses to pay) for the transaction.

What are the most common reasons for a chargeback?

Fraud is the most common reason for a chargeback – when a credit card is used without the cardholder’s authorization or permission.

  • Fraud – unauthorized charge, lost or stolen credit card
  • Technical – incorrect or duplicate billing, failure to refund
  • Quality – product or service was not delivered, was defective or not as described

What is the chargeback process?

Once the consumer starts the chargeback process with the issuing bank, our Disputes department receives a chargeback notification and the funds are reverted back to the cardholder’s bank account immediately. The return of the funds is initiated by the cardholder’s issuing bank and it is up to the merchant to prove that the transaction was legitimate in order to have the funds returned. After the account had been debited, the merchant has 15 days to provide documentation to dispute the chargeback.

in exchange for service

What can a merchant do to reduce the risk of getting a chargeback?

Here are some suggestions to help reduce the risk of chargebacks:

  • Confirm the customer’s identity with a government-issued ID, preferably a driver’s license
  • Have clear terms and conditions in place; ask the customer to sign them and to keep the copy
  • Accurately describe all products and/or services
  • Use shipping services that offer shipment tracking services
  • Avoid manually keying in transactions
  • Train your employees to look for “red flags”
  • Use AVS and CVV verification fields in your Virtual Terminal
  • Keep all receipts, invoices, correspondence, a copy of the customer’s ID, and an imprint of the card (if possible)
  • Batch out daily to avoid “late presentment” chargeback
  • Use chip technology on your POS terminal

What should every merchant keep in mind when running transactions?

The merchant is liable for transactions he or she processes. Potential chargebacks are basically a part of the cost of doing business. Nobody can be 100% protected, so the best way to reduce the risk is to continuously educate yourself and your employees. Nuvei does not make decisions about chargebacks Chargebacks are initiated by cardholders, and Nuvei is responsible for complying with all rules and regulations set by the card brands, including those related to chargebacks. Part of our responsibility includes communicating chargeback information from issuing banks to our merchants.

Top Reason Why Cardholders File Chargebacks

There are numerous reasons for why cardholders file chargebacks. It’s a common opinion that transactions that become chargebacks are unauthorized transactions. This is not always the case. Let’s go over the most common chargeback reasons to better understand them. There are three common reasons for chargebacks: credit card fraud, friendly fraud or misunderstanding or error. We invite you to watch our short educational videos to learn more.

An Expert Review of the Chargeback Process

An expert review of the process through which chargeback is filed and either approved or rejected.


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