Chargeback Reasons - Why Customers File Chargebacks

Chargeback Reasons — Why Customers File Disputes

chargeback reasons

A chargeback is a form of customer protection, but some customers may want to use it in a tricky way, not always with good intentions. This is why you should learn about the most common chargeback reasons.

Chargebacks are usually a result of criminal fraud or friendly fraud, but may also occur due to merchant errors. While in the first instance it’s easy to determine whether the customer’s chargeback is valid, other chargebacks can be quite tricky, so merchants need to put in a lot of effort into proving the validity of a given purchase.

The harsh truth is that chargeback reasons are not always used with their intended purpose in mind, so it’s the merchant’s responsibility to gather as much evidence as possible. We recommend acting promptly, as it’s in your hands to prove that the transaction was legitimate.


Let’s get through these chargeback reasons to learn more about what they mean.

Reason: Fraudulent

The chargeback is marked as FRAUDULENT when the cardholder didn’t authorize the charge. Fraud is one of the most common chargeback reasons and one of the most difficult to dispute from the merchant’s perspective. It occurs when a third party uses stolen card details to make a purchase.

So, when a cardholder notices on their bank statement that someone used their card, they contact their issuing bank and report the fraudulent transaction. Then they need to prove that someone has used their card details without their authorization.

Reason: Unrecognized

Chargebacks with the UNRECOGNIZED status are similar to the FRAUDULENT chargeback reason and occur when a cardholder doesn’t recognize the transaction on their bank statement. The main difference is that it’s not about the compromised account, but about the fact that the cardholder is not able to recognize the purchase or the merchant.

In this case, you may contact the customer as they might have forgotten about the purchase, or the purchase could have been made by one of their family members. This is why having a clear transaction descriptor is so important.

If the customer agrees that the charge was legitimate, ask them to contact their bank and cancel the dispute. Plus, you should submit evidence and the cardholder’s statement that they agreed to drop the chargeback.

Reason: Duplicate

When the customer chargeback is marked as DUPLICATE, the customer claims that you charged them twice for the same item. If this is  true, you need to accept the chargeback, but sometimes a customer is charged for two different products. This means that you need to submit evidence showing that the two charges are for different products.

Reason: Canceled subscription

A chargeback marked as SUBSCRIPTION_CANCELED usually occurs when the customer was charged after canceling the subscription. These chargeback reasons usually come with misreading or misunderstanding the subscription terms and conditions or when the customer expected a notification before each recurring charge and didn’t receive one.

However, this may also happen when there’s hidden information on your website which states that the customer will be charged automatically after the free trial ends. The same goes for unclear or undisclosed billing procedures.

Keep in mind that sometimes customers file a chargeback even after receiving the product or service  — they do so to get the product for free, so you should always gather as much evidence as possible.

Reason: Product not received

This happens when a cardholder claims that the item they purchased wasn’t delivered (it’s marked as PRODUCT_NOT_RECEIVED). A similar situation may also occur when the customer isn’t satisfied because the  product or service they received doesn’t match the description.

A good practice is to contact the customer and resolve the issue. If this is impossible or the customer still claims that they didn’t receive the product, submit evidence proving that the product or service was delivered (such as shipping and tracking information or an activity log if the product or service was digital).

Reason: Product unacceptable

When a customer receives the product or service and claims that it doesn’t match the description or that it arrived in an imperfect condition, they can file a dispute marked as PRODUCT_UNACCEPTABLE.

You can try to resolve the problem with the customer by asking them to return the product or offering to replace it with another item. If the customer agrees, send evidence that the issue is resolved. If not, prepare evidence to prove that the customer received the product as described.

The tricky part is that a cardholder can also use this reason if they didn’t read the descriptions carefully or misinterpreted the advertisement.

Reason: Credit not processed

When the chargeback is marked as CREDIT_NOT_PROCESSED this usually means that the customer returned the product or canceled the transaction and didn’t receive a refund from you.

Keep in mind that you can’t make a refund after the customer initiates the dispute, so you can try to contact them, explain the issue, and find a way to solve it. This case can be also connected to friendly fraud, so check it thoroughly.

If the chargeback is not valid (because, for instance, you refunded this charge before), gather evidence to prove that you’ve displayed the refund policy to the customer, and attach any correspondence with the customer about the refund.

Reason: General

As the name implies, a chargeback marked as GENERAL is a dispute that doesn’t fit into any other category.

So, we recommend contacting the customer to resolve the problem. Otherwise, you need to prepare detailed and relevant evidence proving that the charge was legitimate.

Chargebacks cost more than just loss of sales

The customer isn’t always right.

When you understand the chargeback reasons, this will  help you protect your online business from fraudulent activity. No matter what the chargeback reasons are, you need to know how to react when they occur and what you can do to improve your win rate.

So, if chargebacks occur, act promptly and send as much evidence as possible to the bank to prove that the transaction was legitimate. To do so, log in to your SecurionPay account and go to the Charges tab on the dashboard. For more information, check out How to win a chargeback dispute.

P.S. What may also happen is a retrieval request, known as a soft chargeback. So, before the issuing bank decides to file a chargeback, it can request additional information about the transaction. Learn more: What is a retrieval request?

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Sandra Wróbel-Konior

A well-established Content Marketing Specialist with a tech-savvy personality, experience in writing, and a passion for reading. Staying up to date with the latest technology and social media trends, in love with GIFs and craft chocolate.

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