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Learn more about credit card chargebacks and best practices to help challenge disputes.
Introduction:
Campspot, in partnership with Clover Connect, provides essential insights and best practices to navigate chargebacks effectively.
The information in this article are some excerpts from a larger guide. For more information, check out the document found here:
Dispute Best Practices: A Merchant's User Guide to Help Manage Disputes (April 2023)
What is a chargeback?
- A chargeback occurs when a customer or their bank disputes part or all of a purchase, leading to potential adjustments to your account.
- In 2022, approximately 0.1% of total guest charges were disputed.
- Campspot customers challenged 30% of guest chargeback cases in Q1 2023, with an average win rate of 55%.
How does the Chargeback process work?
- You will receive a notification of the chargeback from your credit card processor via Postal Service.
- When submitting a rebuttal to a chargeback, you must respond by the Chargeback due date and provide a full explanation of why you think the chargeback is invalid and the original transaction is valid. You must include all pertinent, supporting documentation.
- The cardholder’s issuing bank will evaluate this documentation to determine whether to reverse or uphold the chargeback.
What happens if the bank decides the guests claim holds true?
If the cardholder’s bank decides against you as the merchant, you can appeal through an arbitration process at which point the credit card network steps in to decide - however, the losing party in the arbitration process will incur fees in the hundreds of dollars.
Recommendation:
You should not issue a refund (credit) after you have received notification of a dispute. The customer’s bank may have applied a conditional credit to the customer’s account.
If a refund is applied, you may not be able to recover a refunded amount after a chargeback has been received; in fact, you may be responsible for the credit and chargeback.
What features in Campspot should I use to educate my guests on my policies?
One of the most critical steps in protecting yourself from chargebacks is to provide education to your guest on your campground policies. Below find a list of customizable policies available in Campspot. Click here to learn more:
- Terms & Conditions
- Cancellation Policy
- Refund Policy
- Covid-19 Policy
Six Most Common Chargeback reasons
Below you can find a list of the most common chargeback reasons you may confront. Click on any to learn even more information about these chargeback disputes.
| Chargeback Reason | Description | Major Card Network Reasons Code | Notes |
| Credit Not Processed | The customer is claiming that a credit was not issued even though services were canceled. Or, the customer is claiming that a credit was not issued even though the merchant issued a credit transaction receipt or provided a refund acknowledgment. |
Visa: 1360, 1370, 1380 Mastercard: 53, 60 Amex: C02, C04, C05 Discover: 8002, RN2 |
This is the most common chargeback code seen amongst Camspot software customers during Q1 2023 (nearly one third of all chargeback cases). Merchant win rates for this reason code were ~80% during Q1. |
| Fraud - Card Not Present | For card not present transactions, the customer is claiming that the transaction was processed without customer permission or with a fictitious account number. |
Visa: 1040, 1050 Mastercard: 37, 63 Amex: FR2, F14, F24, F29, M49 Discover: 4752 AA, 7030 UA02 |
Merchant win rates amongst Campspot customers tend to be much lower for this reason code (~30% in Q1 2023). The reason win rates tend to be lowest is that in the case the customer is essentially claiming their card was fraudulently used to make an online (card not present) purchase. Given the cardholder’s bank decides the outcome of a dispute, it is common for them to side with their customer, the cardholder, in this type of dispute. |
| Duplicate Processing | The Customer is claiming that a single transaction was processed more than once to the same card number, at the same merchant location, for the same amount and on the same date; the Customer did not receive the benefit of more than one transaction. |
Visa: 1261 Mastercard: 34 Amex: P08 Discover: 4534 DP |
Campspot customers challenging this Chargeback reason code in Q1 had a high win rate of ~90% during Q1. |
| Services Not Provided; Merchandise Not Received | The customer is claiming that the services were not provided. |
Visa 1310, 1390 Mastercard 55 Amex C08 Discover 4755 RG |
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| Data Entry Error | The Customer is claiming that a data entry error was made at the point-of-sale. The items incorrectly entered may include but are not limited to the following: a credit entered as a debit; a debit entered as a credit; transaction amount; transaction code; card number; account number or currency code. |
Visa 1220, 1230, 1240, 1250, 1270 Mastercard 46, 31 Amex P03, P04, P05, P22, P23 Discover 4550 CD, 4753 IN, 4586 AW |
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| No Shows | The Customer is claiming that a No-show transaction was billed to their account or that an addendum charge was added to an original valid transaction from the same merchant. |
Visa 1370 Mastercard 59 American Express C18 |
What can I do to defend against chargebacks?
There are a few things you can do or have in place to avoid disputes:
Credit Not Processed
How can you help avoid a dispute?
- Disclose the refund policy for returned/canceled merchandise or services to the customer at the time of the transaction.
How can you best defend yourself?
- Show that a credit is not due by providing proof that the cancellation/refund policy disclosure was accepted by the customer at the time of the transaction.
- Provide an explanation of why the credit is not due in the dispute rebuttal.
- If the cardholder did not attempt to cancel the transaction, ensure your challenge response outlines this information. This will explain to the issuing bank that their customer did not attempt to cancel the payment prior to disputing the transaction.
Fraud - Card Not Present
How can you help avoid a dispute?
- Ensure merchant descriptor matches the name of the business and is displayed correctly on the customer statement.
- Implement internal fraud prevention policies and procedures for suspicious activity.
- Revoke any sale or exchange of goods/services when appropriate after a prior fraud dispute and implement a process to prevent recurrence by customer.
How can you best defend yourself?
- Prove that a credit which directly offsets the disputed charge has already been processed
- Supply a legible copy of the transaction document/information to assist customer in recognizing the transaction and include a brief description of the goods or services and a valid authorization code
- Provide compelling evidence that the customer participated in the transaction.
Duplicate Processing
How can you help avoid a dispute?
- Ensure transactions are not processed multiple times; In the event that a transaction is processed more than once in error, immediately issue a void, a transaction reversal or a credit
- Accept only one form of payment per transaction; In the event that two or more forms of payment are accepted for one transaction, document each form of payment on one transaction receipt confirming that the total of all payments does not exceed the total of the purchase
How can you best defend yourself?
- If your guest did make 2 separate purchases, provide valid, legible copies of all transaction documentation which may include:
- Two distinct transaction receipts
- Two invoices
- Itemization reflecting different transactions
- Provide evidence that the transactions were not for the same service or merchandise, if two separate transaction receipts are not available
- Provide evidence that a credit was issued to the account to correct duplicate billing.
- Provide proof of a transaction reversal to correct duplicate billing.
Services Not Provided; Merchandise Not Received
How can you help avoid a dispute?
- Provide services/merchandise as agreed upon to the customer
- Contact the customer in writing, if the merchandise or service cannot be provided or is delayed
- Offer the customer the option to cancel, if your internal policies allow
- Issue credit to the customer, if you are unable to deliver merchandise or provide services Note: Do not issue credit after chargeback has been received
- Issue refunds as applicable, when you cancel the services
- Make sure accommodations are available to the customer as reserved
How can you best defend yourself?
- Provide a written rebuttal addressing all of the customer’s concerns and providing proof that services were:
- Rendered in full
- Available but were refused by the customer
- Provided and acknowledged by the customer
- Available but were not utilized by the customer
- Provide proof that services were rendered or merchandise was received by customer
Data Entry Error
How can you help avoid a dispute?
- Ensure all transactions are processed accurately with proper transaction code
- Process all transactions in the proper currency as stated on the transaction receipt
- Ensure that credit transaction receipts are processed as credits and sale transaction receipts are processed as sales
- Confirm that the transaction amount and account number are correct prior to processing
- Make sure that all sales drafts are written clearly and calculated correctly
How can you best defend yourself?
- Provide a copy of transaction receipt or other documentation to prove that transaction was processed under the appropriate transaction code
- Provide documentation to prove the transaction was processed utilizing the appropriate currency code
- Provide a copy of the sales draft showing that there was no error in the transaction amount or credit amount processed
No Shows
How can you help avoid a dispute?
- Ensure Customer is aware of cancellation policy at the time of the reservation.
- Issue credit upon cancellation of reservation by the Customer
- Provide a cancellation number for all cancellations
How can you best defend yourself?
- Prove that the cancellation policy was properly disclosed to the Customer at the time of the reservation.