# What is a chargeback?

Source: https://kavralab.com/glossary/chargeback/

A **chargeback** is a forced reversal of a card payment, started by the cardholder's bank after the cardholder disputes a charge. The money is pulled back from the merchant, usually with a fee on top. Chargebacks exist to protect consumers from fraud and errors, but stolen cards and false claims turn them into a direct cost for merchants.

## Chargebacks, in plain terms

When a cardholder tells their bank a charge is wrong, the bank, called the issuer, can reverse it without the merchant's agreement. That is different from a refund, where the merchant chooses to return the money. In a chargeback the merchant loses the sale amount, pays a dispute fee to its processor, and often has already shipped the goods.

Every dispute gets a reason code from the card network. The codes fall into a few families: fraud (the cardholder says they did not make the payment), authorization problems, processing errors, and consumer disputes such as an item that never arrived or did not match its description.

## How the chargeback process works

1. **Dispute**: The cardholder contacts their bank and disputes a charge. The bank may credit them provisionally right away.
2. **Chargeback**: The issuer sends the chargeback through the card network to the merchant's bank, the acquirer, which debits the merchant.
3. **Representment**: The merchant can fight back by sending evidence: delivery proof, login and device history, prior orders, customer messages.
4. **Decision**: The issuer reviews the evidence. If it is not enough, the chargeback stands. Some cases escalate to arbitration by the card network, with higher fees.

## Why chargebacks matter beyond the lost sale

Card networks track each merchant's ratio of disputes to transactions and run monitoring programs for merchants whose ratio stays too high. Being placed in one means extra fees and remediation plans, and in the worst case the acquirer can close the merchant account. So a wave of fraudulent orders costs more than the goods: it threatens the ability to take cards at all.

Two sources drive most fraud-related chargebacks. The first is third-party fraud: a criminal uses a stolen card, through [carding](https://kavralab.com/glossary/carding/) or after [card testing](https://kavralab.com/glossary/card-testing/), and the real owner disputes it. The second is [friendly fraud](https://kavralab.com/glossary/friendly-fraud/): the real cardholder makes the purchase, then disputes it anyway.

## Chargeback vs refund vs friendly fraud

|  | Who starts it | Merchant's role |
|---|---|---|
| Refund | Customer asks the merchant | Merchant agrees and returns the money |
| Chargeback | Cardholder asks their bank | Money is pulled back, merchant can contest it |
| Friendly fraud | Real cardholder falsely disputes a valid purchase | Merchant must prove the purchase was genuine |

## How to prevent fraud chargebacks

The cheapest chargeback is the fraudulent order you never accepted. Assess the buyer before payment, step up risky orders with 3-D Secure to shift liability, and keep a record of device and login evidence for every order so you can win the disputes you do get.

Kavra assesses each checkout in real time and returns an explained verdict: the real device, the network, links to other accounts and a recommendation to allow, verify or block. The same evidence, stored with the order, supports representment later. See [payment fraud prevention](https://kavralab.com/solutions/payment-fraud/) for the full approach.

## FAQ

### How long does a customer have to file a chargeback?

It depends on the card network and the reason code, but windows of around 120 days from the transaction or expected delivery date are common, and some cases allow longer. That delay is why fraud from a busy week can keep arriving as chargebacks for months, long after the goods have shipped.

### Can a merchant win a chargeback?

Yes, through representment. The merchant sends evidence that the charge was valid: proof of delivery, the customer's prior undisputed orders, matching device and IP history, account logins and communication. Win rates depend heavily on evidence quality, which is why storing device and session data with each order matters.

### What is a chargeback fee?

It is a fixed fee the merchant's processor charges for handling each dispute, on top of the reversed amount. The merchant usually pays it whether or not the chargeback is later won. High dispute volumes can also bring monitoring program fees from the card networks and higher processing rates.

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