How to Prevent and Fight a Chargeback at Your Facility

Difficulties with customers are never fun, and this is especially true when it comes to chargebacks. 

As a business owner, chargebacks can be a headache. But the good news is that there are processes and procedures that can be put in place to help avoid situations where a chargeback might occur. Small things like requiring a customer with an EMV chip card to insert the card rather than swiping could help in the event that a customer charges back a transaction.

Let’s explore more on how to prevent and fight a chargeback at your facility.

Table Of Contents

• What is a Chargeback?
• Chargeback Reasons
  •  Fraudulent Transactions
  •  Credit (Refund) Not Processed
  • Dissatisfaction with Service Provided
  • Pricing Issue (or Shipping/Delivery Error)
  • Business Name Not Recognized
• What Are Chargeback Reason Codes?
  • American Express
  • Mastercard
  • Visa
• How Does the Chargeback Process Work?
• What Can I Do to Avoid or Prevent Chargebacks?
• What Can I Do to Fight a Chargeback?
• How to Provide Evidence for a Chargeback
• Frequently Asked Questions

What is a Chargeback?

A chargeback, or a payment dispute, is when a cardholder questions a transaction and makes a request to reverse it with their issuing bank. 

The option to dispute a payment is intended to protect consumers against unauthorized transactions. It certainly comes in handy in fraud situations like credit card theft. But, it can also become a big roadblock or problem for your business

There are a number of chargeback types, causes, or reasons.

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Chargeback Reasons and Tips to Avoid Them in the Future

When a chargeback is initiated, a chargeback reason is stated. Here are some common causes.

Chargeback Reason: Fraudulent Transactions

If you’ve ever seen a charge on your credit card statement that you didn’t recognize, this chargeback reason might sound familiar. This reason is cited in situations where a cardholder does not recognize a transaction and decides to file a dispute. It can also include actual fraud, a stolen credit card, friendly fraud, a family member using a credit card without permission, scam artists, and more.

As an FEC owner, it’s important to do what you can to try to protect your business from fraudulent transactions. While you can’t avoid every possible scenario, there are a few things you can do to spot fraud and stop a potential chargeback.

Tips to avoid potential fraud-based chargebacks:

• Require Name Matching
  If a customer is booking a birthday party, consider requiring a name match across the contract and credit card.
  Customers requesting to pay with a credit card that does not have their name on it could end up being a huge red flag and potential future chargeback. Save your sanity and avoid taking any credit card without proof of identification.
  To protect yourself in transactions like online deposits, require a name match on the contract and credit card, along with an address and zip code match. When the customer visits your facility, ask them to use the same credit card they used online (and be sure to have them insert it in the EMV chip reader). To add an additional level of protection, consider snapping a photo of their driver’s license.
• Train Your Staff to Spot Potential Fraudulent Behavior
  Fraud can happen at any time and it often takes a keen eye to spot it.
  Training your staff on how to spot potential fraud is key to helping protect your business. What are some things your staff can watch out for?
  
  • Hesitation, followed by the person using a credit card with someone else’s name on it during an over-the-phone transaction.
    This one might seem obvious, but it happens frequently. Your FEC is packed and someone calls in to book a birthday party. Your staff member is excited to snag this $500 party plus food add-ons and they’re busy selecting options on the screen. The next thing they know, they’re typing in a credit card number, followed by a different name than the name making the reservation. “Oh, it’s my mom’s card, she’s paying for the party.” Watch out! This has the potential to be a future chargeback.
  • Excitement to book a party, followed by the person using multiple credit cards.
    “Can you split this between these three cards please?” It might seem like a simple request. You might even feel like you’re doing your customers a favor. But this move could end up resulting in a chargeback later. Be cautious!
  • A transaction is taking place, but something seems off.
    Your staff member asks the customer to insert their EMV chip card into the reader. Instead, they start shifting around with the machine and you realize they’re typing the card number in. You ask why, and they say the EMV doesn’t work. Be careful, something might be off. In this situation, coach your staff member to state that you have a policy requiring ID for any non-EMV transactions.

Chargeback Reason: Credit (Refund) Not Processed

Sometimes customers are quick to jump the gun. You both agree that they will receive a refund, but they don’t see the refund immediately so they decide to process a chargeback to get their money back.

In situations like this, be cautious not to provide another refund until your case has been reviewed to avoid a duplicate refund.

Tips to avoid potential refund-based chargebacks:

• Communicate Clearly
  This chargeback reason is often the easiest one to solve as it’s simply a result of a misunderstanding about the refund process.
  To avoid this in the future, be clear about how the refund will work. “Susan, I am refunding your party deposit in the amount of $150 right now. Please know that it could take anywhere from 7-15 days to appear back in your account. If you have any issues at all, please call me first.” 

Chargeback Reason: Dissatisfaction with Service Provided

This chargeback reason is a very tough one in the Family Entertainment Center industry with party transactions being so large. If a guest decides that they were not satisfied with the services you provided, or they felt that you did not provide the services you promised, they might file a dispute against the transaction.

Why might a guest be dissatisfied? This is an unanswerable question as the reasons are endless! Your guest might have felt like they were ignored by your staff, their food might have arrived late or was too cold, an altercation might have taken place, the guest of honor might have had an allergic reaction to something. The list can go on.

Chargeback Reason: Pricing Issue (or Shipping/Delivery Error)

Mistakes happen. And sometimes customers are mistakenly overcharged. If you offer shipping or delivery services, you might also experience this reason type for chargebacks.

If a pricing issue is the reason for your customer’s chargeback, do some quick digging to ensure that everything was correct. You’ll also want to make sure that you did not already provide a refund--sometimes customers jump the gun and report a chargeback while simultaneously communicating about the refund with you.

If a customer was mistakenly overcharged for an item, this can also be a simple fix. 

Chargeback Reason: Business Name Not Recognized

Have you ever looked at your credit card statement and noticed a purchase by “XYZ Incorporated” or something that looked off? 

Sometimes business names appear strange on bank statements. Because of this, you might see this as a reason code on a chargeback. 

This is often just a simple misunderstanding and once the information has been clarified, the case can be closed and everyone can move forward.

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What Are Chargeback Reason Codes?

To recap, chargeback reasons are the causes associated with a transaction being charged back. And while chargeback reasons are helpful, it can be tough to encapsulate every single chargeback situation in a simple description. To help clarify descriptions, each card company has developed their own list of chargeback reason codes to indicate the specific reason why a cardholder has initiated a chargeback dispute.

Below is a comprehensive list of chargeback reason codes for each major credit card with descriptions:

• American Express
• Mastercard
• Visa

Chargeback Reason Codes for American Express

For a full list of chargeback codes and explanations, please refer to this document from American Express.

*These American Express chargeback codes require an inquiry first.

Chargeback Reason Codes for Mastercard

For a full list of chargeback codes and explanations, please refer to this document from Mastercard.

The chargeback codes for Mastercard fall into four categories:

• Authorization
• Cardholder disputes
• Fraud
• Point-of-interaction error

Chargeback Reason Codes for Visa

For a full list of chargeback codes and explanations, please refer to this document from Visa.

*Chargeback code resource (cited) - https://squareup.com/us/en/townsquare/what-is-a-chargeback-what-makes-it-happen

Additional resource (not cited): https://chargebacks911.com/chargeback-reason-codes/visa/

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How Does the Chargeback Process Work?

Now that you’re familiar with what a chargeback is and some of the reasons why they’re initiated, let’s explore how the chargeback process works in the event that you receive a dispute from a customer.

1. A transaction occurs.
   First, your customer would have completed a transaction. This might’ve taken place online or in person at your facility. A customer has up to 120 days from the date of the transaction to file a chargeback.
   
   
2. The customer initiates a chargeback.
   The money is moved from the merchant’s account and credited back to the customer (potentially temporarily).
   After seeing a fraudulent transaction (or other chargeback reason type), the customer initiates a dispute with the issuing bank of their credit card. Once this chargeback is initiated, the funds are removed from the merchant’s bank account and are given back to the customer the day they file the dispute. This fund reversal can be temporary or permanent, depending on the results of the dispute.
   
   
3. The customer’s bank (the cardholder’s issuing bank) reaches out to the merchant’s bank (Party Center Pay) requesting information/evidence about the transaction.
   The issuing bank will now seek further information from the merchant. They will provide the reason for the dispute and will request evidence to clear the case. They will also provide a date that all information must be submitted.
   Please keep in mind that the person reviewing your case knows nothing about your facility or your policies. So, it is important that you present your case in a clear, organized manner, highlighting the important points that address the chargeback reason.
   Since all evidence must be submitted together, at one time, we recommend creating a multi-page PDF file with your documentation. Additional evidence cannot be submitted later, so it’s critical that all information is collected at once.
   
   
4. The information is submitted and the cardholder’s issuing bank reviews the information.
   Once the merchant submits evidence to the cardholder’s issuing bank, they will then review this evidence.
   It is important to understand that the issuing bank is the decision-maker in this process and that in certain cases, such as fraud, evidence from the merchant may not help and the issuing bank may rule in favor of the cardholder.
   
   
5. A decision is made and all parties are informed.
   It’s decision time--the issuing bank will notify all parties of the results.
   In the event that a merchant wins the case, they will receive a credit back.
   In the event that the merchant loses the case, the transaction will not be refunded.
   
   
6. (Optional) The case escalates to arbitration.
   In some cases, a merchant will be given the opportunity to take the case a step further to arbitration. It is important to note that not all cases will have this option. In cases that do, it is important that the merchant weighs the pros and cons of arbitration as there is the potential for additional costs and legal fees in the event that the case results are not in the merchant’s favor. Again, the final decision is made by the cardholder’s issuing bank. 

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What Can I Do to Avoid Chargebacks?

With the average win rate of chargebacks at around 27%, it is wise to focus some energy on avoiding chargebacks before they ever occur. 

The best way to do this is to think through your sales process and consider each touch point. If you accept payments over the phone, over the Internet, and in person, you’ll need to set up specific instructions for your staff to follow in each scenario.

Scenarios:

• • • Over The Phone Transactions
    • Over The Internet Transactions
    • In Person Transactions
• Avoiding Chargebacks: Over-the-Phone Transactions
  While likely the least common of the three types of transactions, this one is most important to highlight as it has a very high potential for fraud.
  
  With over-the-phone transactions, it is critical that you collect detailed information from the customer. Full name, address, phone number, email address, and any other information that you already require is a good place to start. When it comes time for the customer to share payment information, make sure the credit card matches the information the customer provided.
  
  Once this transaction has been completed, it is critical that you send a receipt to the customer’s email address immediately. If you are a Party Center Software customer and send a receipt to the customer through PCS, this receipt will appear in the customer’s log history. In the event that you do experience a chargeback, this information is something that you would provide to show evidence of the transaction and that the customer was involved in the transaction.
  
  To avoid potential issues altogether, we recommend using the Party Center Software Secure Payment Link (more on that below) rather than taking credit card information over the phone.
  
  A Note on Voice or Call Recording
  It is worth noting that while video and audio recordings are not permitted during a chargeback dispute, it is sometimes accepted in citations that escalate to arbitration. Beyond that, audio recording can be a tool to help you as a business owner. You might discover by listening back to the audio that your staff member accepted a credit card from someone other than the person booking and attending a party. You can use this as a learning opportunity for your staff, and it will also help you to understand what to avoid in the future.
  
  If you’re a Party Center Software and Party Center Pay customer, we recommend using the Secure Payment Link feature. With this feature enabled, you are able to email a Secure Payment Link to the customer allowing them to pay online. This will help with any potential issues that might arise from taking a payment over the phone.
  
  Payments taken online are more secure than those taken over the phone, especially when AVS and CVV are both activated at the checkout point. AVS, or Address Verification System, checks to see if the billing address matches the address on file with the cardholder’s credit card company. For an additional layer of security, you also have the option to require the customer to add their phone number as part of the verification process. If either of these check-points are incorrect, the transaction will fail, which can help prevent potentially fraudulent behavior.
  
  CVV, or Credit Verification Value, is a security feature that’s intended to prove that a card is actually on hand when a purchase is made. The CVV (also CVD and CVV2) is represented as a 3 or 4 digit number on the back or front of the card. Visa, Mastercard, and Discover have a 3-digit number on the back of the card, and American Express has a 4-number on the front of the card.
  
  There is an additional layer security feature that the CVV offers: the CVV number cannot be stored in a database after it has been authenticated. That way, if a database with transactions is ever breached, the CVV will be protected. If a thief tries to use a stolen credit card and your site has CVV activated, it could prevent a potentially fraudulent transaction from occurring.
  
  
• Avoiding Chargebacks: Over the Internet
  If you do have guests that request to book parties and events or make other purchases over the phone, you might consider coaching them on how to make that purchase online. Having the guest make the purchase over the internet will provide a few more checks and balances during the checkout process, especially when AVS is activated.
  
  To protect yourself further, consider taking a small deposit online and charge the remaining balance in person the day of the event using an EMV device. Some merchants ask the customer to use the same card that they used to make the online deposit to create an additional layer of potential protection against fraud.
  
  
• Avoiding Chargebacks: In-Person
  While in-person transactions are typically the safest option, there is certainly room for potential fraud and other scenarios that might be cause for a chargeback.
  
  Stolen or borrowed credit cards are certainly one of the biggest things to look for. Protect yourself by only allowing the use of your EMV device. Have customers insert their card rather than swiping or typing in the credit card number. Consider asking for ID and even making a copy of their ID, especially if the card they’re using does not have their name on it (however we recommend avoiding the practice of taking any card that does not belong to a cardholder).
  
  Review the party order total with your customer and get a signature on the order. Anything you can do to create a history of purchase with your customers that aligns with their identity will help strengthen your business.

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What Can I Do to Fight a Chargeback?

The most important thing you can do to help fight a chargeback is to first make the decision to dispute it.

Before you get to work collecting evidence, pick up the phone and call your customer to see if you can resolve the issue. In some situations, a simple mistake was made and the customer may drop the dispute.

Do not provide a refund to the customer during this time. It is important that chargeback disputes are settled appropriately to avoid any potential additional fees or confusion.

If the issue cannot be resolved on the phone with the customer and they do not agree to drop the dispute, get to work as quickly as you can and collect the requested evidence for the specific case at hand. You will be notified of the date that the evidence must be submitted by. Adhere to this! Gather the evidence quickly and create one PDF file that includes all the details of your argument.

On page one, explain (in words) the situation from your perspective. Keep it factual and avoid story-telling. Simple facts such as “Customer booked party online on 5/2/21 and paid a deposit in the amount of $50 on card ending in 1234. On the day of the party, the customer paid the remaining balance of $525 using the same card ending in 1234 in the EMV-chip reader.” Then include all pieces of evidence: the customer’s deposit receipt, the transaction log with the customer, the day-of receipt, copy of ID, etc. Consider using the highlighter tool to highlight critical details.

Remember, you only have one opportunity to fight a typical chargeback, so make sure your evidence is compelling and that nothing is left out.

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How to Provide Evidence for a Chargeback

As previously mentioned, there are many reasons a chargeback may be initiated. Each chargeback reason may require different proof that the service or product was provided and/or agreed upon by the customer. The instructions below will help you find each piece of evidence in Party Center Software and show how to organize your evidence for submission to fight the chargeback.

Remember: all of your evidence must be submitted in one PDF document. Therefore, you will need tools to take screenshots, highlight important pieces of information, and organize it all into one PDF document. To do this, we recommend the following:

• Native Screenshots Using Mac

• If you have a Mac, you can utilize the native screenshots options. To take a screenshot of the entire screen, hold down Command, then hold down Shift, then hit the number 3. Your screenshot will be saved to your desktop unless you set them up to filter to a different folder.
• If you’d like to take a screenshot of a specific area, hold down Command, then hold down Shift, then hit the number 4. A crop tool will appear and allow you to draw a box around the area that you’d like to capture.
• To add highlighting to specific areas, circle information, or write on the screenshot, simply click on the screenshot when it appears in the corner of your screen after taking the initial screenshot. This will bring you into the editor tool where you can select a variety of options for highlighting or marking up your document. 

• ScreenPresso for Screenshots

• If you do not have a way to easily take screenshots, we recommend a free software called ScreenPresso. It’s simple to download and keep track of the images you capture.
• Once a screenshot is taken you have the ability to highlight important information on the screenshot and then save it as an image.
• Check out the ScreenPresso Help Center to learn more detail about using the software. 

• Microsoft Word or Google Docs for PDF files

• Microsoft Word and Google Docs both allow you to save files as pdfs. Add all of your highlighted screenshots from ScreenPresso along with an explanation of what each screenshot is providing evidence of. You will then be able to save your document as a PDF for submission.

The following information will need to be gathered from Party Center Software. You may or may not need every piece of information listed below, however, it is always better to provide an excess of evidence rather than not enough.

Locations:

• • • Party Order
    • Payment History
    • Detailed Payment Information
    • Activity Log
    • Order Receipt
    • Agreement to Non-Refundable Deposits

• Party Order
• To see the party order in PCS, navigate to the Orders page in the navigation bar. Use the Order Search box in the top left to search for the order number, or filter the results to find the order.
• Once you are viewing the order, make sure the Order tab is selected and take a screenshot of the entire order.
• Highlight important information such as the order amount and customer information
  
  
• Payment History
• While looking at the party order, select the Payments tab. Take a screenshot to gather a summary of all the payment history of the order.
  
  
• Detailed Payment Information
• If you need to gather more detailed information about a payment select the Payment ID on the Payments tab of the order. A new box will appear with additional information regarding the payment. Capture a screenshot of this information if you feel it will be helpful to your case.
• Activity Log
• The activity log will keep track of all communication attempts made with the customer.
• While viewing the order, select the Activity Log tab and take a screenshot.
• Highlight any important information, such as email communication between you and the customers as shown below:
  
  
• Order Receipt
• Once the customers order has been completed you can view the receipt that is provided to the customer.
• To view the receipt, select the Print Customer Invoice button while on the order.
• Capture a screenshot of the invoice and highlight important information such as the payments made and the customers information.
  
  
  
• Agreement to Non-Refundable Payments
  • To do this, navigate to the Policies section in PCS (ADMIN--Online Booking-->Policies)
  • Select the Policy listed that the customer agreed to and take a screenshot. Highlight any important information such as the text telling the customer they agree to a non-refundable deposit for example. You will also want to highlight the Created Date and the Last Updated Date to prove the policy was not changed after the customer agreed to it.
  • You’ll then want to take a screenshot of the button the customer clicks on, showing they agree with the policies before they are even able to make a payment. To do this, navigate through your online booking process and take a screenshot of your Policies page showing the button says “Agree and Continue to Checkout.”
  • Be sure to include your URL in the screenshot so it provides evidence that this is your online party booking website.
• If the customer has agreed to any policies you have posted, either in your facility or online, submit proof that these are clearly visible.
• Take a picture of your Policies Sign in your facility if the customer booked the party in house.
• Take a screenshot of your Policies listed online if the customer booked the party online.

• • • To do this, navigate to the Policies section in PCS (ADMIN--Online Booking-->Policies)
    • Select the Policy listed that the customer agreed to and take a screenshot. Highlight any important information such as the text telling the customer they agree to a non-refundable deposit for example. You will also want to highlight the Created Date and the Last Updated Date to prove the policy was not changed after the customer agreed to it.

• • • • You’ll then want to take a screenshot of the button the customer clicks on, showing they agree with the policies before they are even able to make a payment. To do this, navigate through your online booking process and take a screenshot of your Policies page showing the button says “Agree and Continue to Checkout.”

• • • • Be sure to include your URL in the screenshot so it provides evidence that this is your online party booking website.

After you have gathered all the above information that is relevant to your chargeback, upload these images into either Microsoft Word or Google Docs. Provide a description of what each image is providing evidence of and save your document as a pdf.

Once you have your pdf document, reply to the Chargeback Notification email you received by uploading your document and stating you would like to challenge the chargeback.

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Frequently Asked Questions

Q: Does My Booking Policy Protect Me from Chargebacks?

A; Not necessarily. While having a policy helps, every chargeback is different and nothing can protect a business 100%, even a policy. We highly recommend meeting with your lawyer to review all terms and agreements, including your digital waivers.

Q: Why Did I Lose My Chargeback?

A: There are many factors that banking institutions consider when chargebacks take place. If you’d like to learn more about your situation, simply request more information from our team by submitting a ticket or contacting us by phone. If you feel the result is inaccurate, or that the customer’s bank missed something, you might be given the opportunity to take the case to arbitration and fight it further. Please note that if you choose this option and the case is not ruled in your favor, you will be required to pay arbitration fees. Speak to your Customer Success Manager for additional information.

Q: How Long Does the Chargeback Process Take?

A: While cardholders have a 120 day chargeback filing window after the date of their processed transaction, the investigation process typically takes between 30 and 90 days for a decision to be made

Q: What Can I Do If I Lose the Chargeback?

A; In some cases, you may have the opportunity to accelerate the case to arbitration if you feel the customer’s bank missed something in your case review. Please note that if you choose this option and the case is not ruled in your favor, you will be required to pay arbitration fees. Speak to your Customer Success Manager for additional information.

Q: How Can I Keep Track of Chargebacks?

A; In your PC Pay MerchantTrack Portal, there is a Chargeback report that will provide you with details and the status of your chargebacks.

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