First chargeback (fraudulent) - advice needed

[shelleyd]

Hi,

My store just received it's first chargeback for fraud. When the transaction was initially made, it was flagged as high risk. So I waited until payment cleared before sending the goods. I also called my bank to check that the transaction was legitimate. After this, I had an obligation to send the goods to the customer as they'd paid in full and I had nothing to confirm that the charge was fraudulent.

Today I received a chargeback for the transaction. I was surprised to find that the amount has already been returned to the customer (my bank told me this couldn't happen) and I now need submit evidence to the customer's bank via Shopify, and they'll try and recover the money. I'm worried about the outcome as the amount isn't small (over $1000).

Has anyone had this happen before? Is it possible that I could lose my money?

Shelley

[Ivy]

Hello, @shelleyd. I am sorry to hear you're going through this, chargebacks can be a stressful part of running a store for sure. As this is your first chargeback, I want to walk you through what a typical chargeback process looks like:

1. The cardholder disputes a credit card charge with their bank.
2. The cardholder's bank sends a chargeback request to the credit card company, and takes the disputed amount and a chargeback fee from you.
3. The credit card company asks you for evidence that the charge was valid.
4. You and gather evidence to figure out whether the charge was valid.
5. Shopify sends a response to the credit card company.
6. The credit card company reviews the evidence. The review can take up to 75 days after the response is submitted.
7. The credit card company resolves the chargeback.
8. If you win the chargeback, then the cardholder's bank returns the disputed amount to you, and Shopify refunds you the chargeback fee. If the chargeback is a partial win, then the cardholder's bank returns some of the disputed amount to you, and Shopify still refunds you the chargeback fee. If the cardholder wins the chargeback, then the disputed amount and the fee is not returned to you.

It is important to note:  Chargebacks are handled and decided upon 100% by the bank processing the payment, not by Shopify.

I cannot predict how this chargeback will go, but I do want to be clear that it is possible you could lose money. I would absolutely advise submitting all your evidence including emails, proof of delivery etc. This will all help to strengthen your case. 

I want to compile some information for you on how best to avoid fraudulent charges, and how to protect yourself from chargebacks in the future. I hope this helps, and I wish you good luck going forward. Thank you!

• How to respond to disputes   
• How to avoid chargebacks  
• Preventing chargebacks   
• Steps for fraud protection