Chargeback AFTER refund issued - useless Shopify

Shopify Discussion
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Topic summary

A merchant issued a £284 refund to a customer due to delivery delays, but subsequently received a chargeback for £294 (including a £10 fee) for the same transaction. Despite the refund being processed first, Shopify’s system allowed the chargeback to proceed and then cancelled the original refund.

Key Issues:

  • The chargeback dispute response won’t reach the bank until August 18th (two weeks delay with no clear explanation)
  • Shopify support provided conflicting information, initially claiming they would “back up” the merchant, then stating the refund “cannot be processed”
  • The merchant now faces double charges: both the refund amount and the chargeback amount were deducted

Technical Context:
Chargebacks are filed directly with the customer’s credit card bank, not Shopify. Banks cannot automatically link refunds to disputed charges due to separate transaction systems. Each dispute requires manual review by bank personnel, causing delays.

Current Status:
The situation remains unresolved. One commenter is considering leaving Shopify entirely, noting that a single chargeback could remove them from the Shop app, which drives most of their sales. Both merchants express frustration with support quality and the platform’s handling of these conflicts.

Summarized with AI on October 28. AI used: claude-sonnet-4-5-20250929.
1

Hi,

Customer placed an order on 18th July for £284. She then emails and asks if item can be delivered on 29th July onwards as she’s moving home. We experienced a container delay so the item could not be delivered on this date. I initiated a refund as I could see customer was getting anxious. I emailed customer and informed her a refund has been initiated and can take 5 working days to appear. On 2nd Aug I get a chargeback with an additional £10 fee so £294 total. I respond to the chargeback with evidence but it says that they’ll let the bank provider know my response on 18th Aug (no explanation as to why it takes two weeks). I got in touch with Shopify useless chat system. They said not to worry as they’ll back me up, they can see I’ve refunded the customer already (why couldn’t they see this before allowing a chargeback?!). A few hours later, it then says ‘your refund cannot be processed’. I get passed over from useless agent to useless agent who gives me the same robotic response. Not getting anywhere. Why the hell do Shopify allow chargebacks when a refund for the very same order? Is this Shopify backing me up? Really?

2 Likes
2

Hi @Takhara

First off, sorry you’re experiencing this very frustrating situation.

I just want to help clear up one misconception. The customer isn’t filing the chargeback with Shopify, but with the bank that issued their credit card they used to pay for the order.

Unfortunately it’s still possible to receive a chargeback even after you’ve initiated a refund. But this is because bank transactions are separate, and it’s not possible for the issuing bank to tell that the debit to the customer’s account is linked to the credit for the disputed charge.

Your best bet is to include the evidence of your communications with the customer as part of the dispute, and make sure to include the details of the refund as well - that way the link between the refund and the initial charge can be made.

The reason why this process takes so long is because each chargeback dispute is reviewed by a real person at the issuing credit card bank. They need to review the evidence submitted by both sides of the chargeback, and determine a ruling.

It’s beyond Shopify’s control that a bank can’t recognize a disputed transaction has been refunded. It’s extremely frustrating that some banks have antiquated transaction recording systems that open loopholes like this but unfortunately that is the case.

3

Thanks for your reply. The first issue is that I was never told about any of this by the Shopify advisor I first spoke to. Not once did they say that my refund would be cancelled. Secondly, I’ve no idea if my chargeback response has even been sent, no information on this at all, no explanation as to why the bank would only see my response on 18th Aug. This is a ridiculous process and I’m not convinced that banks have so much control over Shopify.

4

It has me to the point where I am most likely going to close my shopify account and open a store somewhere else. You were lucky that you were able to talk with other people besides the same person. I got stuck with the same person for 3 days now and he is not the sharpest advisor that they have. after spending 30 minutes chatting with him, and at least a dozen times we discussed that I, like you, initiated a refund this guy actually said well you had a chance to do the right thing. He said I should have issued a refund.I was like haven’t we spent enough time talking about the refund I issued that shopify cancelled because a chargeback hit before shopify could issue a refund? So now shopify has two big banners on the page where I have the order. One says something about a chargeback, and the other says “You owe this customer a refund” No bleep! So now shopify has taken the refund amount and also the chargeback amount with include the refund and the chargeback fee. Personally I would not care and want to just move on, I don’t need this frustration in my life but I don’t sell that many items so one chargeback can take me off of the shop app, which bring in most of my sales. So if this sticks I am just moving on. I only am posting this in case others who are researching shopify before joining can see how much it really isn’t worth it.