Disputes And Fraud
Disputes and fraud
Learn what disputes are, how the process works, and how to prevent them from happening.
A dispute (also known as a chargeback) occurs when a cardholder questions your payment with their card issuer.
To process a chargeback, the issuer creates a formal dispute on the card network, which immediately reverses the payment, pulling the money for the payment—as well as one or more network dispute fees—from Stripe. After that, Stripe debits your balance for the payment amount and dispute fee.
To help our users submit the best possible response for each dispute, Stripe provides a guided process within the Dashboard. This allows you to provide all of the necessary text and images that are appropriate to the dispute reason and your counter argument.
Managing and preventing disputes
Learn the terminology and lifecycle of disputes.
Respond to disputes using best practices.
Provide the appropriate evidence when disputes are withdrawn.
See how excessive disputes could impact your business.
Learn how to best protect against disputes and fraudulent payments.
If you need help with a dispute, contact support.
Preventing disputes and fraud
Learn how to best protect against disputes and fraudulent payments.
DISPUTE CATEGORIES
Fraud is the most common cause of disputes, but not the only one, and different dispute reasons require different types of responses. Refer to our dispute categories documentation to learn more.
The technological advancements related to online shopping, including digital wallets, NFC and QR Codes, and third-party apps that collect payments for you, have opened up countless new opportunities for fraudsters to obtain your customers’ payment credentials. When they do, it often results in a disputed payment—the fraudster gets the product, the account owner gets refunded, and you, the business owner, are out the product and the money, and also get charged a fee. At Stripe, we know it’s frustrating, so we’re trying to help you deal with fraud the only way you can–by preventing it.
In this section, Stripe provides strategic guidance, risk detection tools, and implementation suggestions to make sure you’re armed with the best defense against fraud. Depending on the service you provide, the goods you sell, or how your business operates, certain methods might be more effective than others.
Learn about the different types of fraud and the best strategies to prevent each type.
Use Stripe’s powerful machine learning fraud detection tool to evaluate fraud risks before you accept payment. Create custom rules that allow you to fine tune when blocks are triggered and create exceptions that make sense for your business.
Follow our best practices to make sure your integration collects important information to limit your exposure to disputes and fraud.
Familiarize yourself with the most common red flags so you can implement safeguards against them.
Learn strategies for making sure your customers have access to and acknowledge of your policies and terms of service.
Responding to disputes
Learn how to effectively respond to disputes.
When an account owner files a dispute against a payment, their bank alerts Stripe and Stripe notifies you using:
Email notification
Stripe Dashboard
An API charge.dispute.created event (if your integration is set up to receive webhooks)
Push notification (if you’ve subscribed)
Each of the dispute notification channels provides a link to the dispute’s details page in your Dashboard, where you can learn more about the reason for the dispute and take appropriate action.
Note
When you receive a dispute notification, take action to resolve it before the deadline. Failing to respond to a dispute results in irretrievable refund to the account holder and a dispute fee charged to your account.
1 Review the dispute category
When you get a dispute, the corresponding category or reason appears in your Dashboard and as the value for the reason attribute of the dispute object.
Each dispute category specifies different response requirements and recommendations to make it effective in addressing the root claim from the cardholder, so your first step is to review our response guidelines for the category of your dispute so you can collect the best set of evidence to counter the dispute claim.
Inquiries
Inquiries appear as disputed payments in the Dashboard, but they actually represent a pre-dispute stage that’s typically issued when an account owner doesn’t recognize a transaction on their account. Respond in this stage to resolve any questions and prevent a formal dispute escalation, which saves you time, fees, and your rating with the card networks. For more information, see Inquiries.
Note
If an inquiry escalates to a chargeback, you must submit another response for the dispute.
Fraudulent Disputes
Liability Shift
For fraudulent disputes that might be covered by the liability shift rule, Stripe automatically provides most of the evidence, such as the Electronic Commerce Indicator (ECI) from 3D Secure.
2 Understand the complaint
When possible, the Dispute details page provides you with a copy of the bank’s submission to Stripe based on the account owner’s claim. These are actual documents attached by card networks and can provide additional information about the disputed transaction, such as a text description from the account owner describing the specific complaint. When responding to the dispute, make sure to properly address the issue described in these files.
If the dispute is still open and the bank has provided these files, select Review the claim details under Step 1 of the checklist modal in the Dashboard to view them.
The Dispute details page may also provide you with a way to email the account owner. We recommend contacting them, as it might give you insight to better understand the complaint and help you decide how to proceed. Be sure to keep a record of all communication with your customer during this process, as it provides evidence to submit with your response.
3 Decide to accept or challenge the dispute
HANDLE DISPUTES THROUGH STRIPE
You can’t address a formally disputed payment (such as by refunding the customer directly) outside this process because the issuing bank has already refunded the account owner through the chargeback process and you risk refunding the customer twice.
When you have a clear picture of the dispute details, decide whether to accept or challenge the dispute. Consider the following questions in your determination:
Is the account owner’s claim valid?
If not, do I have the evidence required to disprove the claim?
Can I convince the account owner to withdraw their dispute if I resolve their complaint amicably, for example, by offering a store credit or a replacement item?
Might the dispute be covered by the liability shift rule? If so, consider responding with evidence on top of what Stripe automatically provides, such as the 3D Secure outcome.
When you’ve decided how to respond, select the corresponding button on the Dispute details page in your Dashboard:
Accept dispute submits a response to the issuing bank affirming that you agree to refund the customer for the disputed payment and pay the dispute fee.
Counter dispute opens a form that guides you through the submission process, prompts you for evidence that is relevant to the dispute type and your response type, and allows you to easily upload supporting files.
See Responding to disputes using the API if you prefer to handle disputes programmatically.
4 Submit evidence through the Dashboard
Caution
You have only one opportunity to submit your response. Stripe immediately forwards your response and all supporting files to the issuing bank and you can’t edit the response or submit additional files, so make sure you’ve assembled all your evidence before you submit.
1 Open the dispute response form: Click Counter dispute to open Stripe’s dispute response form.
2 Tell us about the dispute: In the first page of the form, tell us why you believe the dispute is in error and the product type of the original purchase. This information along with the dispute category helps Stripe recommend the most relevant evidence to support your challenge on the next page of the form. For example, if your counter to a customer’s claim that they cancelled a subscription for an online service is that the customer agreed to a minimum term, it doesn’t make sense to ask you for shipping and tracking details. When your integration supports it, Stripe automatically captures the product type based on the original payment.
3 Assemble your evidence: The second page of the form has a dynamic set of sec tions representing the most relevant details you can provide for your individual case.
In the Supporting Files section, use the File Upload tool to attach evidence that matches the checklist of evidence types relevant to your dispute type and counter argument. For each uploaded file, specify which type of evidence it satisfies. Youcan only submit one file per type of evidence, so if you have several files representing one type of evidence, combine them into a single, multi-page file.
Consider the following guidelines to make sure your supporting files are effective:
Consult the evidence recommendations for your specific dispute category.
For fraudulent disputes in particular, if your dispute might be covered by the lability shift rule, we populate 3D Secure information such as the Electronic
Comerce Indicator (ECI) automatically for you.
Organise each piece of evidence according to the evidence type it satisfies –
be as succinct as possible.
Combine items of the same evidence type into a single file.
Check that your evidence files don’t exceed the combined size limit of 4.5 MB.
Banks evaluating the dispute won’t review any external content, so don’t include:
Audio or video files
Requests to call or email for more information
Links to click for further information (for example, file downloads or links to tracking information)
4 Background evidence: The other sections of the second page vary depending on the dispute type and your answers in the first page. When your integration supports it, Stripe automatically captures the data for these sections and pre-populates both the API evidence object attributes and the form fields in the Dashboard. But if any of these fields aren’t pre-populated, include as much information as you can before you submit your response. These sections can include:
Shipping details
Refund policy details
Customer details
Product details
The more information your integration collects and passes to Stripe when your customer makes a payment, the better your ability to prevent disputes and fraud from occurring, and challenge them effectively when they do.
5 Submit evidence: Click the tickbox to acknowledge your understanding that your response is final. After you submit it, Stripe automatically puts the evidence you provide into a format accepted by the issuing bank and submits it for consideration. At this point, you can’t amend what you’ve submitted or provide any additional information, so make sure to include every relevant detail.
5 Check the dispute status
After you submit a response, the status of the dispute changes to under_review. When the issuer informs Stripe of its decision, we inform you of the outcome by email, in the charge.dispute.closed webhook event, and by updating the dispute status in the Dashboard and the Dispute API object to one of the following:
won indicates that the bank decided in your favour and overturned the dispute. In this case, the issuing bank returns the debited chargeback amount to Stripe, and Stripe passes this amount back to you. In some regions, the dispute fee might be returned. Please see Stripe pricing for details.
lost indicates that the bank decided in the account owner’s favour and upheld the dispute. In this case, the refund is permanent and the dispute fee isn’t returned.
In some cases, the bank will provide additional details about the dispute decision. Select View issuing bank response under Relevant documents in the Dispute details to view them.
Dispute response best practices
Learn how to format the most convincing evidence to challenge a dispute.
When an account owner disputes a payment with their bank, they must provide evidence to support their claim. In many cases, the bank’s goal is to protect their customer from having to pay for something they didn’t authorize or feel was misrepresented or damaged.
As the seller, you have the right to counter the account owner’s claim and provide evidence that supports your case. While Stripe doesn’t influence the ultimate outcome of the bank’s decision, our goal is to help you defend the dispute—we base the best practices that we provide here on our experience resolving disputes.
Likelihood of winning disputes
Your chances of overturning a dispute vary significantly based on several factors, including:
The type of dispute
The strength of the evidence you submit
The type of payment (debit, credit, digital wallet, and so on)
The type of purchase (online, in-person, physical product, service, and so on)
Stripe’s Radar for Fraud Teams uses Radar’s machine learning (ML) models to estimate your chances of winning a dispute. It gives you a prediction score in the dispute details page of your Dashboard, so you can prioritize disputes.
If you’re enrolled in Radar, but don’t see a win likelihood prediction next to a dispute, it’s likely one of the following reasons:
The payment wasn’t made with a credit card
The payment has only received an inquiry, not an actual dispute
An error prevented us from generating a prediction (this is rare)
The prediction score ranks your likelihood of winning a dispute that you’ve submitted relevant evidence for from lowest (one dot) to highest (five dots). The following table shows the expected win percentage for each ranking. Even in the most favorable cases, it’s very difficult to overturn a disputed payment.
|
DISPUTE WIN LIKELIHOOD RANKING |
CHANCE OF WINNING THE DISPUTE |
|
5 dots |
60% |
|
4 dots |
40% |
|
3 dots |
25% |
|
2 dots |
15% |
|
1 dot |
5% |
Keep your evidence relevant to the dispute reason and to the point
Card issuers review thousands of dispute responses every day. Writing a long explanation to them isn’t going to make your responses more convincing. Similarly, providing evidence about your clearly stated return policy isn’t relevant for a dispute claiming that the customer never received the product. Instead, describe clearly and concisely why the claim is unreasonable and how your evidence proves that, using a neutral and professional tone. For example:
Jenny Rosen purchased [product] from our company on [date] using a Visa credit card. We shipped the product on [date] to the address provided by the customer, and it was delivered on [date], as shown in the tracking file provided, so the claim that the product was not received is not true.
You can investigate the dispute while collecting evidence. For example, you can take a look at Google Maps and Street View to see where your delivery took place, or check social media like Facebook or LinkedIn to help establish the customer as the legitimate cardholder.
Many businesses also include email correspondence or texts with their customer, but be aware that these exchanges don’t verify identity. If you’re going to include them, make sure to include only the relevant information (for example, if you’re going to include a long email thread, redact any text that only quotes previous emails).
Your evidence should be factual, professional, and concise. While providing little evidence is a problem, overwhelming the card issuer with unnecessary information can have the same effect.
Include proof of customer authorization
Fraudulent disputes account for over half of all disputes. It’s important to prove the legitimate cardholder was aware of and authorized the transaction in such cases. Any data that shows proof of this is a standard part of a compelling response, such as:
AVS (Address Verification System) matches
CVC (Card Verification Code) confirmations
Signed receipts or contracts
IP address that matches the cardholder’s verified billing address
Stripe always includes any AVS or CVC results along with the purchase IP address (if available from your Stripe integration). But if you have any other evidence of authorization (for example, 3DS authentication) include it too.
Include proof of service or delivery
In addition to fraudulent disputes, claims from cardholders that products or services weren’t delivered, were defective or unsatisfactory, or not as described are also potential dispute reasons. Assuming the product was not faulty, was as described, was shipped and delivered prior to the dispute date, and so on, you’ll want to provide proof of service or delivery.
For a merchandise purchase, provide proof of shipment and delivery that includes the full delivery address, not just the city and postal code verification.
If your customer provides a “Ship to” name that differs from their own (for example, a gift purchase), be prepared to provide documentation explaining why they’re different. While it’s common practice to purchase and ship to an address that doesn’t match the verified billing address for the card, this is an additional dispute risk.
If your business provides digital goods, include evidence such as an IP address or system log proving the customer downloaded the content or used your software or service.
Include a copy of your terms of service and refund policy
When it comes to disputes, fine print matters. When it comes to returns or refunds, it’s critical to provide proof that your customer agreed to and understood your terms of service at checkout, or didn’t follow your policies. A clean screenshot of how you present your terms of service or other policies during checkout is an important addition to your evidence—it’s not enough to include a text copy of these only.
Combine files of the same evidence type
You must specify an evidence type for each file you upload, and you can only submit one piece of evidence per type. For example, if you have several items representing communication with your customer (email messages, text screenshots, phone transcripts, and so on), combine them into a single file, because you can only identify one file as Customer communication.
Formatting documents and images to upload
Include large, clear images for review. Whether you upload files through the dashboard or the API, both have limitations on the acceptable file types and the combined file size.
Only PDF, JPEG, or PNG file types are accepted
The combined file size can’t be more than 4.5MB
The combined page count must be less than 50 pages
You can compress your files with tools such as Smallpdf
When submitting documents or images as evidence, use the following recommendations to make sure they can remain legible:
Use a 12 point font or larger
Make sure that documents are US Letter or A4 size, in portrait orientation (you can still add screenshots to your documents in landscape orientation)
Use bold text, callouts, or arrows to draw attention to pertinent information
Avoid using color highlighting
When uploading screenshots:
Crop the screenshot to the area of interest and circle any key components (for example, delivery confirmation or signature)
Use the text fields in the dispute evidence form to describe what the image contains and how it supports your response
The card issuer will consider a response incomplete and won’t review it if it contains any illegible text or data.
Accepting disputes
You can accept a dispute, effectively agreeing with the cardholder that the dispute was valid for the reason given. Accepting a dispute isn’t considered an admission of wrongdoing and is sometimes the most appropriate response. The customer has already received their refund through the dispute process – if you agree with the refund, it’s best to accept the dispute. This is the action you should take if you don’t intend to respond and submit evidence. Although accepting disputes doesn’t negatively affect your business any further, it’s not a viable alternative to an effective refund or returns policy. Dispute activity is calculated based upon the disputes received, not won or lost, so dispute prevention is critical.
Note
Disputes incur a dispute fee that still applies if you accept the dispute.
Misunderstandings
For disputes that are the result of a misunderstanding, your customer can tell their card issuer that they no longer dispute the transaction. It’s still important that you submit evidence to show that the payment was valid, however, and to make sure that the card issuer knows you’re not accepting the dispute.
In cases where you agree that the customer should keep the disputed funds, accept the dispute rather than ask the cardholder to withdraw the dispute for a regular refund. Remember, the card networks don’t consider how many disputes you win or lose, only how many you receive—a withdrawn dispute still counts as a dispute.
Disputes on partially refunded payments
While uncommon, a customer can dispute a payment for the full amount even if they’ve already received a partial refund (for example, a refund of a smaller amount that has been agreed upon). We understand this can be frustrating as it leaves you responsible for the partial refund you’ve already processed and the full amount disputed, though card issuers are very willing to rectify this situation.
Even if you plan to accept the unrefunded portion of the dispute, it’s important for you to provide evidence of the partial refund in your response. This should include the amount and date of the refund, and even a screenshot of the refund information from your Dashboard (this is known as a “credit issued” response).
In most cases, the card issuer cancels the original dispute and then creates a separate one for the corrected amount. On Stripe, we use the existing dispute to track the overall outcome. If the dispute is fully resolved in your favor, you receive the entire amount back. If it’s not, you only receive the partially refunded amount. In this case, the dispute’s status is set to lost, and in the Dashboard, the dispute is marked as “partially won”.