IN THIS ARTICLE:
Learn what a Chargeback is, and what you need to do to properly respond to the dispute and adjust the ledger within iClassPro if necessary.

You can view more information about Chargebacks below:

• What is a Chargeback?
• The Chargeback Process
  • A customer disputes a transaction by contacting their bank.
  • Merchant Notified of Chargeback Received
  • Merchant Response
• Recommended Documentation To Re-Present a Chargeback
• Preventing Chargebacks
• Adjusting the Family Ledger in iClassPro

What is a Chargeback?

A chargeback occurs when a customer contacts a credit card issuing bank to dispute a transaction. The card issuer will contact us to get more information about the transaction, and we will request any supporting documentation from you to assist us in challenging the dispute. The cause of the disputes can vary from the customer being dissatisfied with their purchase, a customer not recognizing the transaction, a customer not authorizing the transaction or a customer reporting a fraudulent transaction.

The timeframes and procedures surrounding the dispute process are managed by the credit card networks (Mastercard, Visa, Discover, American Express). We do our best to help re-present your case to the card issuer who will determine the outcome of the chargeback.

When a chargeback is received, you’ll receive a chargeback reason code from the issuing bank that gives a reason for the dispute.

A list of dispute reasons by card issuer is available here: Chargeback Reason Codes

The Chargeback Process

For most transactions, cardholders have up to 120 days from the transaction date to dispute a charge. At that point, we will notify the merchant of the dispute and the merchant has 7 to 30 days to supply documentation to re-present the transaction. After the case is re-presented, the card issuing bank has up to 45 days to challenge the transaction further.

1. A customer disputes a transaction by contacting their bank.

• For most transactions, cardholders have 120 days from the transaction date to dispute a charge.
• The card issuing bank provides a provisional credit to the customer for the transaction amount.

2. Merchant Notified of Chargeback Received

• The chargeback amount is debited from the merchant’s account and the merchant is notified via email using the email address where settlement summary emails are sent. 
• Chargeback details will also show up in the Merchant Portal which can be accessed at https://merchantportal.iclasspro.com. 
• The merchant will be charged a non-refundable $25 chargeback fee. 

3. Merchant Response

1. Re-present
   • The merchant typically has 7-30 days (depending on the card network ie. Mastercard, Visa, Discover, American Express) to respond to the case by providing supporting documentation. The documentation is passed on to the card issuer to make a determination. A credit will be issued once the case is won. The card issuer has up to 45 days to respond. If the documentation is found satisfactory, the chargeback is declined and the customer will be charged again for the sale. If the documentation is found to be unsatisfactory, the cardholder will keep the funds.
2. Accept
   • The merchant can choose to “accept” the chargeback and allow the funds to be refunded to the cardholder. The chargeback will be automatically accepted if the merchant does not reply by the reply-by date.

Recommended Documentation To Re-Present a Chargeback

Providing sufficient documentation and keeping thorough records is vital to winning chargeback cases. We recommend the following documentation each time when re-presenting a disputed transaction:

• Proof of billing authorization
  - Signed receipt
  - Recurring billing agreement or contract
• Proof that customer utilized services or received merchandise
  - Attendance records
  - Invoice(s)
• Proof that a refund was processed
  - Transaction Receipt

Preventing Chargebacks

The best strategy for chargebacks is prevention. Below is a list of general best practices to help prevent chargebacks.

• Give Great Customer Service & Post Return Policies Clearly
  Many customers will go to a business first to resolve a dispute. Making it easier for customers to contact you rather than disputing the transaction with their bank is key to prevention because it gives you an opportunity to address and resolve the customer's concerns before a chargeback is initiated.
• Use a Clear DBA (Doing Business As) Name that your customers will recognize
  The DBA name is what will appear on cardholder statements. If you're unsure how transactions currently show on credit card statements, please contact us.
• Ensure that you have the correct customer service phone number showing on cardholder statements
  This is important in case the customer has a question about the charge.
• Swipe Cards When Possible
  When the customer is present, swipe the card when possible and get a signature. This makes it easier to prove that the customer authorized the payment.
• Use Address Verification Service (AVS)
  AVS works by comparing a customer's name, address and zip code with the information on file at the credit card company. Mismatches could indicate that it's a fraudulent transaction. iClassPro will automatically attempt to get an address match, however, it will not decline the transaction due to a mismatch. You can set the gateway to automatically decline due to mismatch to enforce stricter requirements. If you need help with this, please contact us.
• Communicate
  Communicate with customers about their transactions. Visa recommends sending a billing reminder 10 days prior to the transaction for recurring transactions. Also, emailing transaction receipts can help customers recognize charges on their credit card statements.

For more resources on the chargeback process or preventing chargebacks, please visit the merchant resource center at Visa.com and Mastercard.com. 

Adjusting the Family Ledger in iClassPro

Once a payment has been connected to a Chargeback, it cannot be voided or refunded within iClassPro.

If you need to balance out the family ledger following a Chargeback, the recommended method is to delete the payment. Because iClassPro keeps records of when payments are deleted and reflects those on financial reports, this is the best method to maintain the accuracy of historical reports, as the payment will still show that it existed between the time it was created and deleted, and will show which charge(s) it was applied to during that time frame.

For more information about how deleted payments are reflected on financial reports, please refer to the following documents:

• Understanding the Bank Deposit Report
• Understanding the Program Deposit Split Report

If you would like additional assistance with chargebacks, please contact us at payments@iclasspro.com.