If a customer for some reason wants the funds returned from your user, they can ask them to issue a refund. If your user refuses, the customer may ask their issuer to make a chargeback (sending the funds back from your user to the customer). After a chargeback is initiated, your user can dispute it in some cases. If a dispute is allowed, your user must provide all necessary documents to either the acquiring bank, or to the payment processor.
There are various reasons for filing disputes:
- Fraud
- Consumer disputes
- Processing errors
- Authorization
When possible, Adyen helps your users to automatically dispute chargebacks, and also provides extensive risk management services to analyze fraudulent transactions and minimize chargebacks.
The dispute process starts with one the following events:
- Notification of Fraud (NOF): No money is withdrawn from your user's account, but they are required to act proactively, for example, block the shopper. This transaction can become a chargeback if there is no 3D Secure liability shift.
- Request for Information (RFI): No money is withdrawn from your user's account, but they are required to supply additional information to the issuer. If your user does not respond to the RFI in a timely manner, a chargeback may take place.
- Notification of Chargeback (NoC): A chargeback has been initiated by the issuer, and can be defended. Adyen will automatically defend chargebacks that do not require action on your user's part, for example, fraud chargebacks for which there was a liability shift.
Your users can view, accept, and defend disputes through Essentials. The type of event is indicated in the reason code of the dispute.
If required, you can also manage disputes on your user's behalf through your Customer Area.
View disputes
To view your users' disputes:
- Log in to your live Customer Area.
- Switch to the appropriate merchant account.
- Go to Risk > Disputes.
- Select the dispute on which you want to get more information.
If a dispute is invalid, Adyen's auto-defense is triggered. In this case, your users do no have to take any action.
Some disputes are not open for defense, for example, Bankers' Automated Clearing Services (BACS) Direct Debit chargebacks.
Avoiding chargebacks
There are several ways to prevent chargebacks, such as:
- Increasing authorisation requirements. For example, forcing 3D Secure on payments.
- The timely initiation of refunds. This ensures that the funds are returned before customers can file a chargeback.
- Proactively informing customers of delivery timeframes and the type of goods that are being sold. For example, notifying customers of the transition from a free trial to a paid subscription.