What is a Chargeback?

A chargeback is a forced transaction reversal initiated by an issuing bank on behalf of a cardholder. Chargebacks were created to protect credit card customers from the fraudulent use of their cards. 

Chargebacks are ordered by the bank that issued the customer’s payment card. Sometimes the bank will do this on their own when fraud or an error is discovered, but most often they occur because the cardholder has contacted the bank to dispute a transaction for some reason. 

There are some legitimate reasons for which a customer might file a chargeback. The main one is true fraud, where the customer's credit card, card number, or account is stolen and used to make a fraudulent purchase. 

In most other cases, even if the reason for the chargeback is a legitimate one such as undelivered or incomplete order, the problem will be solved by contacting Zuppler customer service.

What is a Chargeback Fraud?

Chargeback fraud, often called friendly fraud, is when a cardholder pursues a chargeback through their issuing bank for reasons that are not legitimate. It is quite simple for a cardholder to claim that true fraud occurred when in fact it did not.

Chargeback fraud or friendly fraud can happen in one of two ways:

  1. The customer makes an accidental purchase or doesn't remember a purchase, and instead of working with the merchant goes directly to their issuing bank and initiates a chargeback. This often happens when individuals make accidental purchases with online apps or they don't recognize a purchase on their report that they actually made. 

  2. The customer knows that they made a purchase and, either because they're unhappy or because they just want free food, they go to their bank claiming that the purchase was fraudulent. 

Unlike chargebacks due to true fraud (like card loss, card theft, or identity theft), friendly fraud chargebacks are either mistakes better left to customer service or are outright fraud in and of themselves. 

Because of this fact, Zuppler has to regularly fight chargebacks through representment.

What is a Pre-arbitration Chargeback?

A pre-arbitration is a second chargeback that can occur after a chargeback has been reversed. If the bank becomes aware of new evidence, often provided by the cardholder, that undermines the case the merchant presented, it can initiate pre-arbitration. 

Chargeback Process

When a customer files a Chargeback dispute with the issuing bank, the issuing bank contacts the acquiring bank and informs them of the Chargeback. The customer can raise a chargeback anytime between 45 to 180 days depending on the payment method and the bank's terms. The acquiring bank debits the amount from the Zuppler's account.

Once the funds are debited from the Zuppler's account, an alert is sent. A reason code is mentioned in the alert, this helps to identify the cause of the chargeback. Here, are 2 options: to either dispute or accept the chargeback. If the claim is legitimate or if we choose to accept the chargeback, the chargeback is considered lost.

In case we need to dispute the chargeback, then we will have to provide evidence to validate or disapprove the dispute. We are generally given 7 - 10 days to submit the evidence. The dispute then goes through a resolution process which can take approximately anytime between 30 - 90 days. If the evidence is valid, then we win the chargeback, if not, we lose the chargeback.

Note - We do have internal setup to block addresses, emails and phone number if we find cases of true fraud.

Chargeback Fee

A flat $15 fee is charged for each chargeback and Pre-arbitration chargeback.

Does Zuppler Covers Chargebacks?

Zuppler covers fraud chargebacks for the orders placed through google channel. We do notify Restaurants or Delivery service about each chargeback along with the order receipt for their reference.

Adjustments or Reverse Adjustments for Chargebacks 

After responding to the chargebacks we add adjustments for each chargeback along with the chargeback fee of $30 ($25 for AMEX) except for Google (fraud) order chargebacks. 

We wait for at least 4 to 6 months before reversing chargeback adjustment since customer can file pre-arbitration after the case is won.

  • We reverse chargeback amount plus $15 if chargeback is won without Pre-arbitration.
  • We reverse only chargeback amount if case is won after pre-arbitration.
  • In case of AMEX chargebacks, we reverse only the chargeback amount if the case is won.

Does Zuppler reach out to Customers regarding Chargebacks?

Yes, we reach out to customers for each chargeback along with the order and transaction receipt. If we do not hear back from customer, we try to connect with them via call or text explaining the charge.