Name it—there is an eCommerce business for everything, from food to clothing to jewelry to electronics to personal care. According to the U.S. Census Bureau estimates, U.S. retail eCommerce sales reached approximately $1.2 trillion in 2024, reflecting an 8.1% increase over 2023.

As eCommerce thrives, so does the need and demand for seamless online and digital payments. However, this spike in online payments comes with risks. The FTC reported that in 2024, online shopping issues were the second most commonly reported fraud category, following imposter scams. 

Whether intentional or unintentional, online shopping issues and scams can trigger the entire chargeback process, a problem plaguing all eCommerce merchants. As we approach mid-2025, what are the most common chargeback mistakes and problems eCommerce merchants still encounter today, and what can eCommerce merchants do to address these? Read on to find out.

Important Chargeback Points that eCommerce Merchants Should Remember

To start addressing eCommerce chargeback issues, eCommerce businesses must remember these salient points about chargebacks and their process:

1. Chargeback trigger point: A chargeback does not occur unless a customer, who has made a successful transaction, reports it as erroneous or fraudulent to the issuing bank, regardless of the reason for the report. It is the issuing bank’s responsibility to contact the merchant who will contest this complaint. Without enough evidence, the issuing bank generally approves of the reversal.

2. Laws governing chargebacks: Several laws in the United States support customers' rights to chargebacks, including the Truth in Lending Act, the Fair Credit Billing Act, the Electronic Funds Transfer Act, and the Credit Card Act of 2009. Unfortunately, these chargeback regulations don’t prioritize merchants, and the burden of proving that the transaction was legitimate, including the costs incurred for the chargeback, lies with the merchant.

3. Merchant policy and documentation are critical for chargebacks.  “Compelling evidence” is crucial for merchants to dispute chargebacks. According to Mastercard, this could be in the form of customer records, receipts, signed contracts with a clear indication of return and refund policies, and other transaction data relevant to the chargeback reason code filed. 

4. Chargebacks can result from intentional friendly fraud or false claims. Not all chargebacks stem from good intentions. Most of the time, fraudsters exploit the government’s lack of protection for merchants to create false narratives about their purchases. They initiate a chargeback even when an item is received in good condition, thereby receiving their money back while keeping the item. 

According to the Chargeflow State of Chargeback 2024 report, friendly fraud now constitutes 79.03% of all chargebacks, meaning approximately 8 out of 19 cases. This underscores the growing trend of consumers abusing protections originally designed to safeguard legitimate disputes, leaving merchants vulnerable to increasing financial losses. Learn more about what friendly fraud is and how to prevent it here.

Chargeback Mistakes eCommerce Brands Still Make

Chargeback mistakes can cost eCommerce businesses, from shouldering chargeback process costs to lost sales and damaged reputation. The study, The Psychology of Chargebacks, dives into understanding why consumers dispute charges, and here are some of the key points eCommerce brands can take away:

Mistake #1: Slow Customer Response Times Lead to More Chargebacks

When asked how soon they would wait before filing a chargeback, 22.57% responded immediately, while 38.14% responded within 1-3 days, accounting for the largest portion of the responses. 

For eCommerce brands, this highlights how customers value a fast and prompt response to their queries and concerns; the lack of it triggers the entire chargeback process. This is particularly true for high-value items with high-risk inquiries, such as when customers of debt relief programs encounter issues with customer support, communication, or services, which can lead to them initiating a chargeback for service fees.

To address chargebacks caused by inefficient and slow response times, eCommerce brands should utilize chatbots, guides, tutorials, and detailed FAQ pages, which help address customer concerns promptly while alleviating pressure on customer support teams.

A prompt response is also necessary for merchants already undergoing chargeback procedures. For every successful transaction, a customer typically has 60 to 120 days to file a chargeback complaint with the issuing bank. However, a merchant isn’t given that much grace to file a dispute.

Depending on the card network, an eCommerce merchant should file a dispute within 45 days for Mastercard and 20 days for Visa. When the issuing or acquiring bank doesn’t receive proper documentation for the dispute on time, the dispute is considered final at the merchant's expense.

Mistake #2: Inefficient Support Channels Increase Disputes

Having a well-structured support channel is crucial in managing chargebacks before they occur. Not all customers are patient enough to wait 1-3 days before filing a dispute, and 22.57% of respondents who answered that they would file a chargeback claim immediately can only be addressed by building a dedicated and well-structured support channel that customers can talk to.

However, these are the areas where most eCommerce businesses stumble in terms of support channels:

1. Utilizing AI-only support channels 
2. Utilizing human-only support channels  

For example, a custom t-shirt business with an AI-only support channel lacks the human touch and compassion that human agents can offer. In contrast, human-only support channels often have longer wait times as they strive to address each t-shirt design or production concern. 

To address chargeback mistakes caused by inefficient support channels, eCommerce brands should utilize Name it—there is an eCommerce business for everything, from food to clothing to jewelry to electronics to personal care. According to the U.S. Census Bureau estimates, U.S. retail eCommerce sales reached approximately $1.2 trillion in 2024, reflecting an 8.1% increase over 2023. AI technology and human agents in customer support channels. This should be coupled with efficient escalation and advanced ticketing systems that can automatically filter which concerns can be handled by AI and which require human intervention.

Mistake #3: No Chargeback Management Tools to Fight Friendly Fraud

As online businesses and eCommerce continue to thrive, merchants should start strategizing and accepting chargebacks as part of the risks inherent in every eCommerce business. While chargebacks cannot be entirely avoided, managing them through the use of chargeback management tools can help flag potential chargeback transactions, identify lapses in payment systems, improve record-keeping, and minimize business losses.

Like how typical business systems automate the manual writing of invoice emails, chargeback management tools are equipped with unique features to help:

• Detect instances of friendly fraud through fraud analytics
• Helps the timely and complete submission of chargeback disputes
• Presents detailed analytics of chargeback causes and reason codes
• Receiving real-time alerts on chargeback complaints
• Reducing financial losses and damaged reputation caused by successful chargebacks

Without chargeback management tools, eCommerce brands risk juggling large volumes of chargeback complaints, manually processing the necessary documentation for each, and incurring significant financial losses due to lost sales and chargeback costs. 

A study by Juniper Research highlights the top five leaders in chargeback management in 2025 and how these market leaders are utilizing AI models and modular SaaS solutions to enhance purchase information, reduce false positives, and verify transactions to manage chargebacks.

Mistake #4: Unclear Return Policies and Product Descriptions Trigger Chargebacks

While it may seem like the norm, many eCommerce businesses struggle with handling transaction reversals or chargebacks due to a lack of proper documentation and unclear presentation of merchant return and refund policies, as well as product descriptions. 

Return and refund policies

Chargebacks aren’t under the merchant's control, but that doesn’t mean policies are ineffective in dealing with them. For example, when customers are aware of your return and refund policies before checking out, they are less likely to initiate a chargeback directly with the bank; instead, they would rather communicate with you first to receive a refund or return the defective item. 

Flexible return and refund policies help lower the risk of chargeback complaints. Rigid return and refund rules leave customers with no recourse if a product or service is not delivered as promised. 

Merchants offering services also collaborate with contract management software to streamline contracts and internal merchant return and refund policies. This ensures that both parties are aware of any terms, disagreements, and violations and can address them without prompting a chargeback.

Complete product descriptions

One of the most common reasons for chargebacks is when products or services received are ‘not as described.’ Customers set certain expectations of your products and services based on the description provided on your eCommerce website or platform.

If they don’t meet the described expectations, customers will request a legitimate chargeback, and worse, scammers may identify you as a target of friendly fraud. 

To address this, eCommerce brands should ensure that products and services are thoroughly and accurately described in words and should also include high-quality, actual product images instead of stock or sample images. Ensure that your product descriptions also eliminate technical words and jargon when possible, making them easily understandable to the general public to avoid misunderstanding.

Final Thoughts: How to Protect Your Brand Against Chargeback Risks

In today’s increasingly cashless economy, chargebacks have become an inevitable part of doing business online — but they don’t have to derail your success. 

While you may not eliminate every dispute, you can take proactive steps to drastically reduce them. Ensure your customers have easy support access and receive prompt responses before issues escalate. Invest in a robust chargeback management strategy and keep your policies transparent and well-documented to prevent misunderstandings. By acting on these principles, eCommerce merchants can stay one step ahead of chargebacks, protect their revenue, and continue growing their business with confidence.