7 Cardinal Reasons Merchants Lose Chargeback Disputes

Merchants lose chargeback disputes for seven main reasons: misreading the reason code, missing the response deadline, sending weak evidence, avoidable business errors, poor coordination with the acquirer, ignoring early alerts, and slow manual work. Most losses trace back to one missing record or one missed date, not a weak case. To turn those losses around, follow this guide on how to win chargeback disputes.

eCommerce merchants have realized that treating chargebacks as a business expense is not sustainable. Yet many still lose about half the disputes they fight:

Self-reported by merchants in four surveyed countries. Source: Mastercard 2025 State of Chargebacks report, research by Datos Insights.

Shopify merchant Bon writes (via the Shopify forum):

“Lately, we seem to be losing every chargeback. And it seems very unfair. These are real customers, and they don't seem to be setting out to commit fraud. They just seem lazy or people who become agitated easily. Yesterday I lost a case where a customer ordered the wrong size item, they contacted us and explained the issue.

We said no problem and sent them a return mail label. They were not happy with that reply so they opened a chargeback. We explained to the bank that we shipped what the customer ordered and did all we could to make them happy.

The bank sided with the customer and refunded their money, and we do not have the product and lost the shipping fee and other fees as well. This is one example of similar weekly occurrences.”

Stay with me as we dissect the seven cardinal reasons merchants, like Bon, lose chargeback disputes.

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1. Not Understanding the Chargeback Reason Code

Chargeback reason codes are supposed to help merchants formulate requisite chargeback disputes. But they don’t always live up to that expectation. Seriously, chargeback reason codes are one of the reasons merchants lose chargeback disputes.

Here’s why:

1. The networks do not have streamlined chargeback reason codes. Each card brand has distinct chargeback reason codes. The codes exist to track cardholder disputes, but the mixed numbering is confusing.
2. Chargeback reason codes do not reflect cardholders' true intent. The cardholder might tell their bank they did not authorize the transaction when, in reality, they’re trying to steal from the business.
3. Chargeback reason codes lead to businesses using bad data for reporting and analytics. When a friendly-fraud dispute is coded as genuine fraud, your fraud data gets skewed. That can push fraud tools toward false declines of good customers. Each network uses its own code set, so check the Visa chargeback reason codes and the other networks’ lists before you respond.

Reason codes also vary by issuer type: neobank-issued debit cards like Chime follow Visa's own code set, and misreading a Chime dispute code is the same mistake described above.

Using the chargeback reason code as a single source of truth in your chargeback dispute and fraud prevention is equally old school. Savvy eCommerce merchants are now going a step further. They’re using AI-assisted chargeback management to pull insights from 1,000+ data points per order to support their chargeback strategy.

They also match evidence to each code; our chargeback evidence matrix by reason code shows how.

2. Failure to Stick to Chargeback Dispute Guidelines

One of the most essential guidelines for disputing false and fraudulent chargebacks is abiding by the card networks’ chargeback time limits. Visa, Mastercard, Amex, and Discover have fixed timelines for every stage of the dispute cycle.

Network rules give the acquirer a fixed window to answer each stage of a chargeback dispute. The windows most often cited are:

Scroll to compare all columns. Use the arrow keys when the table is focused.

Your processor needs time to forward your evidence, so its date comes first. Stripe, for example, gives merchants roughly 7 to 21 days depending on the network. The network clock also starts when the dispute is filed, not when you see the notice. That shortens your time further.

Mix up these windows, and it is easy to run out of time and lose by default. Use the date on each case notice.

What Happens If a Merchant Does Not Respond to a Dispute?

If a merchant does not respond to a chargeback dispute by the deadline, the merchant loses it by default. The issuer keeps the funds with the cardholder, and the case closes without review.

• You lose the sale amount plus any goods already shipped.
• You still pay the dispute fee. It applies whether you win, lose, or accept.
• The case still counts toward your chargeback ratio, because networks count disputes received, not won or lost.
• Amex records it as R13, No Reply, when it gets no response within 20 days.

If you do not plan to fight, accept the dispute instead of ignoring it. When you do fight, answer every case with a short chargeback response letter and matching exhibits. For what follows a loss, see what happens if you lose a chargeback.

3. Lack of Compelling Evidence in Chargeback Disputes

Card networks treat compelling evidence as proof that the cardholder took part in the transaction, received the goods or services, or benefited from the purchase.

Without records that clearly show the disputed charge is legitimate, the chargeback dispute is likely to fail.

Strong chargeback dispute evidence often includes:

• Proof of purchase or transaction: An invoice or receipt that shows what the cardholder bought and how much they paid.
• Proof of delivery or digital merchandise use: Shipping receipts, tracking, delivery confirmation, IP address, streaming timestamps, and activated serial numbers all prove delivery or use.
• Customer Communications: Emails, chat logs, or call notes that show the customer was happy or the issue was resolved.
• Store policies and signed agreements: A chargeback dispute without proof the customer accepted your policy or signed an agreement often fails.
• Primary data from previously non-disputed transactions: Under Visa Compelling Evidence 3.0, liability for a 10.4 card-absent fraud claim shifts to the card issuer if a merchant can provide:
  1. Two or more earlier undisputed, non-fraud transactions on the same card, 120 to 365 days before the dispute.
  2. At least two matching data elements across those sales (account or login ID, delivery address, device ID or fingerprint, IP address), one of which is the IP address or device ID.
• Fraud detection data: Your chargeback dispute evidence should also show the payment was approved and the buyer was verified.

The exact documentation outline might differ depending on the nature of the case you're dealing with.

4. Poor Business Practices

Chargeflow’s State of Chargebacks Report found that 79% of all ecommerce chargebacks are friendly fraud. Yet, a tangible percentage of disputes are attributed to merchant missteps.

Regardless of the strength of your chargeback dispute, if you billed the customer twice, for example, you will still lose the case.

Close all the loopholes that could trigger customer disputes. These are in two folds:

1. Pre-transaction due diligence

• Staff training on transaction processing best practices
• Strong fraud checks and customer verification
• Accurate product descriptions so buyers know what they get
• Clear prices, billing terms, and policies

2. Post-purchase assiduity

• Excellent customer service to prevent buyer’s remorse
• Transaction records filed as regulations require
• Good record keeping so documents are easy to find

The list is by no means exhaustive. Understand how payments work for your industry. Improve your business practices. And ensure you’re not opening backdoors for scammers to commit online shoplifting.

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5. Poor Relationship with Acquirer

Merchant acquirers process chargeback disputes on merchants’ behalf. A poor relationship with your acquirer can lead to lost cases, late responses, and wrong case details.

For example, Nigerian fintech Shago Payments took its acquirer, Fidelity Bank, to court in 2024 over chargeback fraud claims worth ₦811 million. Cardholders filed several chargeback claims against Shago between June and August 2023. Shago claims that Fidelity Bank “unilaterally resolved” the chargeback claims in favor of cardholders.

While this incident is unusual and nuanced, it still reflects how a poor relationship with your acquirer can be problematic.

Working closely with your acquirer is vital as it helps you improve dispute remediation efforts. Acquirers have extensively more payment information than you do. They’ll help you understand chargeback causes better.

6. Ignoring Chargeback Alerts and Trends

Technology tools like Chargeflow alerts give merchants a head-start in chargeback processing. It helps you know about the case before it enters “day one,” so you can prepare for a chargeback dispute or contact the customer to resolve it.

Another key tool for an effective chargeback dispute is ChargeScore, a complementary solution from Chargeflow. It scores your odds of winning each case from past data and customer behavior. That way, you’re not disputing friendly fraud chargebacks like someone boxing the air. Rather, you can quickly generate chargeback response templates to build air-tight cases.

7. Using Manual Chargeback Disputes

Chargebacks have always favored the cardholder. New tech makes it even harder for merchants to win.

For instance, there’s been a growing report of scammers using AI to bypass certain fraud checks to make unauthorized transactions. Such cases are difficult to crack manually. For a challenge, the merchant needs records that address the specific allegation. No reliable figure caps the manual win rate. Judge chargeback dispute results by case type, evidence, and timing.

Automated chargeback management cuts repeat prep work. Results still depend on the evidence. Each response still goes through chargeback representment, where the issuer reviews your evidence. Measure labor savings from chargeback automation versus manual using real hours and labor costs. Then compare net recovery on similar closed cases.

Using manual chargeback disputes makes you lose money. It can cause you to enter the card network monitoring program.

Elevate Your Chargeback Disputes: A Case Study of Elementor

Elementor is a software company best known for its WordPress website builder. Like most online businesses, chargebacks were more than an annoyance for Elementor. Each dispute took about 30 minutes to process by hand, which slowed the team and hurt customer service.

That puts pressure on their team and resources. Elementor needed a solution to address the problem without requiring the amount of time they spent.

Enters Chargeflow, a transformation chargeback solution for global commerce.

Measurable Results Beyond Time Savings

After moving to Chargeflow, the Elementor team saw fast results:

• Expedited Dispute Resolutions: Chargeflow cut dispute processing time by 90%.
• Improved Win Rates: Elementor’s chargeback dispute success rates doubled.
• Reduced Operational Costs: Elementor moved staff to other work by automating slow manual tasks.

These gains made Elementor faster and freed its team to focus on customers. Read the full case study.

Frequently Asked Questions

What happens if a merchant does not respond to a dispute?

If a merchant does not respond to a dispute before the deadline, the merchant loses by default. The cardholder keeps the refund, the merchant pays the dispute fee, and the case still counts toward the merchant’s chargeback ratio.

Why do merchants hate chargebacks?

Merchants hate chargebacks because each one costs the sale, the goods, and a fee, and it raises the chargeback ratio that card networks monitor. Mastercard projects global chargeback costs of $36.9 billion in 2026, rising to $46.1 billion in 2029 (Mastercard, updated June 2026).

Do merchants usually fight chargebacks?

Many merchants fight only some chargeback disputes because each response takes time. Merchants who answer every winnable case with matching evidence recover more revenue than those who respond selectively.

Can merchants stop disputes before they are filed?

Yes. Chargeback alerts from Visa and Mastercard networks warn merchants about a dispute before it becomes a chargeback, so the merchant can refund and avoid the case and its fee.

Turn Chargeback Losses Into Recovered Revenue

Chargebacks are a major headache, especially for eCommerce businesses. They drain revenue, damage your reputation, and, in severe cases, result in the loss of payment processing rights.

Merchants can dispute meritless chargebacks and recover lost revenue. Now you know the seven cardinal reasons disputes fail, and each one has a fix.

Make your chargeback disputes productive. Understand the reason codes, provide compelling evidence, stick to the guidelines, improve your business practices, collaborate with your acquirer, use chargeback alerts to stay ahead, and automate your disputes for better outcomes.