Avia Chen
Co-Founder, Marketing & Product
Table of contents

No merchant wants to receive news of a transaction dispute. Simply put, a contested charge means a potential loss of revenue. Add in the host of extra dispute costs (chargeback fees, penalties, etc.) and it's easy to see why payment disagreements are a major problem for retailers. 

But for consumers, the dispute process is a valuable tool. The ability to refute a credit card charge safeguards their financial well-being. Without protection from system errors or fraud, no customer would risk using their credit card. 

Unfortunately, merchant dispute management strategies often forget about this consumer perspective. And that limits how effective any response plan might be. Real-life people dispute a transaction—knowing why they disputed a charge is crucial if you want sustainable, accurate defenses. 

Let’s explore transaction disputes from the consumer perspective in more detail. 

Understanding Transaction Disputes

A transaction dispute is a disagreement between you and a customer. Mistakes happen—consumers are allowed, by law, to question the validity of any charge. If one of your customers finds reasonable proof of a problem, they may file a complaint to resolve the issue. 

Common transaction dispute reasons include: 

  • Billing errors (double charges, technical glitch, incorrect values)
  • Unauthorized charges (unknown payments, fraud)
  • Product quality problems (damaged goods, missing items, product not as described)
  • Non-delivery (did not receive the product in the agreed-upon time frame) 

Transaction disputes are a consumer legal right under the Fair Credit Billing Act of 1974. The purpose is to protect customers from unfair credit billing. That supports the informed use of credit for better economic stabilization. In other words, consumers can feel confident in the open credit system since they do not carry the financial burden of fraud or errors. 

The Consumer's Perspective in Disputing Transactions

Fair credit billing laws make the dispute process a rightful consumer tool. But that doesn't mean it is all fun and games. Most customers go through a similar journey with each transaction dispute: 

  1. Discovery: First, a customer finds an incorrect charge. Problems on a billing statement are no welcome surprise. Corresponding emotions of urgency, frustration, and distrust can all arise.
  2. Merchant contact: Second, the customer usually attempts to resolve the issue with you, the merchant. But if they cannot make contact or feel that their concerns go unaddressed, emotions of anger or helplessness may arise. 
  3. Complaint filing: Third, with no other recourse, the customer files a dispute with their card issuer. Some consumers may feel a sense of vigilance at this point, especially in instances of true fraud. But many may feel anxiety with complex cases that have no easy resolution. 
  4. Evidence: Fourth, the customer has to prove their claim. This can involve a lot of time and labor, which can lead to a sense of dissatisfaction. Such dissatisfaction only compounds if the customer discovers you are fighting against their claim. 
  5. Investigation: Fifth, consumers must wait as the card issuer assesses the dispute. Impatience and fear can set in as customers await deliberation.
  6. Resolution: Finally, customers will likely feel relief from a correct resolution (especially if it results in a chargeback). But if the process is unfair and strenuous, the client relationship may fracture beyond repair. 

The Impact of Disputes on Consumers

Clearly, consumers have some personal stakes involved in each transaction dispute. But lengthy disputes also have several secondary impacts, just as it does with merchants: 

  • Financial strain: Consumers undergo the same financial uncertainty as merchants during the dispute cycle. For example, they too must manage a temporary loss of funds. And budgeting for that can be complicated. Confused account tracking can cause extra stress. 
  • Inconvenience: Consumers also must invest significant time and effort when disputing a charge. The same as merchants, they have to file paperwork, build evidence, and contact issuers. These activities disrupt normal daily activities and present an inconvenience.  
  • Distrust: Consumers also lose faith in the payment system and potential in the merchant they purchased from. A prolonged dispute creates friction that negatively impacts the customer experience. For example, issuers may freeze the client's credit account during cases of identity theft. Even when resolved, such issues make using a credit card uncomfortable. 
  • Penalties: Consumers may also face direct account ramifications, just as merchants would. For example, those who engage in chargeback fraud may be penalized. Credit scores aren’t affected, but the account is marked, which can affect future ability to qualify for a loan. Some cases may even involve account closures. 

Reasons for Consumers to Dispute Transactions

If the dispute process is no simple task for customers, why might they go to such lengths to correct credit card charges? In reality, many real-life instances understandably inspire customers to dispute a transaction. Here are some examples:

  • Unauthorized transactions (Conditions 10): Discovery of a charge that the customer did not authorize often means identity fraud. Such moments involve shock and a sense of violation that creates a strong demand for resolution.
  • Billing errors (Conditions 12): Think of someone on the edge of account penalty thresholds. Unexplained charges or double billing may appear to force them into fees or high-interest costs. Frustration and confusion in such cases may propel people toward dispute.
  • Product quality (Conditions 13): Consider consumers who have businesses that rely on your products. If parts are missing or arrive damaged, dissatisfaction and second-hand embarrassment can trigger a complaint.  
  • Non-delivery (Conditions 13): Consider a family who does not receive their Christmas gifts in time. Disappointment and impatience could drive the cardholder toward filing a dispute. 

What Merchants Can Do

While necessary, the dispute process does include emotional and financial friction. In an ideal world, everyone can find ways to reduce that friction—without losing the integrity of the dispute process. Here are some possible customer-centric defense strategies to help you achieve that goal: 

  • Preventative measures: If possible, limit the instances where your customers feel the need to dispute a transaction. Offer clear product descriptions, adopt quality control on products, and use fraud detection software.
  • Customer service: Resolve customer issues before they become disputes. Write customer-friendly policies, build easy access channels, and offer robust refund terms. 
  • Implement Alert Solutions: There are solutions available to merchants that provide them with a notification when a dispute is initiated (before it turns into a chargeback). This allows merchants to proactively address the issue before the bank or issuer conducts their initial investigation. These solutions reduce potential chargebacks arising from transaction disputes by up to 70%. Chargeflow offers its customers with the most sophisticated transaction dispute alert solutions on the market today.
  • Dispute resolution: Limit the damage inflicted on the customer relationship as consumers contest problem charges. Engage in prompt communication, provide detailed sale receipts data, and offer educational resources during the dispute process. 
  • Constant improvement: Evolve your dispute defenses based on why your consumers file a dispute. Use feedback mechanisms, leverage new technology, and regularly update your transaction process security.  


Transaction disputes are a critical aspect of eCommerce, impacting both merchants and consumers. While merchants need to worry about the financial implications, it is also necessary to understand the value of disputes from a consumer point of view. 

Transaction disputes can foster long-term relationships by protecting consumers. Customers who feel safe using their credit cards are more likely to engage with trusted retailers. That is why properly managing transaction disputes according to the customer's perspective is so important. 

To address disputes effectively, merchants should prioritize customer service, clear product descriptions, and proactive solutions like Chargeflow’s alert system. These consumer-centric strategies not only reduce dispute costs but also build trust and long-term relationships. 

Therefore, understanding and respecting the consumer's perspective in managing transaction disputes benefits both merchants and consumers, promoting a secure and mutually beneficial credit system. Invest in consumer-centric defense strategies that lower dispute costs without hurting the customer relationship. 


Average Dispute Amount
Average Dispute Amount
# Disputes Per Month
# Disputes Per Month
Time Spent Per Dispute
Time Spent Per Dispute
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