How to Avoid Credit Card Disputes

Sunday, March 20, 2022

Every day the Heartland Dispute Department talks with merchants who want to know why there are chargebacks on their account. Many aren’t informed about the card brands’ rules and regulations or the risks associated with not running a transaction correctly. Here are tips to help safeguard your hard-earned dollars from the risk of disputes.

Many merchants aren’t aware of the rules and regulations they must follow or the risks associated with not running a secure payment transaction as the credit card issuer requires. The fact is, credit card issuers have specific requirements which help ensure transaction security for their customers, and merchants who accept these cards agree to the terms.

Here are some tips to help avoid credit card disputes and safeguard your hard-earned money from the risk of disputes:

Best practices for card-present transactions:

  • If the card has a chip, it must be inserted or scanned on an EMV-compliant terminal — never swiped!

  • Magnetic stripe cards must be swiped through the terminal in one direction only to obtain an approved authorization.

  • Obtain a valid authorization for every transaction.

  • If the card is declined, do not try again — request another form of payment.

  • Check the number on the card against the four digits of the account number displayed on the terminal and ensure any embossed account number matches the printed number.

  • For magnetic stripe cards that must be swiped, have the cardholder sign the transaction receipt and make sure the signature on the card matches.

  • Never key-enter a card-present transaction to avoid the higher risk of accepting a counterfeit card. 

  • Check the expiration date to be sure the card is still valid.

Best practices for card-not-present transactions

  • Obtain a valid authorization for every transaction.

  • If you receive a decline, require another form of payment.

  • Obtain a positive AVS and CVV match for every transaction.

  • Ship only to the address that received a positive AVS match when the transaction was authorized.

  • Require a signature on delivery for products shipped.

Dealing with unsigned cards

  • Ask the cardholder to sign the card and provide current government identification, such as a driver’s license or passport (if local law permits).

  • Make sure that the cardholder signature on the transaction receipt matches the one on the card and the additional identification.

  • If the cardholder refuses to sign the card, ask for another form of payment.

If the card has a “See ID” in place of a signature

  • Ask the cardholder to sign the card and provide current government identification, such as a driver’s license or passport (if local law permits).

  • Check the signature on the card matches the one on the transaction receipt and the additional identification.

Refund & Credit Policies

For card-present transactions, proper disclosure must be legibly printed on the face of the transaction receipt near the cardholder signature line. Don’t make refunds difficult, or this may invite chargebacks where the customer makes a fraudulent claim to the issuer rather than deal with your return requirements.

  • Do not process a refund on a different card number.

  • Do not refund with cash.

  • Do not issue a check as a refund.

Data that must be collected in a credit card transaction

  • The card account number.

  • The name on the card.

  • The card expiration date as it appears on the card.

  • The cardholder’s statement address.

  • If you are taking an order over the telephone: Record the time and date of your conversation, make a note of the details of the conversation, obtain proof of delivery whenever possible.

  • If you are taking an order through the mail or by fax: Obtain, a signature on the order from, always retain a copy of the written order, and obtain proof of delivery whenever possible.

Refund and credit policies

  • For mail orders and telephone orders, your refund and credit policies may be mailed, emailed, or faxed to the cardholder. To complete the sale, ask the cardholder to sign and return the disclosure statement to you.

  • Online orders must communicate a refund policy to the cardholder and require the cardholder to select a “click-to-accept” or another affirmative button to acknowledge the policy.

  • Terms and conditions of purchase must be displayed on the checkout screen that presents the total purchase amount or within the sequence of website pages the cardholder accesses during the checkout process.

BONUS: Red Flags for online sales

  • Larger-than-normal orders.

  • Orders that include several versions of the same item.

  • Orders made up of big-ticket items.

  • Rush or overnight shipping, and...

  • Shipping outside of the merchant’s country.

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