During this time, merchants are continually dealing with unique challenges. As card networks and merchants see an influx in dispute attempts, it is important merchants understand the dispute situations and what the cardholder's rights are during the COVID-19 crisis. In this post, we will answer frequently asked questions surrounding the unique dispute situations caused by the virus.
COVID-19 Dispute FAQs
Physical Goods Disputes
When do issuers have the right to dispute a physical goods transaction?
- When the cardholder does not receive merchandise by the expected/agreed upon date. Issuers should require the cardholder to try to resolve the issue with the merchant before filing. This requirement causes your customer service to be a vital part of preventing disputes.
- The cardholder tries to return merchandise but is unable to because the merchant's location is closed due to the virus. By having a flexible return policy and allowing customers to ship in returns will help prevent these disputes.
I can't ship the product to the customer because of shipping restrictions. What should I do?
If a merchant is unable to ship or give the agreed-upon product to the cardholder, you should contact the cardholders and explain the situation. Offer them the choice of a refund or waiting until the product can be shipped.
The cardholder does have the right to dispute the transaction if the merchandise is not received by the expected date, so it is essential to communicate with the cardholder if there are any delays.
Disputes Involving Cancellation by the Merchant
If the merchant cancels their goods/services, when does the issuer have the right to dispute the charge?
- When the merchant chooses to cancel the goods/services, the cardholder can dispute the charge because the goods/services were never received. To avoid these disputes, merchants should give the cardholder the choice of a voucher or refund.
- When the merchant chooses to reschedule an event, the cardholder does not have to accept the new date and can dispute the charge. The merchant is responsible for providing the service on the date that was agreed upon. When the merchant postpones the event, they are changing what the cardholder agreed to. To avoid these disputes, merchants should give the cardholders a choice between a refund or tickets for the new date.
- The merchant chooses to cancel the goods/services, and the cardholder decides to receive credit. Then the merchant files for bankruptcy before the cardholder can use their voucher. The cardholder still has the right to dispute the charge as long as they are still in the allotted time frame.
If the merchant cancels goods/services, when does the issuer NOT have the right to dispute the charge?
- When the merchant cancels the goods or services because of government probations. Government regulations and laws surpass dispute rights. The cardholder has to work directly with the merchant to resolve the matter. If you receive a dispute from following government laws or regulations, make sure to include the information on the law you were following in your dispute response as compelling evidence.
- When the merchant canceled their goods/services, which then caused the cardholder to make additional purchases, the extra purchases cannot be included in the disputed amount. For example, a canceled flight caused the cardholder to get a hotel room. The hotel room cost cannot be disputed against the airline.
Disputes Involving Cancellation by the Cardholder
If the cardholder cancels the goods or services, when do issuers do NOT have the right to dispute a charge?
- When the merchant was still offering the services, but the cardholder chose not to use the services because of concerns about COVID-19.
- When the merchant was still offering the services, but the cardholder was unable to use the service because of travel restrictions on the cardholder. For example, they were unable to make a flight or hotel reservation because of travel restrictions.
- When a cardholder missed a flight and was unable to use a non-refundable service, such as a cruise or hotel reservation.
- When a cardholder decides not to use a good or service, then receives a voucher for future use. The merchant files for bankruptcy before the cardholder can use their voucher. The cardholder does not have the right to dispute because the merchant was able to fulfill the service at the time of cancelation.
Increased Pressure to Retain Revenue
COVID-19 is putting increased pressure for merchants to not only gain revenue but retain it. With the surge of disputes, it is even more vital for merchants to understand how to prevent disputes and how to respond with the correct compelling evidence. This is why we have put together our Dispute Best Practices to Minimize Fraud Cost During the COVID-19 Crisis Guide to help merchants retain revenue during this time.
If you have any other questions about disputes, please feel free to contact us.