Understanding Core Definitions:

The terms "dispute" and "chargeback" are often used interchangeably, but they represent different stages in the payment reversal process. For JustiFi merchants, understanding these distinctions is crucial for proper case management and evidence preparation.

Dispute: The Initial Challenge

🟡 Definition: A dispute is a disagreement or complaint a cardholder files with their issuing bank about a charge they believe is incorrect, unauthorized, or not as agreed upon.

Characteristics of Disputes:

• Initial Stage: First formal challenge to a transaction
• Cardholder Action: Customer contacts their bank to question a charge
• Investigation Phase: Bank reviews the claim before determining next steps
• Potential Resolution: May be resolved without merchant involvement if deemed invalid (ie: the transaction was previously refunded)

Types of Dispute Claims:

• Unauthorized transactions (fraud)
• Goods or services not received
• Defective or not-as-described products
• Duplicate charges
• Processing errors
• Cancellation issues

Chargeback: The Formal Process

🟡 Definition: A chargeback is the formal reversal of a credit card transaction, initiated by the issuing bank after determining a dispute has merit.

Chargeback Characteristics:

• Formal Process: Official card network's procedure with strict rules
• Immediate Impact: Funds are immediately withdrawn from your merchant account
• Evidence Required: Merchant may provide documentation to contest, as desired
• Timeline Constraints: Specific deadlines for response and resolution

Chargeback Components:

• Reason Code: Specific classification of the chargeback basis (ie: fraud)
• Liability Shift: Burden of proof shifts to merchant to contest
• Network Involvement: Card network (Visa, Mastercard, etc.) oversees process
• Fee Assessment: Additional fees beyond transaction amount

01. Status Terminology

Processing Status Terms:

• Under Review: Evidence submitted, awaiting card network decision
• Pending: Awaiting additional information or merchant response
• Solved: Case closed with final resolution
• Due Date: Deadline for evidence submission (critical for case outcome)

02. Card Network Terminology Differences

Visa Terminology:

• Dispute: Pre-chargeback inquiry or information request
• Chargeback: Formal liability shift with reason code
• Pre-Arbitration: Second chargeback after merchant wins initial dispute
• Arbitration: Final binding decision by Visa
• Compelling Evidence: Specific documentation standards for fraud disputes

Mastercard Terminology

• First Chargeback: Initial chargeback filing
• Second Presentment: Merchant's response with evidence
• Pre-Arbitration: Issuer's challenge to merchant's second presentment
• Arbitration: Final network decision
• Issuer Recovery: Additional fees and penalties

American Express Terminology

• Chargeback: Immediate dispute notification (no pre-dispute phase)
• Response: Merchant's evidence submission
• Final Decision: Amex's binding resolution
• Inquiry: Information request that may prevent chargeback

03. Lifecycle Stage Terminology

Pre-Dispute Stage:

• Customer Inquiry: Initial cardholder question to merchant
• Bank Inquiry: Issuer investigation before formal action
• Information Request: Request for transaction details
• Resolution Opportunity: Chance to resolve without chargeback

Active Dispute/Chargeback Stage:

• Notification: Official notice of chargeback filing
• Liability Shift: Funds held or withdrawn from merchant
• Evidence Window: Timeframe for merchant response
• Representment: Merchant's formal challenge with evidence

Post-Decision Stage:

• Acceptance: Merchant accepts chargeback liability
• Reversal: Chargeback overturned in merchant's favor
• Final Settlement: Ultimate liability determination
• Case Closure: Formal end of dispute process

04. Evidence and Documentation Terms

Evidence Categories:

• Compelling Evidence: Fraud-specific documentation standards
• Supporting Documents: General transaction proof
• Additional Statement: Merchant's narrative explanation
• Photographic Evidence: Visual proof of transaction legitimacy

Documentation Types:

• Authorization Proof: Evidence of proper payment authorization
• Delivery Confirmation: Proof of goods/services provided
• Cancellation Policy: Terms and conditions documentation
• Customer Communication: Records of merchant-customer interaction