How do chargeback defects happen?

Chargeback defects result when the alert service did not stop the chargeback as planned even after the merchant took the appropriate corrective action, like issuing a refund, to resolve the dispute.

Chargeback defects are typically caused by one of the following:

  • Dispute progression is not stopped by an open-loop solution resulting in the merchant issuing a high number of double refunds.
  • Data sources like TC40 can lead to communication delays because these data sources are not really designed to be used for chargeback prevention. Information is inefficiently relayed indirectly between issuers, card brands, acquirers and merchants. These delays reduce the time a merchant has to respond to a dispute and can require the merchant to rush to post a refund in a short amount of time before the issuer processes the chargeback.