Every merchant knows how frustrating chargebacks can be, and they're often avoidable if you know why they're happening.
The best way to stop a chargeback from repeating is to understand the motive behind it. Was it fraud? A confused customer? A fulfillment issue? Each type tells a different story and needs a different fix.
The 3 Main Motives Behind Chargebacks
You can group most chargebacks into three buckets: fraud-based, customer-driven, and merchant error-related. Knowing which one you're dealing with helps you decide whether to fight it, refund it, or fix something operational.
1. Fraud-Based Chargebacks
These chargebacks happen when a cardholder claims they didn't authorize the transaction. The most common code here is "Fraudulent" or "No Authorization", depending on the card network.
Common reasons:
- A stolen credit card was used
- A family member (like a child) made a purchase without permission
- True fraud with a hacked account
Examples:
- A customer sees a charge from your business and reports it as unauthorized
- The purchase was flagged by the issuing bank and reversed
Response tips:
- If you have 3D Secure or verified authentication, include it in your evidence
- Use AVS (Address Verification System) and CVV matching at checkout
- If the customer claims the charge is fraudulent, but you have a delivery receipt and IP address match, it's worth fighting
2. Customer Dispute Chargebacks
Sometimes, customers file disputes not because of fraud, but because they didn't recognize the charge, didn't get what they expected, or misunderstood the terms.
Common reasons:
- "I didn't get what I paid for."
- "I thought I canceled the subscription."
- "The charge was too high."
Typical chargeback codes:
- Product Not Received
- Canceled Recurring Transaction
- Credit Not Processed
- Misrepresentation
Examples:
- A subscription renews, and the customer forgot they signed up
- The customer ordered a blue item and got a red one
- They think the descriptor on their statement is from a scam
Response tips:
- Use clear billing descriptors that match your brand name
- Keep delivery confirmations and tracking records
- Have a cancellation and refund policy that's easy to find
- Show communication with the customer when applicable
3. Fulfillment and Merchant Errors
These chargebacks are on you. They're avoidable with better systems, but they still happen, especially at scale.
Common reasons:
- You didn't ship the item on time
- The refund was never processed
- You double-charged the customer
- Your checkout form was buggy and caused a duplicate order
Typical chargeback codes:
- Duplicate Processing
- Refund Not Issued
- Late Delivery
- Processing Error
Examples:
- Your POS glitched and charged a customer twice
- The customer returned an item but never got their refund
- You promised 2-day delivery, but it took 10
Response tips:
- Double-check your refund logs and payment processor settings
- Make sure your customer support team is trained to respond fast
- If your system failed, it's often best to refund and avoid fighting the dispute
Spot the Patterns, Then Act
The types of chargebacks you get can tell you what needs to change:
- Lots of fraud? Upgrade your fraud tools or use 3DS.
- Tons of "product not received"? Tighten up fulfillment and tracking.
- Too many subscriptions disputed? Rework your cancellation flow and send reminder emails.
Treat chargebacks like data. Group them by motive, track them by reason code, and look for trends across channels, SKUs, or times of year. Every chargeback has a root cause. And once you find it, you can reduce your risk without guessing.
Conclusion
Not all chargebacks are created equal. Fraud, confusion, and operational issues each call for a different response. If you're seeing chargebacks pile up, start by sorting them into these three motive groups. You'll uncover patterns fast and know whether you need better tools, clearer policies, or stronger documentation.
FAQ: The Types of Chargebacks
What are the main types of chargebacks?
The most common types are fraud-based chargebacks, customer disputes, and merchant-related errors. These categories help merchants understand if the issue is fraud, confusion, or fulfillment-related.
What is a fraud-based chargeback?
It's when a customer claims they didn't authorize the transaction. This could be due to stolen cards, account takeovers, or family members using the card without permission.
Are all chargebacks fraudulent?
No. Many chargebacks come from legitimate customer complaints or merchant mistakes, not actual fraud. It's important to identify the motive behind each case.
Can I fight customer dispute chargebacks?
Yes, but it depends on your documentation. If you have clear refund policies, proof of delivery, or communication with the customer, you may be able to win the dispute.
How do I avoid fulfillment-related chargebacks?
You need clean systems: accurate shipping, fast refunds, and error-free checkout processes. Monitor for glitches or delays and fix them quickly to prevent future chargebacks.
Ready to Fix the Root of Your Chargeback Problem?
If chargebacks are hurting your margins, it's time to get proactive. Chargeblast helps you break down dispute patterns by motive so you can spot repeat triggers quickly. Whether it's fraud filters, shipping delays, or messy subscription flows, we show you what to fix before the chargebacks come in.
It’s time to turn your dispute chaos into clear action.
