Ever feel like chargebacks come out of nowhere? One day your sales are fine, the next, you're losing revenue over transactions you thought were closed. Most merchants assume it’s fraud, but that’s only part of the picture. Customers dispute charges for lots of reasons, and if you don't understand the reason for dispute, you're stuck playing defense.
This guide breaks down the most common dispute reasons, explains how banks label them, and shows what to do differently so you’re not stuck dealing with preventable chargebacks.
What Is a Reason for Dispute?
When a cardholder contacts their bank to question a transaction, the bank opens a formal dispute case. As part of that process, they assign a reason code—a specific label that explains why the customer is disputing the charge. These codes come from the card networks (Visa, Mastercard, etc.), and each one ties back to a general category like fraud, product issues, or billing problems.
Here’s the catch: the reason code doesn’t always tell the full story. Sometimes customers file disputes for convenience, not accuracy. A charge labeled “fraud” might be a forgotten purchase.
A product dispute might be about buyer’s remorse. The reason for dispute gives you a starting point, but it’s your job to dig deeper and fix what’s broken in your process. Let’s take a look at the common reasons for disputes and what you should do to prevent them from escalating.
1. Fraudulent or Unauthorized Transactions
Visa: 10.4
Mastercard: 4837
This is the most common reason for dispute. It usually means the cardholder says they didn’t authorize the charge. Maybe their card was stolen. Maybe a family member used it without permission. Or maybe the customer just didn’t recognize the transaction.
Real-world example:
A clothing store gets hit with a dispute for a $200 online order. The billing address matched, but the shipping address was different. The customer says they never made the purchase.
How to reduce it:
- Use AVS and CVV verification to confirm card details.
- Enable 3D Secure for an added layer of authentication.
- Watch for mismatched billing and shipping addresses.
- Invest in a fraud detection tool that flags unusual behavior.
2. Product or Service Not Received
Visa: 13.1
Mastercard: 4855
Customers file this dispute when they’re charged for something that never arrives. Sometimes the product really is lost. Other times, it was delivere, but the customer wasn’t home, or the package was stolen.
Real-world example:
A subscription box company ships an order, but USPS marks it as delivered two days early. The customer never finds it and contacts their bank.
How to reduce it:
- Always send tracking info after checkout.
- Use signature confirmation for high-value orders.
- Be clear about estimated delivery windows.
- Respond quickly to “missing item” complaints with helpful options.
3. Product Not as Described or Defective
Visa: 13.3
Mastercard: 4853
This happens when the customer feels the item didn’t match what they expected. It could be the wrong color, the wrong size, or just poor quality. They may try to return it, but if the return takes too long or gets denied, they dispute the charge.
Real-world example:
An electronics brand ships a “noise-canceling” headset that doesn't reduce background noise. The product page wasn’t specific, and the customer feels misled.
How to reduce it:
- Write clear product descriptions with accurate specs.
- Use real photos, not generic ones.
- Package fragile items with care to prevent damage.
- Make returns easy. Don’t drag your feet on refunds.
4. Recurring Charges After Cancellation
Visa: 13.2
Mastercard: 4841, 4842
Recurring billing is a great revenue model—until customers forget they signed up or think they canceled. If they’re still being charged after they thought it was over, they’ll skip your support page and go straight to their bank.
Real-world example:
A fitness app charges $9.99 monthly. A user cancels their account through the ap, but doesn’t realize that it doesn’t cancel billing. Two months later, they filed a dispute.
How to reduce it:
- Send billing reminders before each renewal.
- Show the subscription terms clearly at checkout.
- Make cancellation obvious and accessible.
- Confirm cancellations by email and stop billing immediately.
5. Duplicate Charges
Visa: 12.6
Mastercard: 4834
Nobody likes getting charged twice. This often happens when a transaction is retried after a failed payment or when a refund and a new charge overlap.
Real-world example:
A customer refreshes the checkout page when it freezes. The browser reloads and they hit “pay” again. The merchant’s system logs two separate payments.
How to reduce it:
- Use software that prevents duplicate submissions.
- Train support staff to watch for double charges.
- Check for identical transactions during reconciliation.
- Refund any duplicate charges as soon as possible.
6. Credit Not Processed
Visa: 13.6
Mastercard: 4860
This one’s on the business. If you say you’ll issue a refund and don’t follow through, the customer will take matters into their own hands.
Real-world example:
A customer returns a dress and is told the refund will post in 3 to 5 days. Two weeks later, there’s still no refund and no reply from support.
How to reduce it:
- Process refunds within 24 to 48 hours.
- Send a refund confirmation with the expected timeline.
- Keep good records of refund approvals and transactions.
- Train your support team to resolve refund cases quickly.
7. Unrecognized or Confusing Charge
Visa: 10.4, 13.7
Mastercard: 4837, 4863
Sometimes, customers dispute a valid charge because they don’t recognize the name on their bank statement. This is called friendly fraud. It’s frustrating, but fixable.
Real-world example:
Your business is called “BrightSkin Beauty,” but your statement descriptor shows up as “BSB INC.” The customer thinks it’s a scam and files a fraud claim.
How to reduce it:
- Use a clear statement descriptor that reflects your business name.
- Add a support phone number or email to the descriptor if possible.
- Send post-purchase receipts that explain what the charge will look like.
- Make it easy to reach a live person if they have billing questions.
Why Preventing Disputes Matters
Too many chargebacks can trigger card network monitoring programs. Visa calls it the VFMP (Visa Fraud Monitoring Program), and Mastercard has its own version. These programs add fees and oversight, and if your ratio stays high, your processor could shut down your account.
To avoid all that, aim to keep your chargeback rate below 1% and respond quickly when disputes happen. Even better, fix the root causes before they cost you money.
Final Thoughts
Disputes happen, but they’re not random. Each one starts with a specific reason for dispute, and most of those reasons can be traced back to a breakdown in communication, fulfillment, or trust. When you understand what’s behind each chargeback, you can fix the systems that cause them. And when you fix the systems, you don’t just avoid disputes—you protect your business from unnecessary losses.
FAQs About the Reason for Dispute
Can I win a dispute if it’s labeled fraud?
Yes, but it’s tough. You’ll need strong proof like AVS match results, IP logs, 3D Secure data, or delivery confirmation. Without solid evidence, banks usually side with the cardholder.
How long do I have to respond to a dispute?
Anywhere from 7 to 30 days, depending on your payment processor. Always respond as early as possible to avoid losing the window.
What if I already issued a refund?
Submit proof of the refund during representment. If the refund is posted before the dispute date, you may be able to get the case reversed.
What tools help prevent disputes?
Fraud filters, order monitoring, auto-refund triggers, and clear statement descriptors all help. Some platforms offer real-time alerts when a dispute is filed.
Ready to Cut Down on Disputes?
If your business is losing money to chargebacks, it's not just a payment issue—it’s a visibility problem. Without the right tools, you can’t see where the dispute is coming from or stop it before it hits your balance.
That’s where Chargeblast comes in. We help you track every reason for dispute, respond faster, and reduce your risk of being flagged by banks.
