COVID-Related Disputes Best Practices
We’re all facing unique challenges at this time, but for business owners, the stakes are particularly high. We want to offer support and help in the ways we can. This page will serve as your resource for navigating payment disputes that customers may have reported to their bank due to factors resulting from COVID-19.
What is a dispute?
Customers have the right to dispute purchases they disagree with by asking their bank to reverse the charge on their card. The customer’s bank will hold the disputed funds from your Square account until the dispute is settled. Square doesn’t decide the final outcome of payment disputes – our aim is to help you send relevant evidence to your customer’s bank that gives you the best chance of protecting your hard-earned sale.
Note: Square does not charge any additional fees to our merchants for disputes.
What are the most common reasons a customer may dispute a payment during COVID-19?
Though there are more reasons that a customer might dispute a payment, Square sellers have seen an increase in chargebacks in three key areas throughout the ongoing COVID-19 crisis:
Not Received: A customer claims to never have received the goods or services that they purchased.
Cancelled: A customer claims to have cancelled their order but was still charged for the transaction.
Credit not Processed: A customer claims to have returned or cancelled their order and did not receive a credit or refund in line with the return policy.
How do you improve your chances of winning these types of disputes?
Prevention is our collective focus, but we know that despite best efforts, disputes may still occur. In order to defend yourself when a dispute does happen, it is important to provide compelling evidence to your customer’s bank showing that their reason for filing the dispute is invalid. You can submit relevant documentation to defend open disputes in your Square Dashboard.
What documentation should you provide?
While the following types of documentation are useful in response to all types of disputes, they are especially helpful while defending disputes related to COVID-19.
To strengthen your case, you should provide evidence showing that your customer acknowledged and signed your business’s terms and conditions at the time of payment. It’s especially helpful in defending against payment disputes if you can provide a signed and dated contract that shows the full terms and conditions of the sale and includes things like:
- Cancellation/refund policy: This policy outlines how long the cardholder has to cancel services and receive a full or partial refund. We recommend that you include any cancellation fees or restrictions that apply.
- Rescheduling policy (if applicable): This policy illustrates how you plan to deliver the services on a new date when the original date is no longer available and how long the cardholder has to change the date of services.
- ‘Force Majeure’ clause (recommended): This policy shows the steps taken by your business when services are postponed due to unforeseeable circumstances. Note: A Force Majeure clause alone is not sufficient to remedy a dispute. Please see the additional recommended documentation listed below.
Obtaining customer signatures is an important step in protecting your business from disputes as it shows the cardholder has acknowledged your policies. You can use a tool like Square Contracts to quickly create and customise a contract for free.
Sometimes local or federal government restrictions can affect the ability for businesses to continue providing services. This can range from a minor inconvenience to an explicit restriction on your business’ ability to serve customers.
During an unanticipated event like COVID-19, new laws such as Stay-at-Home orders for non-essential workers, cancellation of elective surgeries, and restrictions on gatherings have a big impact on businesses.
You can improve your chances of winning a dispute by providing a government issued document that clearly states how a restriction of this sort has affected your business. This information can often be found on your federal, county or local government website. We recommend that you take a screenshot or download the page to add to your dispute defence documents.
If you had to postpone or cancel delivery due to COVID-19, showing proof that you took proactive steps to remedy the issue with customers is an important way to strengthen your response to a dispute. We recommend that you gather and upload the following types of documentation that illustrate how you have been willing to provide assistance with resolving the customer’s issue:
- Offering a partial refund to your customer. Note: If you provided partial goods or services you can provide signed proof of the goods or services and include an invoice or itemised receipt showing a breakdown of the transaction amount and the refund amount.
- Offering a credit voucher for future use with the seller. You’ll need to provide proof that the credit voucher has been provided to the cardholder. Note: You can strengthen this documentation by specifying the time frame the credit voucher will remain valid.
- Offering to reschedule services or delivery of goods. Note: Providing specific dates if possible can help strengthen this further.
What happens after you submit your documentation?
After your documentation is submitted to Square through your Square Dashboard, all you have to do is wait. We’ll review your documentation and forward your information to your customer’s bank. Here you can also view the status of the dispute, all documents you have uploaded thus far, and what’s next in the dispute process.
The bank can take up to 90 days from the start of the dispute to make their final decision. The dispute outcome is final and Square will not be able to continue to fight the dispute on your behalf. As soon as the decision is made, we’ll notify you of their ruling via email and on your Disputes Dashboard. To learn more about the dispute process, refer to our help video.