Respond to disputes for unauthorized charges
About disputes for unauthorized charges
Unauthorized charges generally fall into card-not-present (CNP) or card-present transactions.
Fraud disputes in CNP environments refers to situations where a customer claims they did not authorize a transaction that occurred in a CNP environment, such as transactions that happen online, over the phone, or a mail order. These disputes often arise from unauthorized activity such as stolen card information or account takeovers.
Card-present fraud disputes refer to situations where a customer claims they did not authorize a transaction that occurred in a card-present environment but was manually entered rather than electronically read. Fraudsters may request a manual card entry instead of tapping or dipping a card to circumvent EMV protections. It’s recommended to use EMV chip dip or tap payments to lessen the chances of a fraud dispute.
In these situations, you need to provide evidence linking the transaction to the legitimate cardholder. Providing the correct dispute documentation increases your chances of winning the dispute and recovering your funds.
Before you begin
For both dispute types:
You can respond to disputes from your Square Dashboard.
Dispute evidence must be legible, verifiable, in English or with a translation, and clearly linked to the disputed transaction. Audio and video evidence isn’t accepted.
For card-not-present (CNP) disputes:
Make sure you aren’t relying solely on having a payment credential on file without any evidence of a specific payment authorization.
Ensure you’ve documented delivery of goods or services to the cardholder's verified address.
Provide specific evidence linking the transaction to the legitimate cardholder.
Use of a card on file by a family member isn’t authorized, unless they are an authorized user of the card.
Card-not-present disputes can be difficult to win, and a win isn’t guaranteed. Using Square Risk Manager can help you catch and manage online payments that pose a potential fraud risk. Learn to set up Square Risk Manager and how to use 3D Secure with Square Risk Manager
For card-present disputes:
Ensure you’ve obtained a proper manual imprint for key-entered transactions. Missing signatures on transaction receipts for manually entered transactions lessen the chances of a dispute being resolved in your favor.
Keep in mind that sellers should avoid manual entry when both the cardholder and card are present. Payments should be processed via EMV dip or tap to protect against fraud and shift liability back to the issuing bank.
Review the dispute reason and prepare evidence
Review the reason for the dispute type to determine the applicable best practices and supporting documentation that’s needed before responding.
These types of disputes generally occur for eCommerce, subscription service, digital goods, and mail or telephone order businesses. If a customer claims they did not authorize or participate in the transaction, prepare the following documentation:
- Customer data that links the transaction to the legitimate cardholder. Provide all available customer authentication data, such as login details or password usage, and cardholder details, such as their full name, their billing address, phone number, and email address.
- Device or IP information showing the transaction came from a device or location previously used by the customer.
- Identification verification showing the customer’s ID was verified upon delivery of the goods or services.
- Proof of delivery providing tracking details, a full delivery address, and a delivery status listed as delivered.
- Any evidence of previous undisputed transactions with the same payment credentials.
- Communication records of all interactions with the customer about the purchase.
- Policies on refunds, cancellations, or terms & conditions. This can include a screenshot of an “I agree” checkbox at checkout or a signed contract. If using a signed contract, the policy must appear on the same page as the customer’s signature. If the policy is located elsewhere in the contract, the customer must initial next to the relevant policy section. In all cases, documentation must clearly show that the customer reviewed and acknowledged the policies prior to completing the purchase.
These types of disputes generally occur for retail, food and beverage, professional services, and health and beauty businesses. If a customer claims they didn’t authorize a transaction that was manually keyed in at a physical location, prepare the following documentation:
- A valid manual card imprint with the cardholder’s signature. Don’t use pencil rubbings or photocopies of cards instead of proper imprints.
- A signed transaction receipt showing the cardholder’s signature that matches the card.
- Any additional identification of the customer that was verified at time of transaction.
Submit your dispute documentation
Once you’ve compiled the supported documentation for your dispute, submit them in your Square Dashboard. Learn how to submit your documentation and manage payment disputes.