Valid Vs. Invalid Chargebacks: What’s The Difference?

3rd July 2022

Chargebacks are a very serious matter and can cause a lot of harm to your business. This is a credit card transaction that has been disputed, typically because the merchant did not provide the product they promised or there was some kind of error in the transaction. There are two different types of chargebacks, a valid and an invalid one.

 

So what is the difference between valid and invalid chargebacks? This article will outline them both in detail and how to prevent chargebacks, but first, let’s talk about what they entail and why it matters if it is valid or not.

What Is A Valid Chargeback?

Valid chargebacks occur when the customer disputes a legitimate transaction. The dispute can be related to the amount of money that has been charged or the terms of the transaction (such as what the charge was for). Chargebacks are one of the most common issues you will have to deal with in your eCommerce store, and it is important that you take steps to protect your business from them. In other words, a merchant is responsible for this chargeback. 

What Is An Invalid Chargeback?

An invalid chargeback is an unnecessary or non-compliant payment dispute, and this is a chargeback that shouldn’t have happened. This means that the reason for the dispute is false or inaccurate, or the dispute doesn’t follow card network rules.

 

Although all of these transactions may be valid, they usually occur during times of high shopping traffic, such as holidays and Black Friday sales. In other words, a customer has disputed for a reason which is not related to the accuracy of their purchase. Among other reasons for invalid chargebacks, it can be an expired issue or when the customer claims that the order wasn’t delivered, but it isn’t true.

Which Dispute Type Is Most Common – Valid Or Invalid?

As a rule, most chargebacks fall into the “invalid” category because there is often no clear reason for the dispute. However, this doesn’t mean that these cases should be ignored. The most important thing about it is gathering as much information about the customer’s complaint as possible and researching each case to see where the problem may have originated. Because if your business brings many chargebacks in a short period of time, it looks like you should dive deeply into analytics and other available information and investigate each case.

Why Does It Matter If A Chargeback Is Valid Or Invalid?

Chargebacks are a very serious issue and most often get resolved in your favor if they are resolved at all. When they are not, this can mean that your business is losing money, time, and other resources. It is important to remember that these actions can lead to serious consequences for your business. It means that the merchant is responsible for the chargeback regardless of where it comes from.

 

You should use this knowledge to your advantage to prevent chargebacks and ensure you get the money owed to you by fixing the problem as soon as possible. And if you care, why does it matter if a chargeback is valid or invalid, just remember that valid chargebacks can be prevented, and invalid chargebacks can be fought.

How To Prevent Chargebacks?

The first thing you should do when you’re learning about chargebacks is to make sure that every order that is processed includes a contact form. This will ensure you will have the ability to communicate with your customers and keep track of selling information such as shipping costs.

 

Another important way to prevent chargebacks is by providing as much information as possible when processing customer orders. For example, have a detailed description of the product they are placing their order for and provide pictures and even videos if possible. In addition, encourage your customers to review your products and offer them an opportunity to leave feedback. This will give you the entire information about your goods and services.

 

Hiring a professional chargeback prevention team is a great way to prevent valid and invalid chargebacks. Having a huge experience and analytics data, chargeback specialists have an opportunity to detect, prevent, and resolve any types of chargebacks and give a merchant an ability to focus on growing business.

The Bottom Line

In conclusion, chargebacks are very common for online business owners. We can see that it can cause a lot of harm and even cost thousands of dollars to the business. Although chargebacks are not necessarily good or bad, it is important to make sure that you understand the difference between a valid and invalid chargeback to prevent them from happening.

 

To avoid chargebacks, you should ensure that your customers are happy with all the services your store provides. There is no reason a customer would file a chargeback against you when they get their product, and it comes in perfect condition, or they get exactly what they ordered. That will only mean that your business has done this great job and is worthy of those recommendations.