Many WooCommerce merchants know about chargebacks and how to prevent them — but in case you don’t, here’s a quick overview of the key details regarding chargebacks and some preventative steps you can take today.
Why do chargebacks exist?
A “chargeback” is when a customer recalls a payment. While they can be extremely costly for retailers when abused, chargebacks exist to offer consumers protection for purchases.
The Fair Credit Billing Act of 1974 established rules for disputing credit card charges. Protections provided by the act include:
- Giving consumers 60 days to dispute a charge that was unauthorized, for the wrong amount, or for a purchase that was never delivered.
- Allowing consumers to instruct their credit card issuer to withhold payment during a dispute with a merchant.
- Limiting the amount of time for acknowledging a dispute and investigating it.
- Requiring written notification of a credit card dispute, unless the card is stolen.