You’ve just defended a chargeback, submitted your evidence, and received a decision in your favor. Finally, some relief. But then, out of nowhere, the case reopens. That second round? It’s called pre-arbitration.
This stage can feel frustrating, especially after putting time and effort into your original response. But it’s not the final word. If you're a merchant, understanding how pre-arbitration chargebacks work can make the difference between keeping or losing revenue you thought was already secured.
What Is a Pre-Arbitration Chargeback?
A pre-arbitration chargeback happens when the cardholder’s issuing bank challenges the outcome of a chargeback you already fought and “won.” In other words, the case isn’t fully resolved yet.
At this point, the issuer (or sometimes the cardholder) submits new evidence or argues that something was mishandled in the previous round. The goal is to reopen the dispute before it reaches the arbitration phase, where the card network makes a final decision.
Think of it like an appeal in a court case. It doesn’t always mean you did something wrong, but it does mean the other side isn’t satisfied with the result.
Why Do Pre-Arbitration Chargebacks Happen?
There are a few common reasons why a chargeback might move into pre-arbitration:
- New Evidence Appears: Maybe the cardholder finds a receipt they forgot to include. Or they provide screenshots of a cancellation request you didn’t see the first time.
- The Issuer Disagrees with Your Response: Even if your evidence was solid, the issuing bank may decide it doesn’t address the core reason for the dispute. They may push back to get a second review.
- Processing Mistakes: Sometimes it’s as simple as a deadline being missed or a piece of evidence being overlooked.
For example, let’s say you’re a digital service provider. You win a chargeback by showing usage logs proving the customer accessed your service. But then, during pre-arbitration, the cardholder submits proof that they tried to cancel within the trial period. That could be enough for the issuer to escalate the case again.
How the Pre-Arbitration Process Works
Here’s how this phase usually unfolds:
The Issuer Starts Pre-Arbitration
The issuing bank notifies your acquiring bank that they’re reopening the case. They’ll include the reason code and any new supporting documentation.
You Get Notified
Your acquirer will send you the updated case details. At this point, you need to review the new claims and decide how to proceed.
You Make a Decision
You have two choices: accept the pre-arbitration and return the funds, or reject it and push the case to full arbitration.
It’s Either Over or Escalated
If you accept, the money goes back to the cardholder, and the dispute ends. If you reject, the card network (like Visa or Mastercard) steps in and makes a final call.
Each card network has its own response window, often between 7 and 30 days. Miss that deadline, and you lose by default.
How to Respond to a Pre-Arbitration Chargeback
If you get hit with a pre-arbitration case, here’s how to handle it:
Read the Reason Code Carefully
This tells you why the case is back on your desk. Each network has its own reason codes, so make sure you know what’s being questioned.
Look Closely at the New Evidence
Compare it to what you submitted before. Is there anything new that changes the story?
Ask Yourself: Is Arbitration Worth It?
For low-dollar transactions, it might not be. But if you're dealing with large-ticket sales or repeat abuse, escalation may be justified.
Talk to Your Acquirer
They can help you understand the risks, timelines, and odds of winning.
Don’t Delay
Timelines are strict. Waiting too long will almost always result in an automatic loss.
Real-world tip: If you’re dealing with a $60 chargeback and arbitration would cost $500, it doesn’t make sense to escalate. But for a $2,000 dispute where you’re confident in your evidence? It might be worth it.
Preventing Pre-Arbitration Chargebacks
The best way to avoid pre-arbitration is to make your initial response bulletproof. Here's how:
Send Clear, Complete Documentation
Screenshots, receipts, customer communication logs, and delivery tracking—include it all. Don’t make the bank dig for answers.
Communicate with Your Customers
If you see complaints brewing, reach out early. A simple refund or clarification can stop a dispute before it starts.
Watch Your Dispute Ratios
Monitor chargeback trends so you can spot patterns. One-off disputes are normal. A string of them could signal a bigger problem.
Use Real-Time Fraud Tools
Chargeback alerts and other fraud detection tools help you stop suspicious transactions before they ever become chargebacks.
FAQ: Pre-Arbitration Chargebacks
What is a pre-arbitration chargeback?
It’s when the cardholder’s bank challenges the result of a previous chargeback case. They’re asking for a second review before it goes to the card network.
How long do I have to respond?
Usually between 7 and 30 days, depending on the card brand. Always confirm the deadline with your acquirer.
What happens if I ignore it?
You lose the case by default. The money goes back to the cardholder, and it counts against your dispute ratio.
Is it always worth fighting back?
Not always. Think about the amount of money involved, the strength of your evidence, and whether you’re willing to pay arbitration fees if it escalates.
How do I reduce my chances of getting one?
Be thorough the first time around. Include all evidence, and work with customers directly when possible. A strong initial response is your best defense.
Final Thoughts
Pre-arbitration chargebacks can feel like the system dragging you back into a fight you thought you won. But they’re part of the process. Knowing how they work, what triggers them, and how to respond gives you the upper hand.
Don’t treat pre-arb like an afterthought. Treat it like your second chance to keep your revenue and close the case for good.
See Chargebacks Coming Before They Hit
If you're dealing with more disputes than usual, it might be time to rethink how you handle fraud and payments. Chargeblast gives you a clearer view of your chargeback landscape. With tools like alerts, automated dispute tracking, and smarter analytics, you can stop issues before they hit your balance sheet.
