Too many chargebacks don’t just hurt your bottom line—they can get your merchant account frozen or terminated. If your dispute rate suddenly spikes, you don’t have time to waste. Here’s what to do immediately to stop the bleeding and keep your business running.
Start With Triage: What’s Causing the Spike?
When you’re dealing with too many chargebacks, the first step is to figure out what triggered the surge. Chargebacks generally fall into three buckets:
- Fraud
- Customer dissatisfaction
- Operational errors
To narrow things down, start reviewing dispute reason codes. If you're seeing fraud-related codes (like Visa 10.4 or Mastercard 4837), check your fraud filters and recent order patterns. If the chargebacks are “product not received” or “service not as described,” it’s time to look at fulfillment or customer communication issues.
Check Your Fraud Filters
One common reason for a sudden chargeback spike? Fraud filters that aren’t doing their job—or are doing too much.
- If filters are too loose, you’re letting fraud through. That leads to unauthorized transaction disputes.
- If filters are too strict, they may be flagging legitimate customers. Some of them will turn around and file a chargeback out of frustration.
Tools like AVS (Address Verification System), CVV matching, and device fingerprinting should be active. But monitor approval and decline rates. If your decline rate is unusually high, you might be rejecting too many good orders.
Look at Your Statement Descriptor
A vague or unfamiliar billing descriptor can confuse customers. That confusion often leads to “unauthorized” chargebacks—even when the transaction was legit.
Make sure your descriptor:
- Matches your business or product name as closely as possible
- Includes a recognizable phone number or website
- Avoids generic terms like “online purchase” or abbreviations that don’t clearly identify you
You can contact your payment processor to request a change to your descriptor if needed. Many will allow you to customize it or add soft descriptors.
Review Refund Timing
Some merchants try to delay refunds or force customers to jump through hoops to get one. That backfires. Customers will go straight to their bank if they feel ignored.
If your refund policy isn’t fast and clear, fix it now. When you process refunds quickly, especially within 24 to 48 hours of a complaint, it can prevent a dispute from turning into a chargeback.
Bonus tip: Monitor your response times on customer service tickets. If it’s taking longer than 48 hours to respond, you're likely losing to chargebacks you could have avoided.
Monitor Subscription and Trial Conversions
If you’re running subscriptions, free trials, or continuity offers, those are high-risk triggers. Too many chargebacks often come from:
- Customers who didn’t realize they were signing up
- Difficult cancellation processes
- Confusing rebill terms
To reduce disputes:
- Send email reminders before rebills
- Make cancellation one-click and immediate
- Show the billing terms clearly at checkout
Don’t hide terms in footnotes or fine print. That strategy leads to short-term gains and long-term dispute pain.
Tighten Order Screening
If your chargebacks are coming from new customers or high-ticket orders, you may need to pause and reassess your approval criteria. Add manual review steps for:
- First-time buyers
- Large orders
- Mismatched shipping and billing addresses
- VPN traffic or foreign IPs
You don’t have to shut down sales completely—but if you’re getting too many chargebacks, it’s time to raise the bar on what gets through.
Use Real-Time Alerts to Catch Disputes Early
You can’t fight a chargeback you don’t know about. Enroll in chargeback alert services through vendors or directly via networks like Verifi (Visa) or Ethoca (Mastercard). These services notify you when a customer files a dispute, giving you a chance to resolve it before it hits your chargeback ratio.
If you're already using alerts, check how many are getting resolved versus escalating into chargebacks. A high escalation rate means your response time or refund process needs work.
Recheck Your Chargeback Ratio
Each card network has its own acceptable chargeback rate:
- Visa: 0.9% or lower (measured by count)
- Mastercard: 1.5% or lower (measured by volume)
If you're breaching those limits, you're already at risk of entering a monitoring program, which could mean extra fees or losing your merchant account altogether.
Lower Disputes Before It’s Too Late
Too many chargebacks are a warning sign you can’t ignore. Whether it’s fraud slipping through, customer confusion, or operational issues, the faster you identify and fix the cause, the better chance you have at staying out of the danger zone.
Review your systems. Communicate clearly. Process refunds fast. And don’t wait until you're blacklisted to act.
FAQs About Too Many Chargebacks
What’s considered too many chargebacks?
Most networks consider anything over 1% to be too many chargebacks. Visa sets its threshold at 0.9%, while Mastercard allows up to 1.5%. Exceeding these rates puts you at risk for monitoring programs or account termination.
How quickly should I respond to disputes?
You should aim to respond within 24 hours of receiving a dispute or alert. Faster responses can stop the chargeback from being finalized and improve your win rate.
Can I stop a chargeback once it’s filed?
Sometimes. If you're enrolled in alert systems like Verifi or Ethoca, you may get a short window to issue a refund before the chargeback completes. Otherwise, once it's processed, your only option is to fight it through representment.
Should I issue a refund during a dispute?
Yes, if the customer has a valid complaint and you haven’t already refunded them. But once a chargeback is processed, the bank usually debits the funds automatically. Refunds issued after that may not stop the dispute unless done early through alert tools.
Will a better descriptor really lower chargebacks?
Yes. Many chargebacks labeled as “fraud” are actually from customers who didn’t recognize the charge. A clearer descriptor helps them connect the dots before calling their bank.
Don’t Wait for the Next Chargeback to Hit
If your dispute rate is rising, Chargeblast helps you get ahead of the problem. From fraud filter tuning to real-time dispute alerts, our tools are built for prevention. We work behind the scenes to stop chargebacks before they happen, so you can keep selling without constant fear of penalties or shutdowns.
Ready to lower your chargeback rate? Get in touch with us by booking a demo below!
