PracticeQ Payments - Disputes

Unfortunately, disputes seem to be becoming more and more common for merchants across the board in recent years. With cardholders more aware than ever of the dispute process, it can be seen as an "easy refund" path instead of working with a merchant to come to a solution when there is a disagreement about payment. Dispute fraud (knowingly submitting a fraudulent dispute) is also on the rise, so it's important for merchants to protect themselves against dispute submissions.

Disputes can harm your reputation with card companies and payment processors, especially when they are lost. Card companies and payment processors, along with their funding banks, both have a risk threshold when it comes to working with merchants. This is based on many criteria such as your services/products and your credit. Fraud risk and risk of disputes is also considered when these companies work with you. If the ratio of payments vs. disputes is too high, processors will refuse to work with those merchants.

What is a Dispute/Chargeback?

A chargeback is a dispute initiated by a customer against the merchant who accepted their card as payment in exchange for goods or services. The chargeback process is available as a protection for cardholders against fraud and merchants who do not provide their product/service as promised. 

When a bank receives a chargeback dispute from one of their cardholders they open an investigation by contacting the processor (PracticeQ Payments in this case) and requests evidence that the product/service was provided. PracticeQ Payments will then notify the merchant of the chargeback and advise as to what documentation should be provided. 

While rare for most merchants, chargebacks can be a costly and time-consuming strain. Dishonest cardholders can try to take advantage of the system and the burden is on the merchant to prove that they fulfilled their commitment to the cardholder. It is recommended that you respond to all chargeback notices as quickly as possible and try to resolve any disputes with your customers before they result in a chargeback.

What are Common Chargeback Reasons?

• Fraudulent transactions.
• Duplicated charges.
• Not as described/defective merchandise.
• Services not provided or merchandise not received.
• Refund not processed after returned item.

Your Relationship is Your First Defense

When dealing with disputes, we always recommend working with the cardholder directly whenever possible as they have the power to request the dispute be shut down by their financial institution. Whether that means you issuing them a refund, taking another method of payment, or another resolution you come to together, keeping this out of the dispute process should always be your goal.

IMPORTANT: Always ensure that the dispute has been disabled before a refund is issued to the cardholder, as this will remove the risk of the cardholder being disputed twice (once if they win the dispute, and once if you manually refund). Reach out to our support team at hello@intakeq.com if you need help checking the status of a dispute.

Transparency Rules

Be clear with your clients on what your financial policies are, including refunds/returns, cancellations, and payment options. Incorporate this information into your booking process, signed payment consent forms, and in booking confirmation emails where possible. Encourage your clients to reach out to you with any payment questions and include lines of support for easy communication.

Not only can this be used for evidence of clear payment responsibility, it can also empower your clients to take financial responsibility, and create a bridge between you and them if they have any questions or concerns.

Record Keeping is Required

It is highly recommended to have a detailed financial consent form signed by any paying clients. This can serve as evidence in the case of card-absent disputes, which are much more common than when a physical card is swiped at a terminal in person.

Keeping clear records of communication, appointments, and invoices is also important to serve as evidence should a dispute be submitted against you. You might want to send an after-visit form requiring signature to further confirm services rendered.

Receive and Review

If you find yourself in the position of having a dispute submitted against you, you’ll find the details of it in the Payment Dashboard (More > Payment Dashboard) under the Disputes tab. You may have signed up for email notifications (More > Payment Dashboard > Settings) and been notified of the dispute submission. If you don’t have dispute notifications enabled (this is a good time to do so!), you should make sure to check the Dispute tab for updates regularly.

From the Dispute tab, you’ll see any disputes listed in rows. Each dispute will contain the following:

A view of the Disputes tab.

1. Status: The status of the dispute. This will update to Evidence Uploaded once you’ve submitted it. Otherwise, it will stay in Open status until a decision is rendered by the cardholder’s financial institution.
2. Reason: The reason reported by the customer for the dispute.
3. Customer: Identifies the cardholder who has submitted the dispute.
4. Deadline: The deadline to respond to the dispute.
5. Created: The date/time the dispute was posted.
6. Amount: The amount of the transaction in dispute.
7. Payment: A link to the payment details.

A view of the dispute details. You can click any row to bring up the Dispute Details screen.

A view of the evidence upload screen. You must acknowledge that you understand evidence may only be submitted one time before you can submit.

Next Steps

Once a dispute has been posted and you’ve reviewed the data, you’ll need to act.

Whenever possible, we recommend working with the cardholder directly to resolve the dispute one-on-one. They may have submitted it in error, had to cancel a card for fraud, or not recognized the charge. The cardholder can work with their financial institution to reverse the dispute, so coming to an understanding that has them remove the dispute would be the best outcome.

If you aren’t able to work with the cardholder, or are not able to come to an agreement with them, you will need to submit your evidence via the Upload option of the dispute row.

Evidence Examples:

• Signed financial consent form.
• Copies of any emailed invoices.
• Copies of all customer service communications.
• Proof of usage, such as signed post-visit summary.
• The terms and conditions the customer agreed to at the time of purchase.
• Proof the purchase was made by a member of the customer’s family or household, in the case of a minor/spouse payor.
• Evidence of another payment on the same card that was undisputed. For example, evidence, such as a transaction receipt, demonstrating the cardholder’s card was used in a transaction the week before and was not disputed.
• A copy of your Return Policy, with links or examples of placement that prove it is easily visible.
• Your rebuttal letter.

Once you have uploaded and submitted your evidence, you will await the response from the cardholder’s financial institution. The state of the dispute in the dashboard will update once the decision has been rendered.

Money Matters

You may be wondering what exactly happens to the funds from the disputed transaction, and when it will affect you as the merchant.

First, there is a $25.00 dispute fee per transaction chargeback. This amount is non-refundable, meaning it doesn’t get returned to you if you win the dispute, or if the cardholder decides to reverse the dispute.

As for the transaction amount, that is first funded by the payment processor at the time of the dispute submission, and then it is withdrawn from your bank account as part of that day’s deposit batch – for more information on deposit batching, see our article PracticeQ Payments FAQ. You will see a refund line appear on your Payments tab for that day as well, signaling the funds were withdrawn and are being held.

You might notice that the transaction funds are deposited back into your bank account once your evidence has been submitted. This is a good faith return of funds that some financial companies perform, but please note that it should not be taken as an indication that the dispute has been won, and it does not happen in all dispute cases. If you’ve received this good faith deposit and ultimately win the dispute, no further funds will be exchanged, but the money would be deducted form your account if you lose. If you don’t receive this payment at the time of evidence upload, you would await the outcome of the dispute and receive the funds back upon winning or have no further funds exchanged if lost as the money still being held would be returned to the cardholder.

Win/Loss Decision

Ultimately, it isn’t us or our processor who decides who wins or loses a dispute. The cardholder’s financial institution/card company will review the evidence provided and render their decision following their review of both sides.

At this stage, usually shortly following the respond by date, you’ll see the dispute State update to Win or Lost. Reach out to use if you would like further information on the decision made. Sometimes the cardholder’s financial institution will include details when advising our processor of the dispute decision, but not in all cases. 

Pre-Arbitration

Pre-arbitration is a stage that occurs when the cardholder/issuer appeals/rejects the documentation provided by the merchant.

This stage exists to allow the merchant the opportunity to submit documentation a final time to their case. If the merchant decides to submit documentation this is considered arbitration. With arbitration, the card brand itself makes the final decision after reviewing all documentation submitted by the cardholder/issuer and the merchant.

If you would like to continue with arbitration you will need to provide any additional documentation to us. You will know that a dispute has re-opened if you receive an email notification and the status updates to Pending. The cost of losing a dispute in arbitration is substantial - a base fee of $500.00 is charged by the card company to support the investigation, there may be additional fees, as well as requiring a financial audit which could result in even more costs. In most cases, we do not recommend entering arbitration unless you have substantial new evidence and the value of the transaction is much higher than the fees for losing. 

If you have any issues uploading dispute documentation, or receive an error, please contact support (hello@intakeq.com) to ensure this is handled.