How do I manage chargebacks?
Occasionally, you may receive a charge dispute, known as a chargeback, from a backer’s credit card provider. You can often resolve these disputes with the backer and avoid proceeding through the chargeback process with the credit card provider.
- What is a chargeback?
- What charges can be disputed?
- How do I prevent chargebacks?
- How do I work with backers to reverse chargebacks?
- How do I dispute chargebacks with credit card providers?
What is a chargeback?
A chargeback is a demand by a credit card provider for you to make good on the loss on a fraudulent or disputed transaction.
If you receive a chargeback notice from a credit card provider, that means one of your backers disputed a charge associated with your campaign. The credit card provider will contact you to refund the money. The provider can take money back for the backer even if the charge was legitimate and authorized by the cardholder.
What charges can be disputed?
Backers can dispute both the original pledge amount and any charges originating in BackerKit, such as add-on item purchases.
How do I prevent chargebacks?
To prevent chargebacks use the following best practices:
- Charge cards close to your shipping date, and no more than 30 days before shipping. For more information, see How do I charge credit cards?
- Refund backers when they ask. For more information, see How do I process refunds?
How do I work with backers to reverse chargebacks?
You may be able to work with a backer directly to reverse the chargeback. Sometimes backers forget that they made a pledge and don’t recognize the charge, especially if a lot of time has passed since the campaign ended. You may be able to resolve the dispute by letting them know it’s a legitimate charge and reminding them of your campaign.
To find and contact the backer who submitted the chargeback:
- Find the Stripe or PayPal payment ID for the transaction in the chargeback notice sent to you from the credit card provider.
- Create a new segment and filter on the Stripe or PayPal payment ID provided. For more information, see How do I create a segment?
- If you don’t find a matching payment ID, the backer may be requesting a refund of their original pledge amount.
- Search your Stripe or PayPal account for the payment ID from your crowdfunding platform.
- Once you find the backer’s name, you can search for them in BackerKit to find contact information.
- Open your segment and click the View Backers tab.
- Find the contact information for the backer and reach out to them to confirm that they want to proceed with the chargeback. Let them know their charge was for your project and verify with them that they intended dispute their charge.
- If the backer still wants to pledge, ask them to cancel their chargeback.
- If the backer wants to cancel their pledge, tell the backer that you’re happy to issue a refund if they cancel the chargeback. You can try to explain that going through with the chargeback results in a fee for you as well as hurts your credit. For more information, see How do I process refunds?
- If you have not shipped the items to the backer, cancel their pledge:
- On the menu on the left, click Backers.
- Search for the backer by their name, email address, notes, or pledge ID.
- When you find the backer, click View Profile next to their name.
- From the Actions menu in the top right corner, select Mark Pledge as Canceled.
Pro Tip: Contact your backer as soon as possible to prevent chargebacks from processing.
How do I dispute chargebacks with credit card providers?
With chargebacks, the burden proof lies with the business who collected payment. You must prove that the charges aren’t fraudulent, but the backer can dispute the charge without providing back up information.
If you’ve already shipped the rewards, you can provide a tracking number to the credit card provider to dispute the chargeback. Otherwise, if the amount is relatively small, you may not want to pursue the dispute.
For more information about chargebacks, see the Stripe help article and PayPal help article about chargebacks.