Capital One Chargeback Guide for Merchants (2024)
As someone who used to sell stuff online, I’ve had to prepare for many chargebacks. Is there any difference in preparing for Capital One chargebacks?
I’ll talk about that in this guide.
We’ll see whether they’re different from chargebacks from other companies, how to prevent them, and other relevant information.
Let’s simplify this process.
Key Takeaways
- Capital One doesn’t have a specific chargeback process.
- Customers have 90 days after the transaction to file a dispute.
- The chargeback process will vary by the merchant’s payment gateway.
- Capital One has no specific chargeback fees or thresholds.
- Reason codes will vary by the card brand the dispute revolves around.
Are Capital One Chargebacks Any Different?
Capital One is an issuing bank. This means that they represent the customer during chargebacks. The chargeback process will vary depending on your payment processor (acquirer).
We simplify the processes for various payment processors in separate guides:
Check them out to find time restraints, chargeback fees, whether the process differs, etc.
Capital One does offer merchant services. Meaning they should technically be an acquirer. However. They use other payment processors (e.g., PayPal).
Does Capital One have time limits for chargebacks?
Yes. Kind of.
Summary: Capital One is mainly an issuer. Chargebacks work the same as any payment processor, card network, and issuer.
Capital One Time Limits for Cardholders & Sellers
Capital One gives customers 90 days from the transaction date to file a dispute [1].Â
They don’t have specific time limits for merchants. These will vary by card network.
Here are examples of different response times that merchants have:
- Discover: 5 dayssome text
- Retrieval requests: 20 days
- American Express: 20 days for inquiries and chargebacks
- Mastercard: 45 dayssome text
- Second chargeback: 30 days
- Visa: 20 days
You'll automatically lose any dispute if you don’t respond within those limits.
You now know the timeframes. Let’s see how the process works.
Capital One Chargeback Process
- How Long They Take: 90 days
- Fee: Varies by processor
- Parties involved:some text
- Capital One
- Cardholder
- Merchant’s payment processor: AKA acquirer
- You (the seller)
Here’s what the process will look like for merchants:
- Cardholder files a dispute with their issuer.
- Your acquirer temporarily debits your account within 7 – 10 days of the claim.
- They’ll notify you that there’s a chargeback.
- You must build a representment package.
- Submit the package.some text
- Payment processor will forward it to Capital One.
- The issuer reviews the information and makes one of the following decisions:some text
- You’re not responsible: Temporary credit removed from customer’s account.
- Partially responsible: They’ll remove a part of the original credit.
- Found responsible: Credit becomes permanent.
What if customers aren’t happy with Capital One’s decision?
They can appeal the decision.
This means they’ll submit more evidence. From there, Capital One may request more information from the merchant.
Then they will make a new judgement.
There’s a story that I found on Reddit where a customer initiated a chargeback for tickets they claimed to not have received. The merchant submitted all the evidence required.
Capital One allowed the customer to continue the chargeback. So long as they provided documentation that they were aware of the seller’s cancellation policy.
However. They never posted an update on the story.
What’s the point of this story? To give you perspective on what could happen during a chargeback.
But what issues can lead to a chargeback?
Summary: Chargebacks take 90 days. Fees vary. Seller submits evidence. Final decision by issuer.
Capital One Chargeback Reason Codes
Capital One doesn’t have specific reason codes. These will vary by card network.
We explain all of the reason codes, ways to prevent them, and evidence you’ll need in separate guides:
These reason codes identify dispute reasons. Issuing banks assign these codes. And each card network uses specific codes.
Codes help merchants understand dispute causes, gather evidence, and prevent future disputes.
Did you read through all of this without knowing what a chargeback is?
Let’s change that.
What Are Capital One Chargebacks?
A Capital One chargeback — what they label as a dispute — is a credit card charge a customer has a complaint, claim, or question about. The goal of filing a dispute is to get the charge reversed.
In simpler terms, a chargeback (from any issuer and acquirer) is a forced reversal. It involves a long process that requires submitting evidence.
What is it, then? A chargeback or a dispute?
Most banks and card brands will use the terms “chargeback” and “dispute” interchangeably.
Many define a “dispute” as when a customer files an issue with their issuer.
And a chargeback as the reversal of a charge.
Some payment processors have their own dispute processes (e.g., PayPal), which aren’t “chargebacks”. These stay on their platforms and don’t involve card brands.
And all charges can’t be disputed.
Customers can only file disputes for debit cards if they’re a victim of fraud.
Credit cards offer more coverage because of Regulation Z .
This covers issues like:
- Unauthorized transactions
- Credit not issued
- Accounting errors
- Cardholder disputes
- Goods/services not rendered
Why are chargebacks bad, though?
First off, there are chargeback fees.
These cost $10 – $100 per transaction. These lead to merchants losing 0.47% of their annual revenue to chargebacks alone [2].
And when it comes to fraud, that number increases to 1.8%
Having too many chargebacks on your file can result in being placed in monitoring programs.
Such programs, like the Visa Dispute Monitoring Program, result in consequences like:
- Higher chargeback fees.
- Review fees that can reach the tens of thousands.
- Inability to process certain cards.
- Labeled as a “high-risk” merchant.
These sound an awful lot like refunds…
Summary: Chargebacks are disputed charges reversed. Leading to fees and potential merchant penalties.
Are These Different From Refunds?
Refunds are seller-initiated, directly returning funds to customers. Chargebacks are customer-initiated through their card issuer. Reversing transactions without merchant involvement. Unlike refunds, chargebacks incur additional fees for merchants.
Now, let's look at how this plays out in the real world.
Imagine a customer just bought a new pair of shoes online. They arrive, but they're the wrong size. What do they do?
If they opt for a refund, they will contact the seller. You might ask to return the shoes; then you’d process the refund.
Due to scenarios where sellers don’t respond, 81% of customers see chargebacks as easier to deal with.
That, or the merchant could have a complex refund policy.
Refunds are more straightforward and less costly. Plus, they give the merchant a chance to resolve issues directly with the customer.
In the end, refunds and chargebacks have their place.
The way you’ll handle chargebacks also differs from refunds.
Summary: Merchants return funds to customers through refunds. Chargebacks reverse transactions through issuers.
How to Handle Capital One Chargebacks
Here’s how you’ll deal with Capital One chargebacks:
- Gather and submit evidence
- Wait for a response
- Submit additional evidence if needed
You don’t have much control over this process. You’re at the mercy of Capital One.
Your payment processor (e.g., Stripe) is also not the decider. Capital One would be. Thus, you’re trying to convince them.
Do you think you’ll have the evidence to fight a dispute?
If not, you’re wasting your time, money, and resources.
On average, merchants only win 30% of all chargebacks. Around 43% of friendly fraud chargebacks. And nearly 9% of third-party fraud.
Such a low win rate could come from the issuer favoring the customer.
It also likely comes from the seller not being prepared. For instance, someone could have gotten rid of evidence before it was needed.
Chase Bank recommends that you hold onto transaction-related documents for these lengths:
- Visa: Minimum 13 months
- MasterCard: Minimum 13 months
- Discover: Minimum 36 months
Why?
Because those numbers typically represent the maximum amounts of time that customers have to file chargebacks with certain card networks.
Let’s start this process off by getting evidence.
1. Build Your Representment Package
When you get a chargeback, you’ll first need to gather documentation.
Here are examples of different documents you may need to provide:
- Transaction data: Purchase amount, time, date, etc.
- Buyer communication logs: Emails or messages.
- Proof of delivery/service: Proof that the product reached the customer.
- Order confirmation email: Email you sent to customer to confirm order.
- * Relevant policy information: Information from your return, cancellation, or terms of use policies.
- Fraud scoring results: Results that your fraud flagging software had on the order.
- Payment authentication reports: Download them from your payment gateway.
If you have shipping insurance on an order, it usually includes signed confirmations. This evidence will help you a lot during “order not received” chargebacks.
What if it’s a digital product?
You’ll need to provide usage logs and other similar documents.
I can’t tell you all the evidence you’d need in one guide. What you’ll need will vary by the assigned chargeback reason code. And these will vary by the card network.
Refer to the links to those reason code guides.
Those guides won’t tell you how to properly send your payment processor your policy information, though.
Only send parts of your cancellation policy (or relevant policy to the chargeback) to your acquirer.
Because think about it:
Capital One’s staff that’s dedicated to disputes have only so much time to review evidence.
They can’t waste a half hour reading your policies. If you’re not careful about presentation, they may miss evidence that could have helped you.
Make your policies easier to read by drawing a red box over relevant areas to the chargeback.
Like this:
Then, only send screenshots of those particular pages. Ensure you include a link to the policy. The person reviewing your dispute might want to reference your entire policy.
Write a Rebuttal Letter
Another part of your package is the rebuttal letter.Â
This formal document provides evidence and explanations to support your position and request the reversal of the chargeback.
Your letter should also make up of these components:
- Specify the chargeback date, amount, and reference number.
- Directly address the reason provided by the cardholder.
- Avoid jargon and be direct in explaining the situation.
- Provide clear contact details for further communication.
- End the letter with a professional closing, such as "Sincerely" or "Respectfully".
Your letter should also be made up of these components:
We received a chargeback on [date] for [amount] with reference number [number]. The cardholder claims non-receipt of the item.
Our records show the package was delivered on [date] to [address]. The tracking number [number] confirms successful delivery. We have attached the delivery confirmation and invoice for your review.
We believe this chargeback is invalid based on the evidence provided. We request a reversal of this chargeback and reinstatement of the funds to our account.
For questions or additional information, please reach us at:
[Company Name]
[Phone Number]
[Email Address]
We appreciate your time and attention to this matter.
Sincerely,
[Your Name]
[Your Title]
[Company Name]
Only include this letter if your payment processor recommends adding it.
This information is for reference in case it’s required.
You’ll then submit the required evidence through your payment gateway’s online chargeback management platform.
Now, you wait.
2. Wait for a Response
Your acquirer may request additional evidence. If they do, give them what they want.
Meanwhile:
You could talk to the customer. See if you can convince them to withdraw from the dispute. In some cases withdrawn disputes count as “won.” And few providers (like Shopify) will refund chargeback fees from won chargebacks.
If this isn’t possible, wait for Capital One’s response.
If it’s in your favor and the customer can provide additional evidence, this process will reset.
There are some tips that I didn’t include.
Let’s see them.
My Tips to Help You Increase Your Chances of Winning Capital One Chargebacks
Aside from the tips I’ve weaved into the above sections, here’s what else I’d recommend:
1. Know when to fight chargebacks and fight fraud.
You have the lowest chances of winning fraud disputes. Unless you have intense fraud prevention that can (without a doubt) prove your innocence, don’t fight it.
That’s why mid-sized businesses spend more than 11% of their annual revenue on fraud prevention [3]. Because such fraud can cost businesses more than 5% of their revenue each year.
Such fraud prevention also prevents you from losing your ability to process payments. It’s necessary.
If your payment gateway offers chargeback protection and insurance for fraud-related cases, get it. These protections sometimes allow you to recoup losses from fraudulent chargebacks.
They also sometimes include fraud flagging software (like with Stripe).
2. Consider a chargeback analyst.
If you have the budget or high chargeback rates, hire a chargeback agent.
They specialize in preventing and fighting chargebacks. Even if you were to train your staff to deal with chargebacks, would you know what to teach them?
An analyst will have all this information. They’re also up-to-date with:
- Emerging fraud types
- Payment processor information
- Chargeback SOPs
We talk about considerations when hiring one in a separate guide. Check it out.
3. Don’t miss deadlines.
Respond as soon as possible when receiving chargeback notifications. If you don’t respond within these time limits, the customer automatically wins.
These tips apply to chargebacks in general, but you should know about them when dealing with Capital One.
The biggest tip I could offer is to avoid chargebacks altogether.
We’ll talk about how, now.
Types of Capital One Chargebacks & How to Prevent Them
The types of Capital One chargebacks are as follows:
- Technical errors
- Authorization issues
- Customer disputes
- Fraudulent transactions
Yes, yes. The chargeback type you’ll encounter will vary by reason code. So will the preventative measures.
However:
We’ll focus on the most common types of chargebacks you’ll likely encounter, provide examples, and discuss how to prevent them.
1. Technical Errors
Technical error chargebacks result from system malfunctions or processing errors that lead to unauthorized or incorrect charges.
Here’s an example:
A merchant's payment system experiences a glitch during a high-volume sales period.
The system processes some transactions multiple times. Charging customers twice for single purchases.
To minimize technical error chargebacks:
- Implement real-time transaction monitoring.
- Set up automatic alerts for unusual transaction patterns.
- Create a customer communication plan for system issues.
- Develop a rapid response protocol for error correction.
- Schedule regular system audits and updates.
- Partner with reliable payment processors.
2. Authorization Issues
Authorization issues happen when stores charge cards without proper bank approval.
This can occur because of:
- System problems
- Using cards the bank already said no to
- Mistakes in the payment information
Consider this scenario:
A customer attempts to make a purchase at a store. The payment terminal displays an error message, but the cashier manually enters the card details and completes the sale.
The bank had actually declined the transaction due to insufficient funds.
Later, the cardholder sees the charge on their statement and files a dispute.
Leading to a chargeback.
Follow these tips to prevent authorization issues:
- Obtain proper authorization before processing transactions.
- Train staff to handle declined transactions.
- Maintain and update payment systems.
- Double-check transaction details.
- Keep records of all authorizations.
3. Customer Disputes
Customer disputes occur when cardholders contest transactions with their bank. If the bank supports the buyer’s claim, it results in a chargeback.
Disputes can come from product dissatisfaction or unauthorized card use.
Here’s a scenario:
A customer orders a coffee maker online.
Upon delivery, they find the item doesn't match the description and doesn’t function.
Despite contacting the seller, they receive no response.
The customer then disputes the charge with their bank. Claiming the product differs from what was advertised.
Follow these tips to reduce customer dispute chargebacks:
- Respond to customer issues within 24 hours.
- Provide detailed product information and images.
- Send order confirmations with purchase details.
- Offer tracking for all shipments.
- Process refunds within 3 – 5 business days.
- Train staff in chargeback management.
- Use descriptive billing descriptors.
4. Fraudulent Transactions
Fraudulent transaction chargebacks fall into 2 categories: third-party fraud and friendly fraud.
Third-party fraud happens when a fraudster uses someone else's information to buy things. For example, a criminal obtains stolen credit card details and uses them to buy electronics online.
Friendly fraud happens when cardholders buy something but claim the transactions were fake.
This can be intentional or due to confusion.
For instance, a customer pays for a subscription, forgets about it, then disputes the recurring charges.
To prevent both types of fraud:
- Implement two-factor authentication.
- Verify shipping and billing addresses.
- Keep detailed transaction records.
- Communicate with customers about their purchases.
- Use fraud detection software.
- Train staff to spot suspicious transactions.
Let’s address some questions that customers and merchants may ask about Capital One chargebacks.
If you’re a merchant, it’s important to know questions from both sides. That way, you can predict the customer’s moves.
FAQs
How Do I File a Chargeback With Capital One?
Customers will first log into their Capital One account or through the app. From there, they’ll select the transaction in question from their recent transaction list. Afterward, they’ll select “Report a problem” and answer a series of questions.
They can also file disputes by downloading and mailing in their dispute form.
Or call their dispute number at 888-464-0727.
Can I Dispute a Charge From 2 Years Ago?
Discover is the only card network that will let you dispute charges from 2 years ago. This is through their Good Faith Investigation chargeback reason code. This code only applies to situations with suspected fraud.
Wrapping Up
Merchants don’t need to know too much about Capital One since they’re an issuer. Not a payment processor. It’s the customer who will need to know how to file a dispute with them, time limits, etcetera. Sellers will need to pay attention to card brand requirements.
You (the seller) will also need to prevent chargebacks. One way to do so is with chargeback alerts. We offer these alerts and have reduced chargeback rates by up to 91%.
Sources
- [1] Card Dispute Process. Capital One Help Center
- [2] What is a Chargeback? Shopify. 2023
- [3] Fraud Cost. Snappt. 2024
