Wells Fargo Chargeback Guide for Merchants in 2024

As someone who sold stuff online, I’ve used Wells Fargo as a payment processor. Thus, I will share my experience with you about how they deal with chargebacks.

I’ll explain their role in the chargeback process, how to prevent them, and how to deal with disputes.

Let’s get into this.

Key Takeaways

• Wells Fargo is the acquirer and an issuer for merchants using merchant services.
• They’re the issuer if the customer uses them for banking.
• Fees are between $25 and $150 per chargeback.
• The chargeback process remains similar regardless of Wells Fargo’s role.
• They don’t have a chargeback threshold, but Authorize.net does (1%).
  • Authorize.net is who they use to process online payments.

How Are Wells Fargo Chargebacks Different?

Wells Fargo could act as one of 2 parties in the chargeback process:

• Issuing Bank: The bank that initiates a chargeback and represents the customer.
• Acquirer: The payment processor you use through merchant services.

Customers who use Zelle through Wells Fargo only have protection from unauthorized purchases. Since these transactions aren’t done with credit cards, they don’t have protections from merchant error and other “authorized” purchases.

Summary: Wells Fargo can act as the issuer and acquirer. Affecting the fees that merchants pay and the chargeback process.

Chargeback Fee

As an acquirer, Wells Fargo will charge sellers with merchant accounts $25 for each chargeback file. If your case reaches arbitration, the losing party will need to pay $500 in arbitration fees. That’s because arbitration requires more resources than typical disputes.

This information comes from various online sources. Wells Fargo’s website says fees range from $25 to $150 [1]. Wells Fargo’s page was last updated in 2022.

As an issuer, Wells Fargo will not charge merchants any fees. Only your payment processors can levy fees.

Summary: Chargeback fees range from $25 to $150.

Wells Fargo Dispute Manager

Wells Fargo Dispute Manager is a platform for merchants to manage chargebacks and retrieval requests. 

The platform streamlines the dispute process by allowing merchants to submit evidence and track dispute progress.

This helps merchants improve their win rates, recover revenue, and maintain a healthy chargeback ratio. Why? Because they can learn from patterns of past chargebacks. Thus, they could learn how to prevent chargebacks.

Summary: Wells Fargo dispute manager is a place where merchants manage chargebacks.

Typical Causes of Wells Fargo Disputes

The most common reasons for chargebacks on Wells Fargo include:

• Customer didn’t receive purchased item.
• Processing errors.
• Fraudulent transaction.
• Merchandise wasn’t as described.
• Product didn’t match what the user expected.

Most chargebacks are generalized as first-party fraud, third-party fraud, and merchant error. First-party fraud is when a customer disputes an authorized transaction. In some cases, friendly fraud could come from a family member buying something with the customer’s card.

Third-party fraud, or true fraud, is when a fraudster does an unauthorized transaction. They get the customer’s information by stealing it or buying it from databases.

And merchant error involves issues made by the seller. For instance, you may accidentally charge the seller twice for the same purchase. These are the easiest types of chargebacks to prevent. And we’ll talk about prevention later.

Anyway.

Card networks will describe the dispute type through a chargeback reason code. These will vary by the following providers:

• Visa
• Mastercard
• Discover/JCB (JCB uses Discover codes)
• American Express

Know the reasons for chargebacks to help you build a dispute prevention strategy.

Customers can’t dispute a transaction for “forgetting” about a purchase, filing a dispute because it’s easier than a refund, or being tired of an item. Wells Fargo will decline their dispute request in such cases.

Summary: Most Wells Fargo chargebacks come from fraud and merchant errors. The true reason will vary by reason code.

Time Limits

• File a Chargeback (Customer): 60 days from the transaction date.
• Respond to a dispute:
  • Visa: 30 days
  • Mastercard: 45 days
  • Discover: 30 days
  • American Express: 20 days
• Respond to arbitration:
  • Visa: 10 days
  • Mastercard: 45 days
  • Discover: 10 days
  • American Express: No arbitration process

The time limits for responding to arbitration and disputes are for if Wells Fargo is the acquirer. If they’re the issuer, your response time will vary by payment processor. For instance, if you use PayPal, you must adhere to their time limits.

Does Wells Fargo Have a Chargeback Threshold?

Wells Fargo does not publicly disclose a specific chargeback threshold for its merchant services. Though, like other payment processors, they monitor merchants' chargeback ratios.

A high chargeback ratio can result in several consequences:

• The merchant's account may be placed under review, leading to stricter monitoring or restrictions.
• In severe cases of excessive chargebacks, Wells Fargo may terminate the merchant's account.

The exact threshold that triggers these actions can vary. Factors include the merchant's industry, processing history, and overall risk profile.

However.

Wells Fargo uses Authorize.net for their online payment processing. You can’t exceed more than 1% of total transactions being chargebacks per month.

Here’s a screenshot of proof they use Authorize.net:

(Screenshot source: Wells Fargo)

Summary: Wells Fargo doesn’t have a chargeback rate for their merchant services.

Wells Fargo Chargeback Process

Since Wells Fargo acts as the issuer and acquirer, you’ll encounter slightly different processes as a merchant. Depending on which side they’re on.

Here are both processes.

Wells Fargo as the Issuer

• How Long They Typically Last: 10 days for claims

As an issuer, the chargeback process will vary by provider. It also operates under the rules of Regulation E, the Electronic Funds Transfer Act, and other debit networks.

Here’s how the process goes:

1. Customer disputes a transaction.
2. Wells Fargo investigates the dispute.
3. Payment processor notifies and debits merchant (chargeback).
4. Seller decides whether to contest chargeback.
5. If merchant fights chargeback, they submit evidence to payment processor.
6. Wells Fargo reviews evidence and makes a final decision:
   1. Merchant wins: Chargeback is reversed.
   2. Buyer wins: Chargeback stands.

In some scenarios, Wells Fargo may do a retrieval request. This isn’t a chargeback, but just requests information from the merchant. They’ll use this information to determine whether they should do a chargeback.

When Wells Fargo favors the merchant during a chargeback dispute, the customer may fight that decision. This is pre-arbitration (AKA second chargeback or pre-arb). A situation where the cardholder provides additional evidence.

If pre-arbs don’t result in a solution, it may escalate to arbitration. This scenario involves the card network (e.g., Visa) making the final decision.

Wells Fargo as The Acquirer

How Long They Typically Last: 

• Revolut: Up to 12 weeks.
• Mastercard: Up to 120 days (17 weeks).
• PayPal: 75+ days
• Visa: Prefers to have disputes dealt with in less than a month.
• Discover: “Several weeks or months.”
• American Express (AMEX): 6 – 8 weeks.
• Stripe: 2 – 3 months.

Here’s the chargeback process if Wells Fargo is your payment processor:

1. Customer complains to issuing bank.
2. Issuer submits a chargeback to Wells Fargo and issues provisionary credit to customer.
3. Wells Fargo notifies merchant of chargeback and provides Transaction Document Request.
4. Merchant gathers evidence and submit it to Wells Fargo.
5. Wells Fargo passes evidence to issuer.
6. Issuer reviews the evidence and makes a decision.
   1. Merchant wins: Chargeback is reversed.
   2. Buyer wins: Chargeback stands.

Wells Fargo offers Dispute Manager through their Business Track accounts. This is where you’ll find all your chargeback information from Wells Fargo. It’s also where you’ll submit evidence.

They also allow you to enroll for free by calling 1-800-451-5817.

You’ll need to weigh whether it’s worth using by comparing it to dispute management software other card providers and processors offer. I can’t help you here because I don’t know your needs.

What Are Wells Fargo Chargebacks?

A Wells Fargo chargeback is a forced reversal of charges for violating a regulation or Payment Card Network rule [2]. Many payment issuers and acquirers will use the terms “dispute” and “chargeback” interchangeably.

Or they’ll use terms like “chargeback disputes.”

Summary: Chargebacks are forced reversals of funds from disputed transactions.

How’s This Any Different From a Refund?

Refunds occur when a merchant returns funds to a customer.

The payment processor does not reimburse the merchant, resulting in a loss of the sale amount and the processing fee.

Chargebacks happen when a customer disputes a transaction through their bank. The bank reverses the payment, and the merchant loses the sale amount and processing fee and may incur additional fees.

Too many chargebacks put merchants in the Visa Dispute Monitoring Program. VDMP means more costs, like higher fees, fines, and required rules.

These programs increase operational costs and can harm the merchant's reputation.

Summary: Chargebacks are forced reversals of funds. Refunds are voluntary.

How to Prevent Wells Fargo Chargebacks

Here are tips that I, along with Wells Fargo, recommend for businesses:

• Ensure your business name appears on cardholder statements.
  • Prevents confusion.
• Always get authorization for transactions.
• Verify CVV, CIDs, and CVCs (numbers on the back of cards).
• Don’t break sales into smaller amounts.
• If card is denied, request a new form of payment.
• Participate in fraud protection programs.
• Use Address Verification Service; it compares billing and shipping addresses.
• Use TransArmor services to tokenize (hide) card numbers.
  • Prevents hackers from being able to steal customer card numbers.
• Cancel recurring transactions when receiving a notification.
• Resolve issues regarding defective merchandise immediately.
• Ensure you have an easy-to-understand cancellation/return policy.
• Use chargeback alerts.

Examples fraud protection programs that Wells Fargo recommends include:

• American Express SafeKey
• Discover ProtectBuy
• Mastercard SecureCode
• 3D Secure (many card providers have their own iterations)

Many payment processors, like PayPal, will offer versions of fraud protection — sometimes paid. However… Typical fraud cases cause a median loss of more than $117,000 [3]. Many organizations also lose 5% of revenue a year from fraud.

And many mid-sized businesses spend 11% of their annual revenue on fraud prevention.

You can use Apple Pay or Google Wallet to prevent fraud. These processors check to ensure the cardholder is making the purchase. This helps reduce fraud.

Regarding chargeback alerts.

Mastercard offers Ethoca. Visa offers RDR and CDRN (from Verify, a Visa company). All these alerts warn merchants when there’s an issue with a transaction. Giving merchants a chance to deal with the issue before it escalates to a retrieval request, dispute, or chargeback.

It requires a fair amount of resources and time to implement these alerts. As you’ll need more than 1 for coverage across multiple card networks. We partnered with all those providers to make receiving these alerts simple. Learn how we can help.

Summary: Stop chargebacks by using fraud prevention. Make transactions clear. Authorize purchases.

How Do I Fight & Win Wells Fargo Chargebacks?

First ask yourself, “Is it worth fighting?”

Weigh the cost of fighting the chargeback against the transaction value. Consider the evidence you have to support your case and the likelihood of winning the dispute. If the chargeback is based on a valid reason, such as fraud or non-delivery, fighting may be futile.

Because it’ll be more difficult for you to prove the transaction was legitimate, which is your goal.

Think about it this way. Merchants win around 9% of third-party fraud (unauthorized) chargebacks [4]. And more than 43% of friendly fraud chargebacks. Then, on average, they’ll win 30% of chargebacks.

Let’s say you want to fight it. Good luck.

Your approach depends on whether Wells Fargo is the acquirer. If they process your payments, you'll get a chargeback notification and a request for transaction documents. Provide this evidence by fax or through their Dispute Management software.

Such information may include:

• Receipts/transaction details
• Credit Draft copy (if applicable)
• Case number

I found the information about “faxes” through their small business operating rules page (PDF). And I don’t know when they updated it.

They do “strongly” recommend that you send a rebuttal letter alongside your documents. This letter gives you a chance to explain why the chargeback is invalid and provide your perspective. You’ll also want to mention the evidence submitted.

Ensure the information is legible (if presenting copies). If they’re not, you may receive a “non-receipt” chargeback. You can’t fight this type of chargeback.

Summary: Fight only worthwhile chargebacks. The way you’ll fight it depends on whether Wells Fargo is the issuer or acquirer.

FAQs

How Do I Dispute a Wells Fargo Transaction?

Call 1-800-642-4720 to start a dispute with Wells Fargo. From there, they’ll guide you through the chargeback (AKA dispute) process.

Conclusion

If you’re using Wells Fargo’s merchant services, they’ll represent you during a chargeback. If not, they’ll be the party who you have to convince your transaction was legitimate.

If you need a way to prevent chargebacks, start using chargeback alerts. And we provide such alerts. Learn how they can reduce chargebacks by up to 91%.

Sources

• [1] Wells Fargo. Operating Rules (PDF)
• [2] Wells Fargo. Managing Chargebacks
• [3] Snappt. The True Cost of Fraud
• [4] Chargeflow, 2024. Navigating eCommerce Resilience