11.3: Not as Described or Defective Merchandise/Services

This whole situation becomes even more frustrating because this particular type of chargeback happens more frequently than other dispute categories that merchants see. Along with that lost money you’re also stuck paying extra processing fees. Too many disputes piling up over time could get you enrolled in expensive oversight programs that nobody wants.

Financial damage doesn’t stop there either. Every dispute that comes in means that someone on your team has to drop what they’re doing to gather evidence and put together a response within those tight deadlines that the card networks impose. Failed defense attempts result in permanent revenue loss and extra penalty fees that just keep adding up over time.

You can actually stop most of these disputes from ever happening. Two strategies will make all the difference for your business. Your product descriptions have to be completely accurate and tell customers what they’re going to receive. You also need strong quality control systems that will keep your customers happy while protecting your business from unnecessary losses.

How It Works

Customers have every right to call their bank when they receive something that’s completely different from what they ordered. Maybe the red shirt they spent time picking out online shows up in bright blue or maybe the brand-new laptop they’re excited about refuses to turn on the first time they plug it in. Banks listen to these complaints and file chargebacks to help customers get their money back.

Your payment processor sends you a notification first – this usually arrives within a few days of the customer’s complaint. That message tells you in detail what the customer says went wrong and gives you a deadline to respond. That deadline can make or break your case. Most merchants have no idea how big of a deal it is though.

Most merchants get about seven to ten days to get together their evidence and submit a response. Miss that deadline and the dispute is automatically ruled against you – you lose, period. No second opportunities, no extensions, nothing. Your payment processor spells out the timeline in the dispute notice, so you need to read through everything the minute it hits your inbox.

Your evidence needs depend on the complaint type. A “not as described” claim means that the customer got something different from what was advertised – wrong size, wrong color or missing features. These disputes require you to show your original product listing, any email conversations with the customer and proof of what you actually shipped.

Defective claims are a little different. A customer filing one of these is saying that the item showed up broken or just doesn’t work the way it should. Merchants find it hard to prove that the item was in perfect working order when it left the warehouse. Quality control records are helpful here because they show the exact condition of the product before it shipped. Shipping insurance claims can back you up as well because they document if any damage happened during delivery.

Example Scenarios

A customer orders a medium shirt and gets an extra large – you have a problem on your hands. Maybe your warehouse team was busy that day and somebody grabbed from the wrong bin without double-checking the order. They think they’ll try to wear it anyway. They put it on and they’re looking like the shirt is way too big for them. They reach out to your customer service team for help. They somehow get stuck in this endless email back-and-forth where nothing actually happens instead of getting a quick fix. After waiting for a few days without making any progress on their issue they eventually just get frustrated and call their bank to dispute the charge.

Business owners see this happen all the time though most have no idea how it happens. Sometimes the mix-up is even smaller than that. A phone case shows up in navy blue instead of black. They notice the difference but think it’s probably close enough to what they wanted. Then their friend sees it and asks why they picked out this ugly color. Suddenly that small difference seems like a big mistake. They want their money back and they want it fast.

Service businesses run into this exact same problem all the time. An entrepreneur who runs an online course about social media marketing will promote these great weekly live coaching calls with industry experts right there on their sales page. Students see this and get pretty excited about the whole opportunity because they’re finally going to be able to ask their burning questions and get advice that actually applies to their particular business situation.

It turns out to be outdated conversations about strategies that don’t even work anymore because the apps have changed completely. Students feel tricked and they ask for their refunds. You refuse because they have already accessed the materials so they have their credit card company reverse the charge instead. You have a chargeback and an angry customer who will probably tell everyone they know about their terrible experience with your business.

How it Affects Chargeback Prevention

Chargebacks from customers who receive products that don’t match what they ordered can wipe out your business and the damage goes much deeper than you might expect. One lost sale is only the start – each dispute directly hurts your chargeback ratio and payment processors use that number when they choose if they should continue working with you or cut you off altogether.

Card networks like Visa and Mastercard keep an eye on your chargeback numbers and they set strict limits that you need to stay below if you want to process payments through them. Cross those limits and they’ll drop you straight into their watch-list programs that bring extra fees and a pile of new laws to your merchant account. Sellers can lose their card processing altogether when the situation gets out of hand.

It’s even more frustrating when you realize how few disputes it takes to land you in trouble. Process a thousand transactions in a month with only ten “not as described” chargebacks and you’re already at one percent. Most card networks start to worry around 0.9 percent so your margin for error is slim.

To avoid these problems, make sure that you’re extra careful that everything on your product pages matches what you actually ship out. Your descriptions have to line up word for word with what goes into the box. List the measurements and materials and weight and all the other little facts that shoppers care about. Post photos from different angles and make sure they show what the item looks like in actual life. Give customers all the info up front and there won’t be any nasty shocks when they open the package.

Quality control matters as much as great descriptions. I see merchants who have problems with this all the time – they’ll have perfect product pages but then ship items that don’t match what was advertised. Check each product before it leaves the warehouse and spot any flaws or differences from what’s shown online and always send customers their tracking number and delivery confirmation. These steps create a strong paper trail that can protect you when disputes come up later.

Requirements and Timeframes

Dispute notifications have a way of showing up at the worst possible time, right when the customer’s order arrives damaged or is nothing like what they asked for. Then you’re working against a very tight clock because card networks have been much stricter lately. Most of them will only give you about 20 days to put together your response – that’s a big change from the 30 or 45 days merchants could count on just a few years ago. Miss that deadline and the case automatically closes – you lose with no questions asked and there’s no way to appeal.

Once that dispute notification pops up in your inbox, the clock is already ticking. You can’t wait for your supplier to send over the paperwork and you can’t count on the customer suddenly changing their mind and dropping the claim – it becomes your responsibility as the merchant and it can seem pretty unfair at times. Your manufacturer could be the one who shipped out the completely wrong item or got the order wrong. At the end of the day though, you get left to manage the entire chargeback mess. This situation becomes even more frustrating because customers get a full 120 days from the day they receive their package to file a dispute. That means a sale you processed back in January could turn into a chargeback problem when May rolls around and each transaction you run stays at risk until the 120-day window finally closes and there’s no helpful way to remove that risk for your business.

To win these cases, you need strong proof that you sent the precise item you promised. Your product listings have to be accurate and have to match what actually went out the door. Shipping confirmations can be helpful yet they mostly show that a delivery happened – not that the right item arrived in decent shape. You need quality-control records that show the item’s condition as it left your facility. Photos taken right before shipping work especially well for this evidence.

Your standard return policy won’t help much in these situations either. Card networks want to see evidence about this transaction and this item, not your general business policies.