Chargeback Management

Chargebacks - Preventing Double Refunds

Double Refund Chargeback

As if the loss of revenue from chargebacks wasn’t bad enough, every chargeback has the potential to bring along a host of subsidiary problems—bank fees, increases to your chargeback ratio, time and labor spent in representment, and more—but the most galling one to encounter can be the dreaded double refund chargeback. This is when both a chargeback and a merchant-initiated refund get processed for the same transaction, leaving you with twice the amount of lost revenue on top of the fees, product cost, and other losses. What can merchants do to prevent double refund chargebacks from occurring?

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To prevent double refund chargebacks, it is necessary to understand how and why they occur. Obviously enough, they refer to situations in which one hand doesn’t know what the other is doing: either the merchant processes a refund unaware that a bank dispute is in progress, or the bank escalates a dispute to a chargeback before checking with the merchant to see if a refund has already been issued. It doesn’t matter whether the refund was initiated first, or the dispute—double refund chargebacks can occur either way.

Here’s a typical scenario: a customer, unhappy for whatever reason, calls their bank to dispute a charge. After getting off the phone with their bank, they contact the merchant to express their dissatisfaction. Unaware that a dispute has been initiated, the merchant offers a refund and the customer accepts it. Later, the bank escalates the dispute to a chargeback, and the money is subtracted from the merchant’s account a second time.

It’s also quite common for a customer to contact the merchant first, ask for a refund, and become impatient waiting for the refund to hit their bank account. Feeling forgotten by the merchant, they call their bank and dispute the transaction. The merchant eventually gets around to issuing the refund without realizing that a chargeback has been filed for the very same transaction, and they’ve lost the original dollar amount twice over.

How do I prevent double refund chargebacks?

The easiest double refund chargebacks to prevent are the ones that start with the customer contacting you first. This gives you an opportunity to provide excellent customer service, learn why the customer is unhappy, and promptly issue a full refund. The sooner you can issue the refund, the less likely the customer will feel any reason to contact their bank.

By acting quickly to resolve their problem and get their refund out to them, you stand a good chance of retaining them as a future customer.

Will some customers try to game the system by contacting both the merchant and their bank in the hopes of profiting from a double refund chargeback? Sadly, yes. When it comes to fraud schemes, if you can imagine it, somebody is trying to get away with it.

Ideally, if the refund comes before the dispute the issuing bank will find out about it through the merchant inquiry step before the dispute is escalated. If not, proof that a refund has been issued is rock-solid evidence in representment, and should be sufficient to get the chargeback reversed.

What if the cardholder calls their bank first?

While merchants are supposed to receive prompt notification of chargebacks, they won’t always know when a dispute is in its preliminary stages, and in this window of time it is possible for merchants to initiate disputes with no good way of knowing that the transaction is already in the dispute process.

Chargeback alert services can be beneficial in cases like these, as they will give you advance notice of impending chargebacks and shorten the timeframe in which these double refunds can occur.

Sometimes, the customer will tell you, or you can even ask them, if they’ve reached out to their bank about the transaction they have a problem with. Your customer service agents should be trained to ask the right questions of callers who seem especially upset or aggrieved about a particular transaction, or who exhibit any other behavior patterns that have led to chargebacks in the past. A little extra time with these customers can help you figure out if they’ve already launched a dispute.

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyIf you do believe that a dispute is already in progress, you can contact the customer’s issuing bank to find out if there’s a case number assigned to that transaction yet. If so, it is nearly certain that a chargeback is inevitable, and you should not issue a separate refund to that customer.

Can I represent a refunded chargeback?

You can and should fight chargebacks that you’ve already refunded; the refund is proof that the matter has been resolved in the cardholder’s favor and they are not entitled to a chargeback.

You should always issue refunds back to the same card or account that was used to carry out the original transaction—banks don’t have the time or staffing to investigate representment evidence deeply, and if they see an account number mismatch they might not accept it as proof.

If you submit evidence that is clear, compelling, and thoroughly documented, however, you should expect to win your fights against double refund chargebacks.


Part of what’s frustrating about double refund chargebacks is that preventing them takes some extra proactive work on top of your regular chargeback prevention efforts. You need to be extra watchful for notifications, your customer service team needs to be trained to know what to look for and what to ask, and you need to expedite refunds. You also have to take the time to put together the right evidence to represent these chargebacks that never should have happened in the first place.

If you’re dealing with a large number of double refund chargebacks, or you find yourself working especially hard to head them off, there’s a good case to be made for hiring a chargeback management firm, who can ease the pressure on your staff and operations by handling these matters as part of their overall chargeback management activities.

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