Double Refund Chargebacks

Table of Contents

  1. What is a double refund chargeback?
  2. How do I prevent double refund chargebacks?
  3. What do I do when someone disputes a charge before contacting me?
  4. Can I fight a double refund chargeback?
  5. Let the professionals handle your chargebacks
  6. What is a split refund?
  7. Can cardholders keep double refunds?
  8. Does a double refund cost a merchant twice?

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, including bank fees, increases to your chargeback ratio, time and labor spent in representment, and more. Perhaps the most frustrating chargeback complication for a merchant to encounter is the dreaded double refund chargeback.

What are double refund chargebacks, how can you prevent them, and what should you do if one happens to you? Let's talk about it.

What is a double refund chargeback?

A double refund chargeback occurs when a customer contacts both the merchant their bank about a purchase they're unhappy with, resulting in the merchant issuing a refund and the bank initiating a chargeback. When this happens, the merchant loses twice the purchase amount plus fees.

To prevent double refund chargebacks, it's necessary to understand how and why they occur. The main issue that leads to double refund chargebacks is the lack of communication between banks and merchants during the early stages of a dispute.

Either the merchant processes a refund unaware that a chargeback has already been filed, or the bank initiates a chargeback without knowing that a refund has already been issued. It doesn’t matter whether the refund or the dispute came first — double refund chargebacks can occur either way.

New call-to-actionHere’s a typical scenario: An unhappy customer 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 processes a chargeback, and the money is subtracted from the merchant’s account a second time.

In some cases a customer may 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. Since it can take a few days for a merchant to be notified of a chargeback, the merchant might then issue the refund without realizing that a chargeback has been filed for the very same transaction.

How do I prevent double refund chargebacks?

Double refund chargebacks can be prevented by providing excellent and available customer service and by following best practices for processing refunds, including submitting refund transactions as quickly as possible.

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 process 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.

Using a return authorization will also help prevent this type of double refund. Since the customer will see the pending refund in their account as soon as the transaction is submitted rather than having to wait several days for the funds to reach their account, they're less likely to dispute the charge out of impatience.

Ideally, if the refund comes before the dispute the issuing bank will find out about it before the dispute is escalated. Visa and Mastercard have both made changes to their dispute rules in recent years to try to make sure issuing banks don't initiate a chargeback for a refunded purchase, but the system is far from foolproof.

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.

What do I do when someone disputes a charge before contacting me?

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 refunds with no 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 time frame in which these double refunds can occur.

Unfortunately, chargeback alerts are also costly, and typically aren't worth setting up if your primary purpose is preventing double refunds. If you're already considering alerts as part of your chargeback management strategy, however, this is another benefit they can provide.

fraud Prevention- Proven Strategies to prevent e-commerce fraud An easier way to prevent a double refund in this direction is to ask the customer if they've already brought up the issue with their bank. The customer could lie, of course, but malicious use of double refunds isn't very common.

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.

If 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's nearly certain that a chargeback is inevitable, and you should not issue a separate refund to that customer.

Can I fight a double refund chargeback?

You can and should fight chargebacks for transactions 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 clear and well-documented evidence of a refund, however, you should always be able to get the chargeback reversed.

That won't recover the chargeback fee or other costs, of course, but it will recover the transaction amount and prevent any benefit to a customer who tries to obtain a double refund maliciously.

Let the professionals handle your 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 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 double refunds as part of their overall chargeback management strategy.


What is a split refund?

A split refund occurs when a cardholder both requests a refund from a merchant and disputes the charge with their bank. This is more commonly called a double refund.

Can cardholders keep double refunds?

No. If a cardholder receives a refund after filing a chargeback, they should notify their bank that the chargeback is no longer necessary. Merchants can get these chargebacks reversed by providing evidence of the refund, but this process costs them time and money.

Does a double refund cost a merchant twice?

Yes. Both the refund and the chargeback come out of the merchant’s bank account.

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