This article provides an overview into managing chargebacks and disputes for dealers on our platform. In the event of a dispute or chargeback, TOOLBX will promptly contact you to determine if you wish to challenge the claim. It’s important to note that dealers are financially responsible for transactions without liability shift (no 3DS) and in cases where 3DS does not cover the specific type of fraud. For a comprehensive understanding of our risk management strategy and associated fraud risks, refer to our article on managing fraud and reducing risk.

A dispute arises when a cardholder challenges a payment, initiating a chargeback through their issuer. Disputes generally fall into two categories:

• Fraud

• Consumer disputes

The defensibility of a payment depends on the method used; credit card payments can be disputed, while ACH bank transfers cannot. When a dispute is raised by the issuing bank, TOOLBX will communicate this to you, and the dispute cycle starts.

1. Notification of Chargeback (NoC): Chargeback has been initiated by the issuer, and can be defended. The NoC may follow a RFI (Request for Information), or occur immediately after the payment status is set to 'Settled' or 'Refunded', skipping the RFI step. The chargeback debit usually occurs a few days after you receive the NoC.

2. Optional Request for Information (RFI): If the issuer seeks more details, TOOLBX will contact you for the required information, should you choose to defend the chargeback.

3. Adyen Auto-defense: Adyen (our payment provider) will automatically dispute certain chargebacks, requiring no action from your end, including already refunded transactions or fraud chargebacks with liability shift (e.g., 3DS transactions).

From there, the dispute continues through the following steps:

1. 1st chargeback: The disputed amount is withdrawn from your account. If you accept the dispute, or fail to send your defense documents, this is the final stage.

2. Information supplied: TOOLBX forwards your supporting documents to Adyen. No further changes can be made to these documents.

3. Chargeback reversed: The disputed amount is transferred back to your account. In this stage, the issuer reviews the defense. If they accept the defense, or the issuer response timeframe expires, this is the final stage.

4. Pre-arbitration (Only Visa, Mastercard): If the issuer declined your defense, they open pre-arbitration, which Adyen will review.

5. 2nd chargeback: If the issuer declines your defense, or Adyen accept their pre-arbitration case, a second chargeback occurs. You can not upload defense documents. This is the final stage.

When a dispute has been initiated TOOLBX will reach out to you within 1 business day to inform you of any chargeback. From there TOOLBX will supply you with the reason for the dispute, the timeframe the Dealer has to dispute the transaction and relevant

ACH transactions are governed by the National Automated Clearing House Association (NACHA), which oversees the ACH network. It is important to note that the ACH network does not provide a mechanism to dispute claims directly through it. Instead, the burden of proof for disputing an ACH payment is higher compared to credit card disputes, requiring that a written statement be submitted to the bank to initiate the dispute process. Additionally, there are different timeframes for disputes depending on the type of account involved. Non-consumer (business) accounts must file disputes within two business days, whereas consumer accounts have up to 60 days to file a dispute.

Under exceptional circumstances, ACH network may accept Proof of Authorization (POA) in the event of a customer-initiated return. TOOLBX keeps audit logs, IP and customer information and will help provide this information to the ACH network to help provide Proof of Authorization in the event of any customer-initiated returns. To address most issues with returns you should work directly with the customer to resubmit payment. 

Given that ACH returns cannot be disputed TOOLBX only allows ACH transactions on Accounts Receivable and doesn't allow this form of payment for online orders. Moreover, the importance of vetting customer creditworthiness cannot be overstated. Thoroughly assessing the financial stability and integrity of your credit customers before engaging in ACH transactions is a way to mitigate against 'friendly fraud.'

Each issuing bank has different timeframes for handling the dispute process. If a dispute is raised, and the bank initiates a chargeback, you need to respond and provide defense documents within the specified timeline to defend the chargeback. After that, you can expect a final decision.

In general, a cardholder has a maximum of 120 calendar days from the transaction date to dispute a transaction. This is the moment that the cardholder expects the product or service to be delivered or fulfilled. In some cases for Visa and Mastercard, the cardholder has a maximum of 540 calendar days from the transaction date to dispute a transaction. For example, when the product or service is not immediately delivered or fulfilled, such as a pre-order.

The time frame (in calendar days) to exercise and defend a chargeback are:

The requirements for defending against disputes vary depending on the reason for the dispute. For all types of dispute, you must provide documents with details of transactions to help you build a strong case to challenge the dispute.

Acceptable file formats include JPG, TIFF, and PDF, with specific size limitations for Discover and Mastercard.

• JPG (maximum file size 10MB)

• TIFF (maximum file size 10MB)

• PDF (maximum file size 2MB)

For Discover, the maximum file size is 3MB. For Mastercard, the maximum number of pages for a chargeback defense document is 19.

The cardholder claims that they did not authorize or participate in the transaction. You should demonstrate that the cardholder did legitimately purchase the service or merchandise.

• Copy of invoice

• Email conversation with cardholder

• DHL-signed proof of delivery, and AVS.

• Record of previous non-disputed payments

• Courier’s GPS location providing delivery of the product

The cardholder claims that a single transaction was processed more than once. To defend this dispute you must provide:

• Copy of invoice of two separate orders.

• Documentation to prove that no other form of payment was used

The cardholder claims that merchandise or services that they ordered were not received or not received on time. To defend this dispute you must provide:

• Description of the goods.

• DHL-signed proof of delivery, and AVS match.

• Communication where the cardholder confirms possession of the goods.

• Explanation why shipment was delayed.

The cardholder's bank received a notice from the cardholder stating that they returned merchandise or canceled services, but the credit has not appeared on the cardholder's statement. To defend this dispute you must provide:

• Copy of invoice / confirmation email.

• Proof that the cardholder received your cancellation or return policy and did not cancel according to the disclosed policy.

• Proof that the cardholder initially received the merchandise, and did not return the merchandise.

• Proof that cardholder has not contacted you to solve the issue.

The cardholder claims the goods were not as described or disputes the quality of the merchandise or services. To defend this dispute you must provide:

• Proof that the cardholder has not contacted you to solve the issue or returned the merchandise.

• Evidence to prove that the merchandise was as described or was not damaged or defective.

• If the merchandise was replaced/repaired, provide a DHL-signed proof of delivery.

• Email communication with the cardholder.

The cardholder claims that the terms of sales (Terms and Conditions) were misrepresented. To defend this dispute you must provide:

• Proof that your terms and conditions were clearly communicated before the transaction was processed.

• Proof that the cardholder acknowledged your terms and conditions (for example, a screenshot of the checkout page of your website showing that the cardholder accepted the terms and conditions by selecting a checkbox before proceeding to the payment).

The cardholder claims that you agreed to refund the cardholder but the refund was not processed, or that you didn't process a credit when the cardholder canceled or returned merchandise, canceled services, or canceled a guaranteed reservation. To defend this dispute you must provide:

• Evidence that a credit or reversal that you issued was not addressed by the issuer.

• Evidence that the cardholder didn’t return nor attempted to return the merchandise

• Evidence that the cardholder’s return does not comply with your written policy.

he above dispute requirements are generic and for more detailed guidance on evidence to be submitted, you can reference the following dispute guides below.

• Amex Dispute Guide

• Visa Dispute Guide

• Mastercard Dispute Guide

This guide outlines the necessary steps and requirements for understanding and navigating the chargeback and dispute management process. For further assistance or more detailed information, please contact TOOLBX support.