COVID-19 dispute response guidance

Merchants, especially those in the travel, entertainment, and events industries, are experiencing increased dispute volume due to the COVID-19 pandemic. Government orders have affected some merchants’ ability to make goods or services available. Shelter-in-place orders have forced customers to cancel or not attend previously scheduled events. In some cases, customers are contacting their issuing banks to dispute charges. In some cases customer disputes are invalid, and card network dispute processes give merchants the right to respond to these invalid disputes by submitting evidence to the network.

In response to the increase in disputes being faced by many merchants, Visa and Mastercard have issued guidelines to answer questions about how to resolve disputes related to goods and services canceled directly because of a government order or prohibition. This guide will help you understand how to provide the best possible evidence submissions to respond to invalid disputes initiated by your customers.

Stripe will continue to monitor developments within the card networks and issuing banks. We will update this guide as we learn new information that may help clarify the network dispute processes, including details to help you prepare your dispute evidence submissions.

General suggestions for working with customers

Visa and Mastercard have similar cardholder dispute processes. Both networks have issued their own guidance to clarify their rules in light of the increased dispute activity, predominantly in the travel and events categories. Reviewing the Visa and Mastercard websites for COVID-19 related updates can help you understand the types of disputes the networks view as valid and the types of evidence you should submit to increase the likelihood of a successful outcome. Both networks, in general, advise the following:

Many businesses are finding it difficult to understand when a customer dispute is valid or invalid and, for invalid claims, the right type of evidence to submit. You should continue monitoring the Visa and Mastercard websites for updated information that can help you understand your options.

The examples outlined below describe a few common scenarios for Stripe users experiencing higher than normal dispute volumes. The guidance is not specific to any card brand network, but following the advice can help you successfully address invalid disputes.

Example 1: A government order prevented the good or service from being offered

Some customers initiate a dispute with their issuing bank for charges related to a merchant’s inability to deliver goods or services due to a government order. When a government order prohibits you from making a good or service available, this can negate a dispute right. For example:

A customer dispute might be valid if keeping your business open would not have violated a government order and you nevertheless chose to close your business (e.g. an order that only allowed you to have 10 people inside your gym at once).

Specific network rules and interpretations ultimately determine whether a customer dispute is invalid, which makes the quality of the evidence you submit essential. Your evidence submissions should include:

Example 2: A government order requires my customers to accept a credit or voucher

Some governments are permitting companies in certain industries to require customers to accept credits or vouchers instead of a refund. A dispute initiated by a customer who received a credit or voucher in accordance with a government order is generally invalid. Evidence submission files should contain:

Example 3: I already issued a refund to my customer for the good or service

You may have issued refunds to some or all of your customers. A chargeback initiated by a customer who received a refund is generally invalid. Evidence submission files should contain:

Example 4: My customer is entitled to a refund under my terms and conditions, but accepts a voucher or other credit instead of a refund.

You may have issued a voucher or other credit to some or all of your customers who are otherwise entitled to receive a refund under your terms and conditions. In general, your customer does not have to accept a voucher or credit instead of a refund unless required by applicable law or regulation (see example 2 above). However, depending on the applicable network rules, a dispute initiated by the customer may be invalid if your customer did accept a voucher or other credit instead of a refund. Evidence submission files should contain:

Example 5: My customer did not attend an event (e.g., a concert, a flight, or a hotel visit) that was otherwise available

Your customer may have not attended an event that was otherwise available. Unless there are other compelling factors, such as a specific government order specifying a consumer or merchant’s rights in this situation, you will be required to justify that the cancellation was partially or fully non-refundable, as agreed to by the customer at the time of the purchase.

Evidence should include:

Visa specifically requires proof that a customer has acknowledged both the terms and conditions of purchase AND the cancellation/refund policy. Here is an example of a customer acknowledgement has been provided by Visa:

image.png

Example 6: My customer contacted me to cancel their booking but is not entitled to a refund or credit because they agreed to my cancellation policy when they made the online purchase

Your customer may have contacted you to cancel a service that you were prepared to make available. You will be required to justify that the cancellation was partially or fully non-refundable, as agreed to by the customer at the time of the purchase. There are a range of factors to consider as you prepare your evidence submissions, including:

Evidence should include:

Visa specifically requires proof that a customer has acknowledged both the terms and conditions of purchase AND the cancellation/refund policy. Here is an example of a customer acknowledgement has been provided by Visa:

image.png