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:

• If you are unable to provide a service for any reason, you should contact your customers and attempt to resolve the issue.

• You can offer your customers a voucher or other type of credit. Whether your customers are required to accept the voucher depends on a few factors, including the reason why the good or service is unavailable, the terms of your cancellation policy and applicable laws and regulations.  

• Cardholders who receive a refund from you are not entitled to also initiate a dispute with their issuing bank.

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 border is closed and a government expressly prohibits an airline from flying into the country.

• A government orders the closure of non-essential businesses (e.g., gym, golf membership, camps, indoor and outdoor recreational and cultural facilities).

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:

• A description of the circumstances: Explain that you were unable to deliver the relevant goods or services and how the government order or prohibition resulted in this fact.

• Proof of the government order resulting in inability: Include a screenshot with a government website URL visible, or copy of the government order that prevented you from delivering the goods or service. A news article, or just generally referencing the shutdowns, may not be sufficient. Advisories against travel or large gatherings may also not be sufficient; you must provide evidence of a law or order preventing the goods or services from being offered.

• A copy of the relevant sections of your terms and conditions: Screenshots should include the address bar, showing the website URL. If possible, it is also helpful to show that these were the terms in force when the customer originally made the purchase. Terms and conditions should clearly outline a customer’s rights in the event of cancellation due to factors outside the merchants control, such as a government order. Statements like “Customer may receive a refund”, instead of something more definitive such as “Customer will not receive a refund”, are less likely to be compelling enough to overturn a dispute.

• A copy of your checkout flow showing how customers accept your terms and conditions, and refund and cancellation policy: Make sure to show the full checkout and where the relevant policies and terms are shown to the cardholder at or before checkout. The screenshots should include the website URL being visible in the address bar, along with the checkbox, and links to the terms. If your customer accepts terms on a separate page from the transaction page, your evidence submission should include every webpage a customer sees during the checkout flow. 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 provided by Visa:
  
  

• If applicable, additional government orders regarding refunds: Include a copy or description with references to any relevant government regulations that permit you to offer your customers a voucher, credit, or substitute goods or services instead of a refund.

• [Mandatory for Visa Disputes; Helpful for Other Networks] Proof of credit or voucher: Include a statement and screenshot showing that you provided or offered a voucher, credit, or a substitute good or service as described in your terms and conditions, relevant government order, or as a gesture of goodwill.

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:

• Description of the circumstances: Explain that you gave your customer a credit or voucher in accordance with the government order.

• Proof of the government order requiring customers to accept credits or vouchers instead of a refund: Include a screenshot with a government website URL visible, or a copy of the government order requiring the customer to accept credits or vouchers instead of a refund.

• Proof of credit or voucher: Include a statement and screenshot that you provided the customer with a voucher or credit, along with a copy of your terms and conditions for the customer’s use of the voucher.

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:

• Description of the circumstances: Explain that you gave your customer a refund in accordance with your terms and conditions.

• Proof of refund: Include a copy of any correspondence with the customer, such as an email or a screenshot from your Stripe dashboard.

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:

• Description of the circumstances: Explain that you offered your customer a voucher or credit instead of a refund and the customer accepted the credit or voucher.

• Proof of credit or voucher: Include a statement and screenshot that you provided the customer with a voucher or credit.

• Proof that the customer accepted the credit or voucher: Include communications (e.g., email, chat or phone call) with the customer showing that they accepted the voucher or credit.

• Proof that the customer utilized the credit or voucher: Mandatory for Visa, optional for other networks.

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:

• Description of the circumstances: Explain that you were willing and able to provide the customer with the relevant goods or services, and that your customer did not attend the event and was not entitled to a refund in accordance with your terms and conditions.

• Relevant sections of terms and conditions: Include a copy or screenshot of your terms and conditions that state that the customer is not entitled to a refund, including details of your refund timeframes, if applicable. Screenshots should include the address bar, showing the website URL. If possible, show that these were the terms in force when the customer originally made the purchase. Terms and conditions should clearly outline the cancellation and refund policy. Statements like “Customer may receive a refund” are less likely to be compelling enough to overturn a dispute.

• Proof that customer accepted terms and conditions: Include a screenshot and description of your checkout flow showing how customers accepted your terms and conditions before they completed the transaction. The screenshots should include the website URL visible in the address bar, along with the checkbox and links to the terms. If your customer accepts terms on a separate page from the transaction page, your evidence submission should include every webpage a customer sees during the checkout flow.

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:

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:

• Whether a government order permits you to deny a refund to your customer

• Whether your terms and conditions permit you to reject a customer’s request for a refund after they request a cancellation

Evidence should include:

• Description of the circumstances: Explain that you were willing and able to provide the customer with the relevant goods or services, and that your customer canceled the goods or services and was not entitled to a refund in accordance with your terms and conditions.

• Relevant sections of terms and conditions: Include a copy or screenshot of your terms and conditions that state that the customer is not entitled to a refund, including details of your refund timeframes if applicable. Screenshots should include the address bar, showing the website URL. If possible, show that these were the terms in force when the customer originally made the purchase. Terms and conditions should very clearly outline the cancellation and refund policy. Statements like “Customer may receive a refund” are less likely to be compelling enough to overturn a dispute.

• Proof that customer accepted terms and conditions: Include a screenshot and description of your checkout flow showing how customers accepted your terms and conditions before they completed the transaction. The screenshots should include the website URL being visible in the address bar, along with the checkbox and links to the terms. If your customer accepts terms on a separate page from the transaction page, your evidence submission should include every webpage a customer sees during the checkout flow.

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: