A chargeback occurs when a student challenges their payment with their bank. Learn more about different types of chargebacks, how to handle them, and how to do it using Thinkific Payments.
In this article:
How the Chargeback Process Works
Manage Chargebacks with Thinkific Payments
About Chargebacks
A chargeback is a mechanism that protects customers from unauthorized, invalid, or erroneous charges on their accounts. It is a safeguard for customers, but it can also create challenges for your business, including the potential loss of revenue and additional administrative work. Understanding chargebacks is crucial for minimizing revenue loss and maintaining good relationships with your students.
The chargeback process usually involves the student (also referred to as the account owner), their bank (issuing bank), your business (also referred to as the merchant), and your payment processor (in this case, Thinkific Payments). A chargeback dispute arises when a student contacts their bank to challenge a payment made to your business, potentially leading to a reversal of the transaction. Reasons can vary from unauthorized charges to dissatisfaction with the product or service.
How the Chargeback Process Works
The exact chargeback process might look different for different card networks, but generally it involves the following steps:
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The customer initiates the dispute
When a customer notices a charge on their statement they believe to be unauthorized or fraudulent, they file a dispute with the bank or financial institution that issued their credit card (the issuing bank). -
The issuing bank starts the chargeback process
Upon receiving the dispute, the issuing bank initiates the chargeback process on behalf of the customer. -
The business is notified and can respond
The issuing bank informs the business's bank about the dispute. At this stage, the business can provide evidence to demonstrate that the charge was legitimate and refute the customer’s claim. -
The issuing bank reviews the case
The issuing bank examines evidence from both the customer and the business. Based on this review, the bank determines whether the chargeback request is valid. This process can take up to 75 days.-
If the bank rules in the business's favor
If the bank finds the charge to be legitimate, the customer’s request for a chargeback is denied. If the customer had already received a refund or credit before the investigation concluded, those funds are reversed and restored to the business. -
If the bank rules in the customer's favor
If the bank concludes the customer’s claim is valid, the disputed amount is deducted from the business's account and credited back to the customer.
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If the bank rules in the business's favor
Manage Chargebacks with Thinkific Payments
Adopt Thinkific Payments to harness the power of TCommerce's integrated business management tools, including the TCommerce Dispute Dashboard.
Thinkific Payments makes it easy to monitor and respond to chargebacks via the Dispute Dashboard. When a chargeback is received, it will become visible in the Dispute dashboard, where you can take the desired action - to either fight the dispute with evidence or accept the dispute (return the funds to the cardholder).
To access the Dispute Dashboard and respond to a chargeback:
- From your Admin Dashboard, select Sales
- Select Disputes
- Select the Disputes tab. Note: that the All tab will list all transactions, disputed or not.
- Find the chargeback you want to respond to by scrolling through the list or using the Filter disputes option
- Click on the Chargeback you want to respond to
- Select whether to Accept dispute or Counter dispute by uploading the supporting documentation
Please note there is a 19-page limit for chargeback evidence responses. There is a limit of 4.5 MBs for each provided document.
The Disputes tab of the Dispute Dashboard will show the following information:
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Respond By: the date and time by which you can respond to the chargeback and dispute with evidence or accept the dispute and return funds.
If you fail to submit the evidence by the deadline, the dispute will be automatically ruled in favor of the student.
- Disputed On: the date and time when the transaction was disputed
- Status: the status of the dispute: Won, Lost, Action Required, or Reviewing
- Reason: the reason for the dispute (learn more about reasons and how to prevent and overturn each below)
- From: the email of the customer initiating the dispute
- Amount: the disputed amount
Please note that chargebacks are solely between the merchant (you), and your customer (the student), and their bank. Thinkific plays no role in the dispute process, other than to facilitate the sharing of information and evidence between the parties involved.
Types of Chargebacks
There are eight types of chargeback you will see when dealing with disputes on Thinkific Payments. Each has its own prevention and resolution strategy. Click on each name to learn more.
Credit Not Processed
A student might file a Credit not processed dispute to claim that they are owed a full or partial refund because they withdrew from the course, did not fully utilize it, or the transaction was cancelled or incomplete. This type of dispute arises when the refund or credit has not been processed yet.
How to Prevent It
- Ensure that your return or cancellation policy is clear, accessible, and clearly communicated to the student before they complete their purchase. Add a return or cancellation policy to the Terms of Use Page that your students must agree to when purchasing the product.
- Respond promptly to any refund requests that align with your policy, ensuring that refunds are issued when they are due. Learn how to issue refunds in Thinkific Payments here: Thinkific Payments: Refunds.
How to Overturn It
If you are unable to resolve the issue directly with the student and believe the chargeback is unjustified, you should submit evidence to the credit card company to support your case. This evidence may include:
- Your refund and return policies. For example, you can add a copy and a link to your Terms of Use Page.
- Proof of when and how the student was informed of your refund policy. You can add an explanation that the student must agree to the Terms of Use policy before creating their account.
- Any emails or notifications you sent to the student regarding the refund.
- A clear explanation of why the student was not eligible for a refund.
- Access Logs showing proof that the student accessed the course, including login timestamps, IP addresses, and the duration of use. Learn how to find them here: How do I track student engagement?
Duplicate
A dispute is marked as Duplicate when the student believes they have been charged twice for the same product or service.
If you have not charged the student twice, it’s important to contact them. Explain that the two charges are for different products or courses. If the student acknowledges the validity of the charges, advise them to contact their bank and request the chargeback be reversed. Students on payment plans or subscriptions sometimes mistakenly believe they've been charged twice.
How to Prevent It
- If a student was accidentally charged multiple times for the same payment, promptly correct the duplicate charges and notify the student that the issue has been resolved.
- Check with the student if they made two purchases using different email addresses.
- Provide detailed receipts for each payment, clearly explaining what each charge is for, so students can easily identify the reason behind each transaction. Ensure that the Receipt notifications are enabled: Student Order Receipts and Payment Notifications.
- Adhere to your refund policies and quickly process refunds for any duplicate charges when a student is entitled to one.
How to Overturn It
If the student doesn't drop the chargeback or inquiry after you talk to them, then you need to submit evidence that the two charges were for separate products or services. This evidence may include:
- An explanation of the reason for the two charges.
- Receipts that prove that the two charges were for different products or services. You can find them in your transactions table: TCommerce: Transaction Report
- Any communication with the student where you let them know about the two charges.
- Access Logs showing proof that the student accessed the course, including login timestamps, IP addresses, and the duration of use. Learn how to find them here: How do I track student engagement?
Fraudulent
Disputes often arise when a cardholder claims they did not authorize a transaction, which is the most common cause of chargebacks. This may happen because the cardholder doesn’t recognize a legitimate charge on their statement or due to actual fraudulent card use. These disputes are challenging to resolve, as the claims are often valid. If you suspect the payment was fraudulent, it’s usually best to either accept the dispute or choose not to contest it.
A chargeback is marked as fraudulent if the cardholder denies authorizing the transaction, often due to a stolen card. To handle such cases, try reaching out to the student who placed the order. The charge might have been forgotten or made by someone they know, like a spouse, friend, or family member. If the student agrees the charge is legitimate, encourage them to contact their bank and request the chargeback be dropped. You should also provide supporting evidence to the credit card company, including any statements where the student confirms their intention to cancel the chargeback.
How to Prevent It
To prevent fraud disputes, focus on proactive measures, as these disputes are challenging to win. Effective strategies include:
- Ensure your statement descriptor is clear and easily recognizable, matching the business name or website students associate with their purchase. Need to edit your statement descriptor? Email us at payments-support@thinkific.com.
- Send product welcome emails to help students remember their transactions. Learn more here: Automated Email Notifications.
- Add the terms and conditions, return policy, and contact us page. Learn more: Terms of Use and Privacy Policy Pages. You can create a Contact Us page using Custom Pages.
How to Overturn It
If you believe the student is mistaken or being dishonest, you should provide the credit card company with the following evidence:
- Access Logs showing proof that the student accessed the course, including login timestamps, IP addresses, and the duration of use. Learn how to find them here: How do I track student engagement?
- Completion Records showing that the student has completed lessons, quizzes, or other activities within the course. Learn how to find them here: How do I track student engagement?
- Email Correspondence of any communication where the student acknowledges the purchase, such as welcome emails, access instructions, or support requests.
- Terms of Service Agreement showing evidence that the student agreed to your terms of service, refund policy, or usage terms when purchasing the course.
- Purchase Confirmation such as receipts or order confirmations that verify the transaction details. You can find the receipts in your transactions table: TCommerce: Transaction Report.
General
A chargeback is categorized as General if it doesn't fall under any of the other specific categories.
To address a general chargeback, begin by contacting the student to understand the issue. If you can resolve the problem, advise the student to reach out to their bank and request the chargeback cancellation. Ask them to provide a copy of the chargeback withdrawal letter from their bank. Once you have proof of the student's request to cancel the chargeback, submit this letter as evidence in the Chargeback response form for the order.
How to Prevent It
To prevent this type of disputes, focus on proactive measures, as these disputes are challenging to win. Effective strategies include:
- Ensure your statement descriptor is clear and easily recognizable, matching the business name or website students associate with their purchase. Need to edit your statement descriptor? Email us at payments-support@thinkific.com.
- Send product welcome emails to help students remember their transactions. Learn more here: Automated Email Notifications.
- Add the terms and conditions, return policy, and contact us page. Learn more: Terms of Use and Privacy Policy Pages. You can create a Contact Us page using Custom Pages.
How to Overturn It
If you believe the student is mistaken or being dishonest, you should provide the credit card company with the following evidence:
- Access Logs showing proof that the student accessed the course, including login timestamps, IP addresses, and the duration of use. Learn how to find them here: How do I track student engagement?
- Completion Records showing that the student has completed lessons, quizzes, or other activities within the course. Learn how to find them here: How do I track student engagement?
- Email Correspondence of any communication where the student acknowledges the purchase, such as welcome emails, access instructions, or support requests.
- Terms of Service Agreement showing evidence that the student agreed to your terms of service, refund policy, or usage terms when purchasing the course.
- Purchase Confirmation such as receipts or order confirmations that verify the transaction details. You can find the receipts in your transactions table: TCommerce: Transaction Report.
Product Not Received
A chargeback is categorized as Product Not Received if the student claims they did not receive the product (e.g. course) or services they purchased.
Start by contacting the student to understand the issue. If you are able to resolve the problem, instruct the student to inform their bank that they wish to cancel the chargeback. Be sure to include evidence in your response to the credit card company that shows the student agreed to drop the chargeback.
How to Prevent It
- For physical products, ensure they are shipped promptly after payment is received.
- Send course and product welcome emails to help students access products they purchased. Learn more here: Automated Email Notifications.
- Make it easy for students to contact you if they have issues accessing the course. For example, ensure there is a clear Contact Us page. You can create a Contact Us page using Custom Pages.
- Honor your written policies promptly when a student requests a full or partial refund for products or services they did not receive.
How to Overturn It
Explain and demonstrate one or more of the following:
- If the product was already delivered, Access Logs showing proof that the student accessed the course, including login timestamps, IP addresses, and the duration of use. Learn how to find them here: How do I track student engagement?
- Completion Records showing the student completed lessons, quizzes, or other activities within the course. Learn how to find them here: How do I track student engagement?
- If the product is in pre-order, include information about the pre-order and expected delivery date and any communication where the student acknowledges the pre-order.
- Terms of Service Agreement showing evidence that the student agreed to your terms of service, refund policy, or usage terms when purchasing the course. Learn more: Terms of Use and Privacy Policy Pages.
- Purchase Confirmation such as receipts or order confirmations that verify the transaction details. You can find the receipts in your transactions table: TCommerce: Transaction Report.
Subscription Canceled
The chargeback is categorized as Subscription Canceled if the student believes they were charged for a subscription after it should have been canceled.
To resolve this chargeback, reach out to the student. You may be able to clarify the situation or come to a mutual agreement. If an agreement is reached, advise the student to contact their bank and request that the chargeback be canceled. Be sure to provide evidence of your communication with the student to the credit card company.
How to Prevent It
- Immediately cancel subscriptions upon request if the student contacts you. Learn how to do it here: Thinkific Payments: Cancel a Student's Subscription or Payment Plan.
- Clearly state on your signup page that students are agreeing to recurring payments, and include information on whether or not they will receive a reminder before each payment. You can include this information in your Terms of Use.
- Ensure that your cancellation procedures and policies are communicated clearly to your students, either on the course landing page or in the welcome email they receive after enrolling.
How to Overturn It
If you believe the student did not cancel their subscription before the charge, you should provide evidence to the credit card company showing that the student canceled the subscription after the last charge. You can include the following types of evidence:
- Your subscription cancellation policy.
- Any emails or notifications sent to the student outlining the cancellation policy and instructions on how to cancel.
- An activity log showing that the student accessed the course or services after the date they claimed to have canceled their subscription or filed the dispute. Learn how to find them here: How do I track student engagement?
Unrecognized
A chargeback is categorized as Unrecognized when the student does not recognize the merchant/site's name on their credit card statement.
To resolve this type of chargeback, reach out to the student. They may have forgotten about the purchase, or it might have been made by a spouse, family member, or friend. If the student acknowledges the charge as legitimate, ask them to contact their bank to request the chargeback be canceled.
How to Prevent It
- Ensure your statement descriptor is clear and easily recognizable, matching the business name or website students associate with their purchase. Need to edit your statement descriptor? Email us at payments-support@thinkific.com.
- Send product welcome emails to help students remember their transactions. Learn more here: Automated Email Notifications
How to Overturn It
Consider including the following supporting documents:
- Access Logs showing proof that the student accessed the course, including login timestamps, IP addresses, and the duration of use. Learn how to find them here: How do I track student engagement?
- Completion Records showing the student completed lessons, quizzes, or other activities within the course. Learn how to find them here: How do I track student engagement?
- Email Correspondence of any communication where the student acknowledges the purchase, such as welcome emails, access instructions, or support requests.
- Terms of Service Agreement showing evidence that the student agreed to your terms of service, refund policy, or usage terms when purchasing the course. Learn more: Terms of Use and Privacy Policy Pages.
- Purchase Confirmation such as receipts or order confirmations that verify the transaction details. You can find the receipts in your transactions table: TCommerce: Transaction Report.
Important Considerations
- If you decide to fight the dispute, make sure to provide evidence before the deadline outlined in the Respond By column of the Disputes table. If you fail to submit the evidence by the deadline, the dispute will be automatically ruled in favor of the student.
- There is a 19-page limit for chargeback evidence responses. There is a limit of 4.5 MBs for each provided document.
- Chargebacks are solely between the merchant (you), your customer (the student), and their bank. Thinkific plays no role in the dispute process, other than to facilitate the sharing of information and evidence between the parties involved.
Frequently Asked Questions
What evidence should I submit to dispute a chargeback?
Submit any relevant documentation, such as:
- Refund and cancellation policies
- Access logs and completion records
- Email correspondence with the student
- Purchase confirmation receipts
Select a dispute type from the list above to learn documents you can submit in response to a specific type of chargeback.
Can Thinkific intervene in chargeback disputes?
No, Thinkific's role is limited to facilitating the sharing of information between you and the student. The final decision lies with the student’s bank.
How long does the chargeback process take?
The process can take up to 75 days, depending on the bank and the complexity of the case.