Merchant Chargeback Rights 2025: How to Fight & Win Disputes

JonCarlo Hernandez-Lopez
June 22, 2025

Chargebacks were designed to protect consumers. Today, they’re putting merchants at risk.

The Fair Credit Billing Act of 1974 gave US consumers the right to dispute credit card charges and seek refunds for billing errors and fraud. But as payments and eCommerce have evolved, chargebacks have become a growing source of “friendly fraud”, where buyers misuse the process to reverse legitimate purchases, costing merchants billions in lost revenue and fees.

The good news is that, if you’re a merchant, you’re not powerless. By understanding your chargeback rights and the steps required to dispute unwarranted claims, you can defend your business against excessive chargebacks and associated penalties, while recovering more of what’s rightfully yours.

Key Takeaways

You Have Rights: As a merchant, you have the fundamental right to dispute chargebacks (representment), receive evidence from the card issuer, and be protected in specific situations like shipping delays beyond your control.
Winning is Possible: While the average merchant win rate is 20-30%, using strong evidence and proper preparation can boost success to over 70%. Professional services can increase recovery rates by an additional 55%.
The Landscape is Stricter: Recent 2025 updates from Visa and Mastercard make the dispute process more rigorous, demanding faster and more accurate responses.
Modernize Your Defense: The most effective strategies for 2025 involve using AI-powered tools for fraud detection and representment, alongside proactive customer communication to prevent disputes before they happen.

The chargeback landscape in 2025

Chargebacks have surged in both volume and cost with friendly fraud now driving the majority of disputes. If you’re selling online, the risk is rising fast:

222% increase in eCommerce chargebacks and 816% increase in online travel & lodging chargebacks from Q1 2023 to Q1 2024
79% of merchants experienced friendly fraud in 2024 — up from just 34% in 2023
The average chargeback now costs $74 per dispute

Much of this loss is preventable. With the right tools and processes, merchants can dispute fraudulent chargebacks more effectively and recover revenue that would otherwise be written off.

How the chargeback process works

A chargeback starts when a cardholder disputes a charge with their card issuer. If the issuer sides with the cardholder, the transaction is reversed and the chargeback is passed to the merchant’s bank, which notifies the merchant.

At that point, the merchant can either accept the chargeback or fight it through a formal dispute process (known as representment). If the issuer challenges the merchant’s evidence, the case can escalate all the way to arbitration by the card network.

This process can stretch over months, locking up capital, driving operational overhead, and increasing financial risk. If the chargeback is upheld, the merchant loses not only the sale but also pays fees that add to the total cost.

But a significant share of chargebacks are winnable. With the right strategy and support, merchants can recover disputed revenue and reduce future losses.

Ready to fight back? Contact Justt

Success rates in chargeback disputes

Many merchants underestimate how much revenue can be recovered through a well-run chargeback program:

20–30% average win rate for merchants overall
77% of merchants see >30% success when properly prepared
43% win rate for friendly fraud cases when supported with strong evidence
9% win rate for fraud-related chargebacks (where the cardholder’s claim is more often legitimate)
Merchants using professional representment services achieve 55% higher recovery rates than those managing disputes in-house

With the right expertise and automation, the odds can tilt even further in your favor as the following real-world example shows.

Case study: Melio achieves 85.5% chargeback win rate with Justt

As rapidly growing fintech startup Melio experienced explosive growth, it started to notice a serious chargeback problem that was putting millions in revenue at risk and straining the company’s risk team. Rather than building an in-house chargeback function, Melio partnered with Justt for dispute management.

Results:

85.5% chargeback success rate (a 54.5 percentage point improvement)
$376K in revenue recovered in one year
High win rates maintained even in difficult, high-ticket arbitration cases
Risk team refocused on fraud prevention and business growth

“We see Justt not only as a chargeback mitigation solution, but as our partners in navigating the jungle of chargebacks and card processing,” said Matana Soreff from Melio’s team.

Merchant chargeback rights

While issuers have some discretion in handling chargebacks, certain core rights protect all merchants, no matter which credit card network or payment provider is involved. Understanding these rights is critical to defending against false chargebacks and recovering lost revenue.

Right to representment

Merchants have the right to dispute chargebacks through representment: submitting evidence to prove the original transaction was valid. Successful disputes result in reimbursement of the transaction amount, and in some cases, the chargeback fees as well.

Right to a 15-day return window

Issuers must wait 15 days after a customer returns merchandise before processing a chargeback. This gives merchants time to issue a refund and avoid unnecessary disputes.

Right to documentation

Merchants can always request supporting documentation from the cardholder’s issuer, including reason codes and related evidence, to help assess and respond to the chargeback.

Right to late delivery protection

If a delivery delay was outside the merchant’s control, and the cardholder hasn’t first attempted to return the item, the issuer is required to reject the chargeback.

Right to limit liability to the original purchase price

Merchants are only responsible for the original transaction amount (including shipping and taxes), not for additional penalties. If a refund or credit was already issued, the issuer cannot charge the merchant again for the same transaction.

The right to no chargebacks on cash-back transactions

In the U.S., chargebacks cannot be filed on the cash-back portion of a transaction (e.g. cash-back at a grocery store). Once cash is involved, that portion of the transaction is not subject to chargeback rights.

Recent regulatory changes and updates

Visa Acquirer Monitoring Program (VAMP) Changes (2025): Visa has implemented significant changes to their dispute monitoring program, affecting how chargeback thresholds are calculated. The new VAMP ratio includes all disputes (TC15) along with fraud alerts (TC40) and divides by total settled transactions (TC05), weighing both fraud and non-fraude disputes more heavily against merchants.

Mastercard Arbitration Update (2024): Recently, Mastercard eliminated the 10-calendar-day window for acquirers to respond to arbitration cases. No longer having a protected response period, acquirers must be ready at any time to accept financial responsibility once arbitration files are submitted.

Modern prevention strategies for 2025

These strategies align with regulatory updates while offering pro-level chargeback defense:

AI-powered solutions:

Real-time fraud detection systems
Automated representment filing
Predictive analytics to identify high-risk transactions
Enhanced customer verification processes

Proactive customer service:

Order confirmation and shipping notifications
Clear billing descriptors
Proactive communication for delivery delays
Easy-to-find contact information and return policies

The bottom line

Certain merchant chargeback rights are protected by law, no matter which credit cards you accept. Under the Fair Credit Billing Act, you have the right to dispute chargebacks tied to billing errors, such as unauthorized charges, goods or services not received, incorrect amounts, or calculation mistakes. With proper documentation, you can defend these disputes and recover lost revenue.

But knowing your rights is only part of the equation. With chargeback rates rising sharply in 2024–2025, proactive prevention and modern dispute strategies are more critical than ever to protecting your bottom line.

Chargebacks can be complex and time-consuming, and working with a company like Justt that specializes in chargeback mitigation can save you valuable time and resources while potentially improving your success rate by 55% or more.

Merchant Chargeback Rights FAQs

Why are chargebacks bad for merchants, besides the obvious?

Chargebacks have both immediate and long-term consequences. Each successful chargeback results in lost revenue (now averaging $74 per dispute), lost merchandise, and chargeback fees. With rates increasing 222% in some industries, merchants face higher processing fees and potential account termination if rates exceed network thresholds.

What’s the current success rate for merchants disputing chargebacks?

Current data shows merchants win 20-30% of chargeback disputes overall. However, 77% of merchants achieve success rates of 30% or higher with proper preparation. Friendly fraud cases can achieve 43% success rates with strong evidence, while true fraud cases have only a 9% success rate.

How has the chargeback landscape changed in recent years?

The landscape has become significantly more challenging. Friendly fraud now affects 79% of merchants (up from 34% in 2023), eCommerce chargeback rates rose 222%, and specific industries like online travel saw 816% increases. AI and automation are now essential for effective chargeback management.

What are the rules for chargebacks?

Cardholders can only file chargebacks within stipulated time limits – usually 120 days. Merchants also have to stick to deadlines set by the issuing bank, card network, or payment processor, and their evidence should match the reason code.

What are my fundamental chargeback rights as a merchant?

Your key rights include:

Right to representment (challenging chargebacks with evidence)
Right to 15-day wait period for returned merchandise
Right to full documentation from card issuers
Right to pay only original purchase price (no additional penalties)
Protection against cash-back portion chargebacks
Right to late delivery protections when delays are beyond your control

How long do I have to respond to a chargeback?

Response timeframes vary by card network and can range from 7-14 days. With recent network updates, these deadlines have become more strictly enforced. Missing deadlines automatically results in chargeback acceptance.

Can I appeal a chargeback decision if I lose?

Yes, if you lose during the representment stage, you can seek arbitration through the card network. However, arbitration involves additional fees and should only be pursued for high-value transactions with strong evidence.

What are the most effective chargeback prevention strategies for 2025?

The most effective strategies include:

Clear, recognizable billing descriptors (the #1 cause of disputes)
AI-powered fraud detection systems
Proactive customer communication and tracking
Enhanced authentication (3D Secure 2.0)
Professional chargeback management services
Real-time order validation tools

Should I use automated chargeback management tools?

Yes, merchants using professional representment services see 55% higher recovery rates than those managing disputes internally. Automation also ensures faster response times and consistent evidence presentation.