When a consumer does not agree with a transaction on their credit or debit account, they can contact their bank to dispute the transaction. Consumer rationale for disputes range across a wide spectrum of reasoning, from the wrong item being shipped, to issues with the merchant’s return process. Some of these claims are legitimate; some are not.

If the bank agrees with the consumer’s claims, they have the option to chargeback the transaction to the merchant. A chargeback reverses the transaction by debiting the merchant for the disputed funds and provides the consumer with a conditional credit that may become permanent, depending on the outcome of the chargeback process.

Most banks make the dispute process very easy for their customers, which discourages them from even trying to resolve the issue directly with the merchant. Thus, merchants should be proactive in their efforts to prevent a dispute from occurring in the first place.