Chargebacks and disputes for service businesses

The first chargeback is always a shock. Money that arrived weeks ago leaves the account, a fee goes with it, and you are asked to prove that a service you definitely provided was in fact provided.

It is not a scam and it is not personal. It is the card scheme rules working as designed, with the balance deliberately tipped towards the cardholder. Knowing how the process runs makes it far less alarming and considerably more winnable.

What actually happens

A cardholder disputes a payment with their bank. The bank pulls the money back from you immediately and asks the card scheme to adjudicate. You get a window to submit evidence, typically a week or two. The scheme decides. If you win, the money comes back.

The fee is usually charged whether you win or lose, because it covers the process rather than the outcome. On Youzse that fee is £20. That is why prevention is worth much more than dispute handling, and why chasing a £14 dispute is rarely worth the afternoon.

The three disputes a service business actually sees

The first is genuine card fraud, where somebody used a stolen card. You will lose these and you should, which is why taking a card in person or through a proper payment page matters more than it seems.

The second is "I did not recognise this". A statement descriptor showing a company name nobody has heard of, three weeks after a visit, triggers a dispute from an honest customer. This is entirely avoidable and it is the most common one.

The third is a service quality dispute, where somebody was unhappy and used their bank rather than telling you. These are the ones worth fighting, because the evidence is usually on your side.

The evidence that wins

• The booking record showing what was booked, by whom, when and from which device or email address.
• The confirmation and reminder messages you sent, and the fact they were delivered.
• Proof the service happened. An attendance record, a signed form, a completed job sheet, before and after photos on a vehicle.
• Your cancellation and no show terms, plus proof they were shown at the point of booking rather than added afterwards.
• Any conversation where the customer said the work was fine.

Notice that all of that is generated automatically by a business running its bookings through one system, and almost none of it exists in a business running a paper diary and a card reader.

How to prevent most of them

• Set your statement descriptor to the name over the door, not your limited company name. This one change removes most "I do not recognise this" disputes on its own.
• Send a receipt at the time of payment, every time.
• Show your cancellation and no show policy at the point of booking, and get it agreed there rather than emailed later.
• Take deposits through a payment page with card authentication rather than keying numbers in over the phone. A telephone card payment is the weakest position you can be in.
• Answer complaints quickly. Most quality disputes are from somebody who felt ignored. A refund you chose to give costs less than a chargeback you lost plus the fee.

When to just refund

If it is small, if you would probably lose and if the customer has a point, refund it and move on. A refund is cheaper than a lost dispute, faster than the process and it occasionally gets you the customer back.

Fight the ones where you have the evidence and the amount justifies the hour. Prevent the rest by making it obvious who took the money and what for.