If you’re running a dropshipping store, chances are you’ve run into those pesky fraudulent Shopify chargebacks.

Losing your chargeback disputes can severely damage your eCommerce business. So, it’s best to deal with them effectively and efficiently.

Luckily for you, we at Verum Ecom have dealt with invalid chargebacks for several years now.

In this tutorial, we’ll provide you with:

  • The best tips for dealing with them
  • Different responses and evidence to increase the likelihood of winning
  • A chargeback prevention guide

Hopefully by the end of this guide, you’ll be able to effectively deal with chargebacks and minimize financial losses.

What is a Shopify Customer Chargeback?

Although you might’ve done your best to provide a great product and customer support experience, it’s still inevitable that you will deal with Shopify chargebacks.

Chargeback in Shopify

On average, 1.94% of all transactions result in a chargeback dispute. Furthermore, chargebacks cost eCommerce companies over $40 billion per year.

So, keep in mind that you’re not alone. Chargebacks impact nearly all eCommerce businesses.

A chargeback is essentially when a customer disputes a transaction they made on your online store.

If the customer placed an order using a credit card, they can reach out to the credit card company or bank and file a claim against you.

They will state that there was something wrong with their transaction, and get their money back.

The bank or credit card company will usually approve the chargeback without needing much explanation from the customer.

This is what a standard chargeback process looks like:

  1. The customer disputes a credit card transaction with their bank
  2. The bank initiates a chargeback request with the credit card company while taking the transaction amount and chargeback fee from you
  3. You will be asked to provide relevant evidence to prove the charge was valid
  4. After gathering sufficient evidence, you will send it through Shopify to the credit card company
  5. The credit card company will review the evidence and make a decision – potentially taking up to 75 days

If the credit card company decides that the charge was valid and you win the case:

  • The customer’s bank will return the money to you
  • Shopify will refund the chargeback fee

There is also a case where the chargeback concludes as a “partial win“. If this happens, the customer’s bank will return a percentage of the transaction fee. Shopify will also refund the chargeback fee.

Lastly, if you lose the chargeback dispute, the case will be closed and you will not be returned the initial transaction cost and chargeback fee.

Shopify Chargeback Fee

Shopify charges you a fee for every chargeback they process.

However, the specific fee depends on which country or region you’re based in:

  • United States – 15 USD
  • United Kingdom – 10 GBP
  • Canada – 15 CAD
  • Australia – 25 AUD
  • Sweden – 15 EUR or 150 SEK
  • Singapore – 15 SGD
  • New Zealand – 20 NZD
  • Japan – 1300 JPY
  • Hong Kong – 85 HKD
  • Ireland – 15 ERU + 23% VAT
  • Austria, Denmark, Germany, Italy, Netherlands, Belgium, Spain – 15 EUR

As you can see, if you’re based in the United States, you will be charged $15 for every chargeback dispute.

This can be extremely costly if you have numerous chargebacks and can end up financially destroying your business.

Why Do Shopify Chargebacks Happen?

Customers file chargebacks for a variety of reasons.

The customer usually states that:

  • The product was not received
  • The product was not as described
  • Fraud – The customer didn’t place the order
  • Charge not recognized – The customer doesn’t know what the charge relates to

While you should always take responsibility for problems caused on your end, sometimes customers will file chargebacks for invalid reasons.

There’s two reasons why customers file invalid chargebacks.

  • Fraud – the customer thinks they can keep both your product and get their money back
  • Miscommunication – the customer may believe the product isn’t going to come, despite it still being in the shipping process

Invalid Chargebacks

These invalid chargebacks can really hurt your business.

When a chargeback is filed, your payment processor (Shopify Payments, Stripe, etc.) reverses the charge and bills you an extra $10-20 for the Shopify chargeback fee.

So not only will you lose the revenue from the initial order, you are penalized with an additional fee.

Furthermore, a high number of chargebacks can lead to the payment processor banning you or your Shopify store shutting down.

Also, in order to get that money back, you have to file a response with the customer’s bank. This can be an extremely frustrating process depending on how the bank handles your evidence.

Unless you take the time to file a proper response to your chargebacks, the customer’s bank will tend to side with them. Thus, allowing the customer to keep the money.

How To Manage Your Shopify Chargebacks

If you’re using Shopify Payments as your payment processor, you can manage chargebacks directly from your Shopify admin panel.

Go to your Shopify dashboard and click ‘Orders‘.

Shopify Orders

Next, click ‘More filters‘.

More filters Shopify orders

After that, select ‘Chargeback and inquiry status‘.

Lastly, select the value ‘Open‘ and click ‘Done‘.

Charge and inquiry status

Now, you will see all the open chargeback disputes you have on your dropshipping store.

Shopify has 4 different chargeback status categories:

  1. Open – no response has been submitted yet by you and evidence can still be added
  2. Submitted – the evidence and response was sent and is being reviewed
  3. Won – the chargeback has been decided in your favor
  4. Lost – the chargeback has been decided in the customer’s favor

6 Best Tips To Deal With Shopify Chargebacks

Now that you fully understand what chargebacks are and the importance of properly dealing with them, let’s get into the strategy.

These our are best tips for dealing with Shopify chargebacks.

Although getting a 100% chargeback success rate is impossible, our goal is to increase your odds as much as we can.

Let’s dive in:

Tip #1: Explain The Situation Clearly

Regardless of why the customer filed the chargeback, your general approach should be the same.

You need to explain the situation as clearly and concisely as possible.

If someone filed a chargeback because they didn’t receive their package, you can provide proof of delivery or tracking information.

Furthermore, if somebody made a mistake when placing their order and are blaming you, make this clear in the response form.

Here’s an example of how we explained the situation in the ‘Additional comments‘ part of the response.

chargeback example

As you can see, we explain the transaction process from start to finish. Furthermore, we provide a tracking link to show the package was received.

It’s important to remember that the testimony you provide is reviewed by an actual human being. These chargeback auditors are dealing with hundreds of these cases a day, so you want to make it as easy as possible for them to understand.

There isn’t a secret method that can win you all your chargebacks. You have to treat it like a professional dispute and state all the facts that justify your case.

Tip #2: Provide Relevant Evidence

If you’re using Stripe, Shopify Payments, or another third-party payment processor, they include some basic evidence alongside your own report and testimony.

This may include proof of delivery, the customer’s IP address, information about the transaction, and a summary of the order.

Be sure to know what information your processor is going to hand over. If there’s anything that’s missing that could be evidence for the chargeback, include it manually.

You may need to include a copy of a customer support ticket or export the Shopify order details. Furthermore, you may also want to provide a copy of one of your own policy pages.


Lastly, make sure to compile all the evidence neatly in a PDF or Word document, so the reviewer can conveniently access it. You don’t want to send them a massive folder with a bunch of files.

Tip #3: Be Professional

Despite how angry the chargeback may make you, you always want to avoid sounding unprofessional. Our best tip is to avoid sounding critical or insulting in your responses.

Think about the reviewer. Would they want to sit and read through pages of drama?

Just provide them with the evidence and facts needed to support your position. That’s the only thing that matters and what the bank will use to make their decision.

In your chargeback response, you will have the chance to add ‘Additional Comments‘ along with all the other evidence. This is where you want to explain the situation as professionally and as clearly as possible.

Also, don’t be discouraged if you lose a chargeback dispute. Instead, you should look to improve your business to prevent future chargebacks.

We discuss how to prevent chargebacks before they happen later on in this tutorial.

Tip #4: Act Quickly

Payment processors will typically provide you with a specific date you need to provide the evidence by. This usually ranges from 5-10 days.

Missing the window for a response is detrimental. If you miss it, the chargeback is considered final and the bank makes a default judgment against you.

This means that your money is no longer going to be recoverable.

We understand how easy it is to forget about a pending chargeback with everything else you have going on.

So, whenever you are notified of a chargeback in your Shopify dashboard, make it your number one priority.

Tip #5: Contact the Customer

Although this tip will rarely work for fraudulent chargebacks, there is a chance the chargeback is solely because of miscommunication or confusion.

We recommend emailing or calling the customer and seeing if you can clear up any confusion they had with their order.

Maybe you just need to provide updated tracking information.

If you are able to resolve the situation with the customer, they can contact their bank to get the chargeback reversed.

Furthermore, you should submit relevant evidence that proves the customer agreed to reverse the chargeback. This can include a screenshot of your email conversion with the customer.

Tip #6: Use a Chargeback Recovery Service

We used to do all our chargebacks manually in the past.

However, for the last few months, we’ve used a service called Chargebacks911. They are a comprehensive chargeback management platform.

chargebacks911 service

Chargebacks911 offers 2 types of services:

  1. A comprehensive chargeback service – where they handle all of your chargebacks with a team of professionals. With this service, they guarantee a 40% reversal rate.
  2. A self-service license – where you get access to their platform. You will be handling all the chargebacks yourself, but you receive access to their chargeback prevention system.

With both of these services, you will also have access to their chargeback warning system. This can catch chargebacks before they are formally processed.

In this case, you can refund the payment before the chargeback is filed in order to avoid increasing your chargeback rate.

Chargebacks911 Pricing

Chargebacks911 only charges per chargeback handled on your behalf. For this reason, their services will always save you more money than what you end up paying them.

This service is incredibly useful for dropshippers who are running multiple stores and don’t have the time to deal with chargebacks manually.

*Bonus Tip: Prevent Chargebacks Before They Happen*

The last 6 tips are strategies to follow for when a chargeback is actually filed against you.

However, the actual best strategy for dealing with chargebacks is preventing them in the first place.

shopify chargebacks timeline

Although it’s impossible to prevent all chargebacks, there are ways to lower the amount you receive.

Here’s what we recommend you do:

1) Adequately Train Your Customer Support Team

The most important task for chargeback prevention is training your customer support team. Since your customer support team are the people in direct contact with the customers, it’s vital that they know how to act.

Customers often file chargebacks because they didn’t have a good experience when emailing your store’s customer support.

For this reason, you always want to put the customer first.

This involves:

  • Responding to emails as quickly as possible
  • Providing shipping and tracking information if requested
  • Being professional and friendly in the responses
  • Offering quick refunds and returns when necessary

2) Investigate Suspicious Orders Before Fulfilling

Suspicious orders are when Shopify indicates that the fraud analysis is medium or high.

Here’s an example of what that looks like:

fraud analysis high

If the order is labeled as ‘High risk‘, you should refund it immediately. We personally refund all high risk orders because the additional revenue is not worth the risk of losing a chargeback case.

Furthermore, let’s talk about orders labeled as ‘Medium risk‘.

In this case, we recommend emailing the customer to ask them if their order is confirmed.

Fraud analysis medium

If the customer responds and says the order is confirmed, we will fulfill the order. However, if the customer doesn’t respond or responds saying they didn’t place the order, we will refund it immediately.

3) Clear and Accurate Product Pictures and Descriptions

Many chargebacks are filed because the customer believes that the product doesn’t look or perform the way it’s described.

For this reason, we recommend that you have clear and accurate product pictures and descriptions.

To do this, you should order a sample of the product you are selling to see its quality in your own hands.

If the product doesn’t look the way it does in the Aliexpress product images, you should take product photos yourself.

4) Easy-To-Find Return & Refund Policy

You can avoid a lot of chargeback cases if you have a clear and easy to find returns policy. The returns policy should either be in the header/footer of your store or the product page itself.

Online shoppers are extremely used to returning the products they bought from online stores and expect the same service from you.

5) Give Refunds ASAP When Necessary

In any case when it’s necessary to process a refund, you should initiate it as soon as possible. Customer’s expecting a refund will usually be impatient and quick to file a chargeback.

For this reason, you or your customer support team should process refunds in a timely matter.

6) Clear Billing Statement Name

The billing statement name is the name customer’s see on their credit card statement.

For this reason, you should make the billing statement name the exact name of your online dropshipping store.

You can change the billing statement name by going to your Shopify dashboard, clicking ‘Settings‘, then ‘Payments‘.

7) Accurate and Clear Shipping Time Estimation

You should have a page with shipping information in your header and footer. Furthermore, we recommend including the estimated shipping time on the checkout page.

Customers want to receive their products quickly. However, since you are most likely sending the product from overseas, you want to make it clear that shipping times may take longer.

If your customers understand that shipping may take 1-2 weeks before placing the order, they are less likely to file chargebacks because of long shipping times.

Closing Thoughts

All in all, successful Shopify chargeback recoveries consist of being level-headed and professional.

By providing the evidence that checks off all the boxes the bank is looking for, you have much better odds of winning the chargeback.

The overall goal is to lower your chargeback rate. A good chargeback rate is anything below 1%. If you’re chargeback rate is over 1%, you can potentially be penalized by your payment processor.

If you simply:

  • Implement our chargeback prevention system
  • Follow our guidelines on dealing with filed chargebacks

You will be in better shape that 99% of all other dropshippers.

Please let us know in the comments below if you have any questions about Shopify chargebacks.