What is Dispute? Definition & Examples

What is a Dispute?

Understanding Dispute in E-commerce

Quick Definition

A dispute is a formal challenge to a financial transaction, typically initiated by a customer through their bank or credit card issuer when they believe a charge is unauthorized, fraudulent, or does not meet expected service standards. In e-commerce, disputes can result in chargebacks, potential revenue loss, and potential penalties for merchants.

2 min read

Understanding E-commerce Transaction Disputes

Types of Disputes

•
Fraudulent Transactions: Unauthorized purchases made without cardholder consent
•
Service/Product Not Received: Customer claims item was never delivered or received
•
Product Not As Described: Item differs significantly from website description or images
•
Duplicate Charges: Same transaction billed multiple times

Dispute Resolution Process

1.
Customer Complaint: Initial dispute filed with bank or card issuer
2.
Chargeback Initiated: Funds temporarily returned to customer pending investigation
3.
Merchant Response: Opportunity to provide evidence contradicting dispute
4.
Final Determination: Bank decides whether to permanently reverse charge

Impact on Merchants

Financial Consequences

Lost revenue
Chargeback fees ($20-$100 per incident)
Potential loss of merchant account

Reputation Risks

Decreased customer trust
Potential platform restrictions
Higher transaction processing costs

Prevention Strategies

Clear Product Descriptions

Provide accurate, detailed information to minimize misunderstandings

Robust Shipping Tracking

Implement comprehensive order tracking and delivery confirmation

Fraud Detection

Use advanced verification tools to prevent unauthorized transactions

Technology-Driven Dispute Mitigation

Modern e-commerce platforms like Growth Suite offer advanced features to minimize disputes, including real-time transaction monitoring, customer behavior analysis, and intelligent fraud prevention mechanisms that can significantly reduce the likelihood of unauthorized transactions.

By implementing proactive strategies and leveraging technology, merchants can dramatically reduce dispute rates and protect their revenue streams.