Overcoming Payment Disputes: Strategies That Saved Our eCommerce Store

For the past nine years, I’ve been part of the Customer Support team at an eCommerce company, and during this time, one of the biggest challenges we’ve faced is the rise of payment disputes—often referred to as chargebacks. These disputes usually come from customers who never reached out to us before contacting their bank. Most of them are first-time buyers who placed an order after seeing one of our ads but never communicated with us directly.

The Payment Dispute Crisis That Nearly Shut Us Down

Back in July 2021, things became critical. Our payment gateway accounts were on the verge of being terminated because of an unusually high number of fraudulent chargebacks. We noticed clear red flags: orders shipping to the U.S. but billing addresses coming from countries like Taiwan, Singapore, and South Africa, along with several repeated CVV attempts. The situation created enormous stress for our team, and it pushed us to completely rethink how we handled disputes and fraud prevention.

During that period, our main priority was responding to every dispute by submitting strong evidence. Before sending the evidence, we attempted to contact each customer at least three times. As expected, most never replied, and the few who did claimed they had never placed an order with us or had no idea who we were.

We gathered and submitted every piece of valid documentation—order invoices, tracking details, and email communication records—doing everything as quickly and accurately as possible. Despite these efforts, we still ended up losing about 95% of those payment disputes.

How Payment Disputes Led to Massive Financial Losses

Each payment dispute cost us between $15 and $20 in fees, and with thousands of disputes coming in, the financial impact was massive. To make matters worse, there was also the option of Arbitration—essentially an appeal where we could challenge the bank’s decision by submitting evidence again. But Arbitration came with a high risk: losing meant an additional penalty of around $500 per case.

We tried filing Arbitration on a few disputes, but it quickly became obvious that we were losing almost all of them. After losing thousands of dollars in Arbitration fees alone, we made the difficult decision to stop pursuing them altogether.

This period was extremely tough for us financially. In total, we ended up losing hundreds of thousands of dollars due to these payment disputes.

How We Took Control and Prevented Future Payment Disputes

After going through this difficult phase, we decided we could no longer afford to keep losing money to payment disputes. We built a strategic plan to handle them more proactively.

We began closely monitoring all high-risk orders. For every order flagged as high risk, we immediately reached out to the customer for verification. If an order looked suspicious and we were confident it would eventually turn into a dispute, we refunded it upfront to avoid future losses.

Identifying these high-risk orders early was critical. At that time, we didn’t have tools like Notify Rush’s fraud notification alerts—which automatically highlight Shopify’s high-risk recommendations—so we had to review and email customers manually.

Eventually, we learned about Shopify Payments’ built-in fraud protection. This feature protects merchants from fraudulent chargebacks, as long as the order is shipped within seven business days. Knowing this gave us a clearer framework and helped us adjust our internal processes accordingly.

Conclusion

Handling payment disputes is one of the toughest challenges an eCommerce business can face, and our journey is proof of that. We went through financial losses, operational stress, and countless hours of investigating fraudulent orders. But those hardships pushed us to rethink our processes and build a system that protects our business before a dispute even happens.

By proactively monitoring high-risk orders, improving customer communication, refunding suspicious transactions upfront, and understanding the protections offered by Shopify Payments, we were finally able to reduce unnecessary losses and regain control.

Payment disputes will always be part of online commerce, but the way you prepare for them determines the impact they have on your business. With the right tools, timely action, and a data-driven approach, any eCommerce store can turn a painful challenge into a manageable one—and even use it to strengthen its operations for the future.

If you're currently struggling with payment disputes, remember: prevention is always more effective than reaction. Start early, stay vigilant, and build systems that protect you long before the dispute arrives.