Understanding Chargebacks in Community Businesses
What is a Chargeback?
A chargeback is a forced reversal of a credit card transaction initiated by the cardholder through their bank or card issuer. The payment is returned to the customer, and you (the merchant) lose the revenue plus potentially incur additional fees.
How Chargebacks Work:
Customer disputes charge with their bank/card issuer
Bank investigates the claim
Funds are withdrawn from your account immediately (provisional)
You're notified and given chance to respond
Evidence is reviewed by the bank
Decision is made - chargeback upheld or reversed
Final settlement occurs based on decision
Important: Chargebacks are intended as consumer protection and should be a last resort after attempting to resolve issues directly with the merchant.
Why Chargebacks Are Serious for Community Owners
Direct Financial Impact:
Lost revenue from the transaction
Chargeback fees ($15-25 per chargeback from Stripe)
Processing fees not refunded (you lose ~3% on lost sale)
Operational costs of time spent disputing
Example Cost:
Member charged: $50/month
Chargeback fee: $15
Processing fees lost: $1.50
Total loss: $66.50 (plus your time)
Long-Term Business Risks:
1. Stripe Account Risk
High chargeback rate (>1% of transactions) flags your account
Risk of account review or restrictions
Possible account termination in extreme cases
Higher fees or reserves required
Difficulty getting approved with new processors
2. Reputation Damage
Tagged as high-risk merchant
Harder to work with payment processors
Potential impact on credit
Community reputation suffers
Member trust eroded
3. Operational Burden
Time spent gathering evidence
Distraction from growing community
Administrative overhead
Team morale impact
Documentation requirements increase
Common Chargeback Reasons in Community Businesses
Friendly Fraud (Most Common - 60-80% of chargebacks):
Member doesn't recognize the charge
Forgot they subscribed
Family member made purchase without permission
Trying to get free service by claiming fraud
Buyer's remorse disguised as fraud claim
True Fraud:
Stolen credit card used
Card details compromised
Unauthorized account access
Identity theft
Service Disputes:
Member claims they didn't receive access
Dissatisfaction with community value
Technical issues prevented access
Misunderstood what they were paying for
Expected different content/experience
Billing Disputes:
Charged wrong amount
Duplicate charges
Subscription continued after cancellation
Free trial converted unexpectedly
Unclear billing descriptor
Processing Errors:
Payment processed incorrectly
Technical glitch
System error
Double-charge incidents
Preventing Chargebacks: Proactive Strategies
Strategy 1: Crystal-Clear Billing Descriptors
Why This Matters: 40%+ of chargebacks occur simply because the customer doesn't recognize the charge on their statement.
What is a Billing Descriptor? The text that appears on credit card statements identifying your charge.
Bad Descriptor Examples:
❌ "STRIPE *PAYMENT"
❌ "1234567890 NYC"
❌ "LP*COMMUNITY"
❌ Generic company name they don't recognize
Good Descriptor Examples:
✅ "TRADINGACADEMY.COM"
✅ "FITNESSCOACH JOHN"
✅ "DISCORD GAMING PRO"
✅ "[YourName] COMMUNITY"
How to Set Up in Stripe:
Log into your Stripe dashboard
Go to Settings → Business Settings
Find "Statement Descriptor"
Update to something members will recognize
Include your brand name or community name
Keep it under 22 characters
Test with a small charge to see how it appears
Best Practices:
Use your community name or your name
Include recognizable keywords
Match your marketing materials
Include domain if you have one
Test how it appears on statements
Update if getting "unrecognized charge" complaints
Strategy 2: Comprehensive Customer Service
The First Line of Defense:
Most legitimate disputes can be resolved through good customer service before they escalate to chargebacks.
Essential Customer Service Elements:
1. Be Proactive
Welcome new members personally
Check in during first week
Ask for feedback regularly
Address issues before they complain
Monitor member satisfaction
2. Be Accessible
Multiple contact methods (email, DM, support channel)
Clear "Contact Us" information
Response time expectations stated
24-48 hour maximum response time
Emergency contact for urgent issues
3. Be Responsive
Acknowledge inquiries within 24 hours
Resolve simple issues immediately
Provide timeline for complex issues
Follow up to confirm resolution
Don't leave members hanging
4. Be Solution-Oriented
Listen to concerns fully
Offer multiple resolution options
Be flexible when appropriate
Go above and beyond occasionally
Turn complaints into opportunities
Example Response Template:
Hi [Member Name],
Thanks for reaching out about [issue]. I completely understand your concern.
Here's what I can do to help: [Solution 1] [Solution 2] [Solution 3]
Which would work best for you? Or if you have another solution in mind, I'm happy to discuss.
I'm committed to making this right for you.
Best, [Your Name]
Support Channel Best Practices:
In Discord/Slack/Telegram:
Create dedicated #support channel
Respond publicly (shows others you care)
Tag members when responding
Follow up privately if needed
Keep it positive and professional
Via Email:
Use professional email (not generic Gmail)
Respond from recognizable address
Include signature with contact info
Reference community name clearly
Keep tone friendly but professional
Strategy 3: Clear Refund and Cancellation Policies
Transparency Prevents Disputes:
Essential Policy Elements:
1. Refund Policy
Clearly state if/when refunds are offered
Specify any time limits
Explain the refund process
List any exceptions
Make it easy to understand
Example Refund Policy:
Refund Policy
We want you to be completely satisfied. If you're not happy within the first 14 days, contact us for a full refund—no questions asked.
After 14 days, refunds are handled on a case-by-case basis. We're reasonable people and will work with you to find a fair solution.
To request a refund, email [support email] or message @[YourName] in the community.
Refunds typically process within 5-10 business days.
2. Cancellation Policy
Explain how to cancel
State when cancellation takes effect
Clarify if pro-rated
Explain access after cancellation
Make self-service cancellation available
Example Cancellation Policy:
How to Cancel
You can cancel anytime through your Customer Portal at [link].
When you cancel: • Your subscription ends at your next billing date • You'll keep access until then • No refunds for partial months • You can resubscribe anytime
Questions? Contact [support].
3. Terms & Conditions
Subscription terms explained
Automatic renewal disclosed
Pricing changes policy
Community rules
Service expectations
Where to Display Policies:
✅ Signup page (before checkout)
✅ Welcome email
✅ FAQ section
✅ Pinned in community
✅ Website footer
✅ Terms checkbox at signup
LaunchPass Feature: Enable "Terms & Conditions" on your signup page to require acceptance before payment—provides legal protection if disputed.
Strategy 4: Transparent Communication
Set Clear Expectations:
Before They Join:
What's included
What's NOT included
How often you post/engage
What results to expect (realistic)
Time commitment required
Technical requirements
At Signup:
Send immediate confirmation email
Include what happens next
Provide access instructions
Set timeline expectations
Share welcome resources
Give support contact info
Ongoing Communication:
Regular updates on what's new
Advance notice of changes
Billing reminders before charges
Celebrate milestones
Share wins and testimonials
Ask for feedback
Billing Reminder Template:
Hi [Member],
Quick heads up: Your [Community Name] subscription renews in 3 days on [date] for $[amount].
You'll continue enjoying:
✅ [Benefit 1]
✅ [Benefit 2]
✅ [Benefit 3]
Need to update your payment method or have questions? Manage your subscription here: [link]
Thanks for being part of our community!
Why This Prevents Chargebacks:
Removes "I forgot I subscribed" excuse
Reminds them of value
Gives chance to cancel before charge
Shows professionalism
Reduces "unrecognized charge" disputes
Strategy 5: Detailed Record Keeping
Document Everything:
What to Track:
1. Member Activity Logs
LaunchPass Activity Feed shows:
Login times
Page views
Subscription status changes
Payment history
Cancellation date (if applicable)
How to Access: Admin Dashboard → Activity tab → Search member
2. Community Engagement Evidence
Discord/Slack/Telegram message history
Questions they've asked
Content they've downloaded
Events they've attended
Reactions/engagement metrics
Last active timestamp
How to Capture:
Screenshot messages
Export channel logs
Save DM conversations
Document participation
Note milestone interactions
3. Communications Archive
All emails sent/received
DM conversations
Support tickets
Welcome sequences
Billing notifications
Any correspondence
Best Practices:
Use support ticket system
Save all emails
Screenshot important DMs
Keep organized folders
Date everything
Note context
4. Access Delivery Proof
Join confirmation
Welcome message delivered
Access granted timestamp
Role assigned (Discord)
Channel access logs
Download history
Strategy 6: Use LaunchPass Features for Protection
Built-in Protection Features:
1. Terms & Conditions Checkbox
Enable on your signup page
Requires explicit acceptance
Stores acceptance record
Legal protection if disputed
Proves they agreed to terms
Setup: Admin Dashboard → Edit Page → Enable T&C checkbox → Add your terms link
2. Require Name on Card
Captures cardholder name
Reduces stolen card usage
Provides verification
Helps identify legitimate purchaser
Extra fraud prevention layer
Setup: Admin Dashboard → Edit Page → Enable "Require name on card"
3. Activity Feed Tracking
Automatic logging
Member activity visible
Access history recorded
Timestamped entries
Export capability
Access: Admin Dashboard → Activity → Filter by member
4. Customer Portal Access
Members can self-manage
Cancel independently
Update billing info
View subscription details
Reduces support burden
Link: Share launchpass.com/portal with members
Winning Chargeback Disputes: Response Strategy
Understanding Chargeback Reason Codes
Major Reason Code Categories:
Fraud Codes:
10.4 - Fraudulent Transaction (Card-Absent)
Member claims they didn't authorize
Most common dispute type
Often "friendly fraud"
Authorization Codes:
11.1 - Card Recovery Bulletin
11.2 - Declined Authorization
11.3 - No Authorization
Technical/processing issues
Service/Processing Codes:
13.1 - Services Not Provided
13.2 - Canceled Recurring Transaction
13.3 - Not as Described
Service quality disputes
Full Reference: Stripe dashboard shows specific reason codes. Check Stripe's reason code guide for detailed explanations.
Chargeback Response Timeline
Critical Deadlines:
Day 1: Notification
You receive chargeback notification from Stripe
Email alert sent
Funds immediately withdrawn (held pending)
Clock starts on response deadline
Days 1-7: Investigation
Understand reason code
Gather initial evidence
Assess if worth fighting
Prepare response strategy
Days 7-14: Evidence Gathering
Collect all documentation
Screenshot community activity
Compile communications
Organize proof of service
Prepare written response
Day 15-21: Submission
Upload evidence to Stripe
Write compelling narrative
Submit before deadline
Confirm receipt
Typical Response Window: 7-21 days
Varies by card network
Shown in Stripe dashboard
NEVER miss this deadline
No extension possible
Post-Submission: 30-90 days
Bank reviews evidence
Decision made
You're notified of outcome
Funds returned if you win
Building Your Dispute Response
Step 1: Assess Whether to Fight
Fight the Chargeback If:
✅ You have strong evidence
✅ Clearly provided service
✅ Member actively used community
✅ Obvious friendly fraud
✅ Amount makes it worthwhile
✅ You have time to respond properly
Consider Accepting If:
❌ Weak or no evidence
❌ Legitimately didn't provide service
❌ Technical issue prevented access
❌ Very small amount (< $10)
❌ Your error occurred
❌ Not worth your time
Cost-Benefit Analysis:
Small chargebacks (< $20): Often not worth the time
Medium ($20-100): Usually worth fighting if you have evidence
Large (> $100): Almost always worth fighting
Step 2: Gather Compelling Evidence
Essential Evidence Checklist:
☐ Terms & Conditions Acceptance
Screenshot from LaunchPass
Shows they agreed to terms
Date/time of acceptance
Checkbox confirmation
☐ Proof of Service Delivery
Community access granted (screenshot)
Role assignment (Discord)
Channel membership (Slack/Telegram)
Access dates from Activity Feed
Welcome message sent/received
☐ Member Activity Documentation
LaunchPass Activity Feed export
Discord/Slack/Telegram messages
Questions asked
Resources downloaded
Events attended
Login history
☐ Communication Records
All emails exchanged
DM conversations (screenshots)
Support tickets
Their feedback/testimonials
Any positive comments
☐ Cardholder Verification
Name on card matches
IP address logs
Device information
Location data (if available)
Previous successful charges
☐ Billing Descriptor Info
How charge appears
Proof it matches your brand
Any confirmation they received
Receipt/invoice sent
☐ Cancellation Policy Evidence
Your clear cancellation policy
How to cancel (screenshots)
Proof they had access to policy
Customer Portal availability
Self-service options shown
Step 3: Write Your Dispute Response
Effective Response Structure:
1. Executive Summary (2-3 sentences)
"This chargeback appears to be friendly fraud. The cardholder subscribed to our [Community Name] on [date], actively participated for [timeframe], and received full access to all services as purchased. Evidence below demonstrates clear service delivery and member engagement."
2. Transaction Details
Date of transaction
Amount charged
What was purchased
Subscription terms
Billing descriptor
3. Evidence of Service Delivery
Access granted on [date]
Member joined Discord/Slack/Telegram on [date]
Role assigned: [role name]
Active participation shown:
Posted X messages
Attended X events
Downloaded X resources
Last active on [date]
4. Member Activity Summary
Timeline of engagement
Specific examples with dates
Screenshots attached
Clearly used service as intended
5. Communication History
Welcomed on [date]
Responded to inquiries on [dates]
No complaints or issues raised
Positive feedback received
6. Terms Acceptance
Agreed to Terms & Conditions
Accepted on [date/time]
Name on card: [name]
Checkout completion confirmed
7. Cancellation Process
Clear cancellation policy in place
Customer Portal access provided
Self-service cancellation available
No cancellation request received
8. Conclusion
"Based on the comprehensive evidence provided, the cardholder clearly received and actively used the services they purchased. The chargeback appears to be an attempt to receive free services. We respectfully request this chargeback be reversed."
Tone Tips:
Professional and factual
Not defensive or emotional
Organized and clear
Concise but thorough
Let evidence speak
Step 4: Submit Through Stripe Dashboard
Submission Process:
Go to Stripe Dashboard → Payments → Disputes
Find the specific dispute
Click "Submit Evidence"
Upload documents:
PDFs preferred
Clear screenshots
Name files clearly
Organize logically
Don't exceed file limits
Enter written response in text field
Review everything carefully
Submit before deadline
Save confirmation
File Organization Tips:
Evidence1_Terms_Acceptance.pdf
Evidence2_Activity_Logs.pdf
Evidence3_Community_Messages.pdf
Evidence4_Email_Communications.pdf
Evidence5_Access_Proof.pdf
Step 5: Follow Up
After Submission:
Note submission date
Save confirmation email
Set reminder to check status
Don't contact bank directly
Wait for decision (30-90 days)
Stripe will notify you of outcome
If You Win:
Funds returned to your account
Chargeback fee may be refunded
Update your records
Learn what evidence worked
Use for future disputes
If You Lose:
Funds not returned
Accept the loss
Review what evidence was lacking
Improve prevention measures
Don't take it personally
Advanced Chargeback Prevention
Using Stripe Chargeback Protection
What Is It? Stripe's paid service that covers eligible disputes automatically.
How It Works:
You're protected from losses on covered chargebacks
Stripe handles the dispute response
No chargeback fees on covered disputes
Fraud detection prevents many before they occur
Cost:
0.4% per transaction
Covers chargeback losses
Includes Stripe Radar fraud detection
Worth it for high-volume communities
When to Consider:
Processing > $50k/month
Experiencing regular chargebacks
Want hands-off protection
Value peace of mind over cost
Learn More: Stripe Chargeback Protection
Note: As a Verified Stripe Partner, LaunchPass customers can access this feature.
Creating Internal Dispute Processes
Standard Operating Procedure for Your Team:
When Complaint Received:
Acknowledge within 1 hour
Gather full context
Identify root cause
Propose solution within 24 hours
Follow up until resolved
Document everything
Escalation Path:
Level 1: Team member responds
Level 2: Manager reviews (if not resolved in 48h)
Level 3: Owner involvement (if critical)
Level 4: Refund/resolution authority
Resolution Authority:
Support team: Can offer make-goods, extensions
Manager: Can authorize partial refunds
Owner: Can authorize full refunds, special cases
Documentation Requirements:
Log all interactions
Save all screenshots
Record resolution details
Note member satisfaction
Track resolution time
Analyze trends monthly
Monitoring Your Chargeback Rate
Key Metrics to Track:
Chargeback Rate Formula: (Number of Chargebacks ÷ Number of Transactions) × 100
Acceptable Rates:
Excellent: < 0.5%
Good: 0.5-0.75%
Warning: 0.75-1%
Critical: > 1%
Where to Check:
Stripe Dashboard → Reports → Disputes
Monthly summary reports
LaunchPass Activity Feed
What to Do at Each Level:
< 0.5% (Excellent):
Maintain current practices
Continue monitoring
Document what's working
Train team on best practices
0.5-0.75% (Good):
Review each chargeback
Identify common patterns
Improve weak areas
Tighten policies if needed
0.75-1% (Warning):
Urgent review required
Implement additional safeguards
Improve customer service
Consider Stripe protection
Contact Stripe proactively
> 1% (Critical):
Immediate action required
Risk of account restrictions
Comprehensive process overhaul
Consider professional help
May need to pause growth
Common Chargeback Scenarios and How to Handle Them
Scenario 1: "I Don't Recognize This Charge"
Why It Happens:
Forgot they subscribed
Family member subscribed
Billing descriptor unclear
Time passed since signup
How to Prevent:
Clear billing descriptors
Send billing reminder emails
Include brand name in descriptor
Confirmation emails after charges
If It Happens: Evidence to provide:
Billing descriptor explanation
Signup confirmation
Welcome email delivery
Community access proof
Activity showing they used service
Response Strategy: Show they DID subscribe, received access, and used the service. The charge is legitimate and recognizable.
Scenario 2: "I Cancelled But Was Still Charged"
Why It Happens:
Cancelled after billing date
Didn't follow cancellation process
Assumed cancellation was immediate
Technical error (rare)
How to Prevent:
Clear cancellation policy
Explain when cancellation takes effect
Confirmation email after cancellation
Reminder before next charge
Grace period if appropriate
If It Happens: Evidence to provide:
No cancellation request on record
Customer Portal access logs
How to cancel (easy process)
When cancellation would take effect
Continued service access provided
Response Strategy: Show they didn't cancel before the billing date, had clear instructions on how to cancel, and received service for the billing period.
Scenario 3: "I Never Got Access"
Why It Happens:
Technical issue (rare)
Didn't check email
Didn't accept Discord/Slack invite
Looked in wrong place
Actually did get access but forgot
How to Prevent:
Instant access (Discord/Telegram)
Clear access instructions
Follow-up if no activity in 24h
Support proactively
Welcome message automation
If It Happens: Evidence to provide:
Access granted timestamp
Welcome email sent/delivered
Invitation sent (Slack)
Role assigned (Discord)
Activity logs showing access
Any messages they sent
Response Strategy: Show access WAS provided, when it was granted, and evidence they used it (if applicable).
Scenario 4: "Not Worth the Money"
Why It Happens:
Unmet expectations
Misunderstood offering
Legitimate dissatisfaction
Buyer's remorse
Found alternative
How to Prevent:
Clear value proposition
Realistic promises
Trial period
Satisfaction guarantee
Regular value delivery
Feedback collection
If It Happens: Evidence to provide:
Clear description on signup page
Terms acceptance
Service delivered as promised
Activity showing engagement
Refund policy (if they didn't follow it)
Response Strategy: Show you delivered exactly what was promised. Value perception is subjective but service was provided as advertised.
Scenario 5: "Someone Else Used My Card"
Why It Happens:
Family member subscribed
Friend used card
Actual fraud (rare)
Trying to avoid payment
How to Prevent:
Require name on card
Card verification
Match billing address
IP tracking
Fraud detection tools
If It Happens: Evidence to provide:
Name on card matches
IP address logs
Device information
Pattern of legitimate use
Activity from same location/device
Communication from cardholder
Response Strategy: Show evidence suggests legitimate cardholder made purchase. If truly fraud, you may need to accept the loss.
What to Do After a Chargeback (Win or Lose)
If You Win the Dispute
Immediate Actions:
✅ Celebrate (you protected your revenue!)
✅ Update member status (still active? or should be removed?)
✅ Document what evidence worked
✅ Update chargeback response templates
✅ Train team on successful approach
Member Communication: Option 1: Do Nothing (often best)
They got their money back
Let it go
Move on
Option 2: Remove Access (if appropriate)
If they attempted friendly fraud
Remove from community
Block from re-joining
Protect community integrity
Learn and Improve:
What evidence was strongest?
What could you improve?
How to prevent similar next time?
Document lessons learned
If You Lose the Dispute
Immediate Actions:
✅ Accept the loss professionally
✅ Remove member access
✅ Document why you lost
✅ Identify evidence gaps
✅ Improve prevention measures
Financial Actions:
Write off the loss
Account for chargeback fee
Update revenue projections
Don't dwell on it
Process Improvement:
What evidence was lacking?
What could have prevented this?
Update policies if needed
Strengthen documentation
Improve customer service
Consider if worth fighting similar future cases
Don't:
❌ Contact member directly (accept decision)
❌ Try to charge them again
❌ Leave negative feedback publicly
❌ Hold a grudge
❌ Let it affect team morale
Implementing Lessons Learned
Monthly Review Process:
Analyze All Chargebacks:
How many occurred?
What were the reasons?
Which did you win/lose?
Common patterns?
Cost impact?
Identify Improvements:
Policy updates needed?
Communication gaps?
Service delivery issues?
Technical problems?
Training requirements?
Take Action:
Update policies
Improve documentation
Enhance customer service
Fix technical issues
Train team
Monitor results
Track Over Time:
Month-over-month chargeback rate
Win rate on disputes
Financial impact
Time spent
Trend analysis
Frequently Asked Questions
Can I prevent all chargebacks?
No, chargebacks are a normal part of doing business online. Even with perfect practices, you'll occasionally face disputes. Aim for < 0.5% chargeback rate, which is considered excellent. Focus on prevention and be prepared to respond effectively when they occur.
Should I always fight chargebacks?
That depends on you and your business and circumstances of the chargeback. Absolutely fight chargebacks when you have strong evidence, clearly provided service, and the amount makes it worthwhile.
For very small amounts (< $10) or when you legitimately didn't deliver service, accepting the loss may be more cost-effective than spending hours gathering evidence at least on first glance, However, it is worth noting that not responding to chargebacks actually negatively can effect your ability to take charges with that bank in the future, while fighting the chargeback actually can offer a legitimacy to your business in the eyes of the disputing bank.
How long do I have to respond to a chargeback?
Typically 7-21 days depending on the card network. The exact deadline is shown in your Stripe dashboard when you receive the chargeback notification. Never miss this deadline—there are no extensions and you forfeit your right to dispute.
What's my best defense against chargebacks?
Excellent customer service combined with thorough documentation. Most disputes can be prevented by resolving issues before they escalate. When chargebacks do occur, detailed records of service delivery and member activity are your strongest defense.
Do I get the chargeback fee back if I win?
Sometimes. If you win the dispute, Stripe may refund the chargeback fee, but this varies by case. The transaction amount is always returned if you win. Check your Stripe dashboard for fee refund status.
Can I ban members who file chargebacks?
Yes. Members who file illegitimate chargebacks (friendly fraud) can and should be removed from your community and blocked from rejoining. This protects your community's integrity and discourages future abuse.
What if a member threatens to file a chargeback?
Respond professionally and try to resolve their concern. Explain your refund policy and offer to help through proper channels. Document the threat. If they do file a chargeback, the threat itself can be evidence of friendly fraud (they're attempting to bypass your policies).
How do chargebacks affect my Stripe account?
High chargeback rates (> 1%) can flag your account as high-risk. Stripe may require reserves, charge higher fees, or in extreme cases, terminate your account. Maintain a low chargeback rate to keep good standing with Stripe.
Can I charge someone again after a chargeback?
No. Once a chargeback is filed, do not attempt to charge the member again. This can result in additional chargebacks, legal issues, and Stripe violations. Accept the outcome and move on.
Should I offer refunds to avoid chargebacks?
Yes, being flexible with reasonable refund requests often prevents chargebacks. A proactive refund policy (especially for early cancellations) can save you chargeback fees and protect your merchant reputation. It's often cheaper to refund than fight a chargeback.