Dealing with Chargebacks and Disputed Card Payments

Summary

More trades now take card payments on site through card readers and payment links, so more of them meet chargebacks. A homeowner unhappy with a job, or who has buyer's remorse, can call their bank instead of calling you. The bank provisionally refunds them, your payment provider debits your balance (usually with a fee), and you have days, not weeks, to fight it.

Many tradespeople assume a chargeback means they have been accused of fraud, or that the customer's bank has made a final decision. Neither is true. Most trade chargebacks are consumer disputes ("service not provided", "not as described", "cancelled"), and they are decided on documents. The tradesperson with a clean paper trail usually wins. The one relying on a verbal agreement and a WhatsApp thumbs-up usually loses.

Chargebacks are separate from Section 75 claims (credit card purchases between £100 and £30,000, where the card issuer is jointly liable with you) and from bank-transfer disputes, where there is no chargeback mechanism at all. This guide covers all three and what to do when you've lost.

Key Facts

• Chargeback — a scheme rule from Visa, Mastercard and Amex, not a law. It applies to debit and credit cards with no minimum amount.
• Customer time limit — typically 120 days from the transaction or from the date the service should have been provided. Card schemes cap most claims at 540 days from the transaction.
• Your response window — set by your provider. It is often 7–14 days for small-business card readers and online processors. Missing it means automatic loss.
• Chargeback fee — many providers charge about £10–£20 per dispute, sometimes refunded if you win.
• Section 75, Consumer Credit Act 1974 — the credit card issuer is jointly liable for breach of contract or misrepresentation where the cash price of a single item is over £100 and up to £30,000. A customer can claim against the card company for up to 6 years (5 in Scotland).
• Consumer Rights Act 2015, s49 — services must be performed with reasonable care and skill. Remedies are repeat performance (s55) or a price reduction (s56).
• Consumer Contracts Regulations 2013 — a contract agreed in the customer's home is an off-premises contract with a 14-day cancellation right. If you didn't give the cancellation information, the period extends by up to 12 months.
• Express request to start early — if the customer asked in writing (or another durable medium) for work to start within 14 days, you can keep a proportionate amount for work done if they cancel.
• Chip and PIN / contactless liability shift — for card-present payments, fraud chargebacks usually sit with the card issuer, not you.
• Card-not-present payments (links, phone) — you carry the fraud risk unless the payment passed 3D Secure / Strong Customer Authentication.
• Bank transfers — no chargeback. Authorised push payment (APP) fraud reimbursement (up to £85,000 since 7 October 2024) protects the payer against scams, not against disputes about workmanship.
• Direct Debit — the Direct Debit Guarantee gives the payer an immediate refund from their bank, and you then have to recover the money.

Quick Reference Table

Detailed Guidance

What happens when a chargeback lands

1. Notification — your card provider (card-reader app, payment gateway or merchant acquirer) emails you and shows the dispute in your dashboard. The money and usually a fee are held or deducted.
2. Response deadline — note the date immediately. Some providers count calendar days, and weekends and bank holidays still count.
3. Your evidence — upload a short covering statement plus supporting documents through the provider. Banks do not read long arguments, so lead with the facts.
4. Issuer decision — the customer's bank reviews it. The customer may re-dispute (a "pre-arbitration" stage), and you get one more chance to respond.
5. Outcome — you win (funds returned) or lose (funds stay with the customer). Losing doesn't extinguish the debt. See below.

Writing the covering statement

Keep it to one page:

• Who and what: "Customer [name] engaged [business] on [date] to [job] at [address] for £[amount] including VAT, per accepted quote [ref]."
• What was done: "Work completed [date]; customer inspected and signed off on [date]; photos attached."
• The specific rebuttal: answer the reason code, nothing else. If the reason is "not received", prove completion. If it is "cancelled", show the cancellation notice and the written request to start early.
• Contact attempts: "Customer did not raise any complaint before the chargeback. We have offered to return and inspect (email of [date] attached)."
• Attachments list: numbered, with each file named clearly (01-signed-quote.pdf, 02-terms.pdf, and so on).

The cancellation trap for doorstep-agreed jobs

The single biggest loser of trade chargebacks is the missing cancellation notice. If you quote at the customer's kitchen table and they accept there, or by text after your visit, that is generally an off-premises contract under the Consumer Contracts Regulations 2013. You must:

• Give the cancellation information and model cancellation form before the contract is concluded.
• Get an express request in writing (email or signed form) if the customer wants work to start inside the 14 days.

If you skipped this, the customer can cancel for up to 12 months and 14 days. If you didn't get the express request, you may be unable to charge anything for work already done. A bank seeing "cancelled within the cancellation period" with no notice from you will side with the customer. Build both documents into your quote acceptance process: see terms conditions.

Section 75 claims

A Section 75 claim is not a chargeback. The customer claims against their credit card company, which is jointly liable with you for breach of contract. The card company may then seek to recover from you through your provider. The same evidence applies, but the test is legal: did you breach the contract or misrepresent something? A defective-work claim can arrive years after the job, so keep job files for at least 6 years.

If the customer pays a deposit on a credit card and the balance by bank transfer, Section 75 can cover the whole contract value (up to £30,000), not just the deposit.

When you've lost the chargeback

The bank's decision is not a court judgment. If you genuinely did the work:

1. Send a letter before action. Because the customer is an individual, follow the Pre-Action Protocol for Debt Claims: send a letter of claim with the information sheet and reply form, and allow 30 days to respond. See payment chasing templates.
2. Issue a claim via Money Claim Online if unpaid. Claims up to £10,000 normally go on the small claims track, where costs are limited and you don't need a solicitor.
3. Don't re-charge the card. Taking payment again without fresh authorisation is a breach of scheme rules and could lose you your merchant account.
4. Consider the economics. Court fees, your time and the risk of a counterclaim for defective work all matter. Mediation through the small claims mediation service is free.

Reducing your chargeback risk

• Signed acceptance of a written quote that includes the specification, price, payment schedule and terms.
• Cancellation notice plus written request to start early for every off-premises job.
• Card present wherever possible. Tap or chip and PIN on site beats a payment link sent later.
• 3D Secure on every payment link and online invoice payment.
• Stage payments tied to visible milestones: stage payment schedule.
• Completion sign-off — a short handover form or message the customer replies "agreed" to, plus photos.
• Deal with complaints fast. Most chargebacks follow a complaint the customer felt was ignored. An offer to return and inspect, in writing, is strong evidence that you acted reasonably.
• Match the trading name. Customers dispute payments they don't recognise. Make sure your card statement descriptor shows your trading name, not your payment provider's name.

Frequently Asked Questions

Can a customer charge back a deposit if they change their mind?

It depends on the cancellation rules. Within the 14-day cancellation period, the customer is entitled to a refund of the deposit, less a proportionate amount for any work done at their express request. After it, they can't simply change their mind. You can usually keep reasonable costs already incurred, such as bespoke materials that can't be returned, but not a deposit that exceeds your actual loss. Clear deposit terms help: deposit requests.

How long after a job can a customer raise a chargeback?

Usually up to 120 days from payment, or from when the service should have been completed if that is later, capped at 540 days for most reasons. Section 75 claims on credit cards can come up to 6 years later (5 in Scotland) because they are based on breach of contract.

Can I refuse to accept card payments to avoid chargebacks?

Yes, you can choose your payment methods. But bank transfer shifts different risks onto you: invoice interception fraud, slower payment, and customers who can't pay large sums instantly. Many trades take card for deposits and smaller stages, and transfer for larger stages, with bank details confirmed by phone.

Will a chargeback affect my card reader account?

A high chargeback ratio (often around 1% of transactions, varying by provider) can lead to reserves on your funds or account closure. Occasional disputes that you answer properly are normal, but repeated losses aren't.

The customer says the work is defective. Should I fight the chargeback or fix it?

Usually both. Offer, in writing, to return and inspect or put right any genuine defect: that is the Consumer Rights Act remedy of repeat performance. Then submit that offer as evidence. A bank is far more likely to rule for a trader who offered a remedy than one who refused to engage.

Regulations & Standards

• Consumer Rights Act 2015 — s49 (reasonable care and skill), s50 (information binding), s52 (reasonable time), s55–56 (repeat performance and price reduction)

• Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (SI 2013/3134) — off-premises contracts, 14-day cancellation, express request to start early (reg 36) and proportionate payment (reg 36(4))

• Consumer Credit Act 1974, s75 — equal liability of credit card issuers for purchases over £100 and up to £30,000

• Payment Services Regulations 2017 (SI 2017/752) — unauthorised transaction refunds and strong customer authentication framework

• Payment Systems Regulator APP scams reimbursement requirement (in force 7 October 2024) — mandatory reimbursement of APP fraud victims up to £85,000

• Pre-Action Protocol for Debt Claims (Civil Procedure Rules) — business claims against individuals

• Civil Procedure Rules Part 27 — small claims track (claims up to £10,000)

• Visa Core Rules and Mastercard Chargeback Guide — scheme dispute rules and time limits

• Chargeback and section 75 — Financial Ombudsman Service

• Consumer Contracts Regulations 2013 — legislation.gov.uk

• Consumer Rights Act 2015 — legislation.gov.uk

• Pre-Action Protocol for Debt Claims — Ministry of Justice

• Make a money claim online — GOV.UK

• APP scams reimbursement — Payment Systems Regulator

• payment chasing templates — letters for chasing unpaid invoices and letters before action

• terms conditions — terms that build in cancellation rights and payment rules

• deposit requests — taking deposits that survive a dispute

• stage payment schedule — tying payments to visible milestones

• consumer rights — what the Consumer Rights Act 2015 means for trades