Up: Dispute Infrastructure See also: Monitoring Dispute Ratios
Handling Dispute Surges
Definition
A Dispute Surge is a rapid acceleration in incoming chargebacks. It is a "Force Majeure" event for a merchant, threatening immediate account suspension if not contained.
Why it matters
Time. You have a 30-day "Dispute Lag." The surge identifying today is from sales made 30 days ago. The surge caused by sales today won't hit for 30 days. Managing a surge requires managing this time delay.
Signals to monitor
- Daily Dispute Velocity: Count of new disputes arriving today.
- Vintage Performance: The dispute rate of the current sales cohort (leading indicator).
- Reason Code Mix: Is the surge due to "Fraud" (Criminal) or "Goods Not Received" (Logistics)?
Breakdown modes
- Fraud Attack: A card testing event from last month maturing into chargebacks.
- Logistics Failure: A warehouse disaster causing thousands of undelivered orders.
- Billing Confusion: Changing the statement descriptor to something unrecognizable.
Where observability fits
- Vintage Projection: "Based on current early alerts (TC40s), our ratio will hit 1.5% next month."
- Root Cause Isolation: Pinpointing the specific product or affiliate driving the surge.
- Refund Gap: Identifying transactions that should be refunded now to prevent disputes later.
Note: observability does not override processor or network controls; it provides operational clarity to navigate them.
FAQ
Should I stop selling?
If the surge is bad enough, yes. You need to lower the numerator (disputes) or raise the denominator (sales). Stopping bad sales is step 1.
Can I reverse a chargeback?
You can "Represent" (fight) it. If you win, it falls off the financial ledger, but usually stays on the count ledger for the ratio.
What is a TC40?
An early fraud warning from Visa. It predicts a dispute ~2 weeks before it happens.