A dispute occurs when one of your donors questions their donation with their bank or credit card company. Banks usually ask customers for a reason for the dispute. Donor complaint reasons can vary from not receiving store items, to forgetting they've made a donation in the first place.
Following the donor's complaint, most banks tend to immediately side with the donor without additional investigation and initiate a formal dispute. When a dispute occurs, the bank will immediately notify Stripe, who will automatically remove the disputed funds from your account until the case is resolved. If the case is lost, your organization will not recoup the lost payment. Additionally, Stripe will charge a $15 fee for each lost dispute.
It is possible to fight disputes. One of the most effective ways to handle a dispute is to reach out directly to the donor and ask them to withdraw the dispute with their bank. Stripe has a tool to help handle disputes, and in many cases, you can prove that the donation was valid.
Read Stripe’s article to learn more about how to handle chargebacks and disputes here.
How to minimize disputes:
The best way to prevent disputes is to be transparent with donors. Make sure that if a donation is recurring that your forms clearly explain that to your donors. Disputes from donors frequently occur because they did not realize or had simply forgotten that they had made a recurring donation.
Preventing disputes is important because banks will charge your organization a fee on top of the refunded donation. If your organization has a chargeback rate higher than 1%, you could incur even higher fees and/or have your Stripe account suspended.