A chargeback occurs when a customer disputes a charge on their statement by contacting the credit card company instead of contacting you. If a customer does not recognize the charge on their statement, or if they believe the amount was wrong, they may call their credit card company and ask them to investigate. Thus begins the chargeback. The merchant bank will charge you a fee for the retrieval of information, and if it is determined that the customer is right, there will be another fee for the chargeback itself. The customer will be refunded their money directly through the credit card company and your checking account will be debited. Eventually, if your account has excessive chargebacks, the bank may choose to cancel your account. The more you do to protect yourself against chargebacks, the better off you'll be. There is a great forum on this topic at merchant911.org. It's absolutely free and they will provide you with tools and information to help you cut down on the amount of chargebacks and fraudulent orders you will receive.
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