Last Updated: May 2025 | Version 1.0
Chargeback and Dispute Policy
1. Introduction
Chargebacks and disputes pose significant risks to the Loyalty Points Program, impacting financial stability and merchant relationships. This policy outlines measures to minimize chargebacks and efficiently handle disputes while maintaining compliance with credit card acquirer risk standards.
2. Chargeback Prevention Strategies
Strict Refund Controls:
- Refunds are only applicable to unused loyalty points and can only be issued to the original payment method used for purchase.
- Refunds under $500 are fully automated to proactively prevent chargebacks.
- Refunds over $500 or flagged accounts require manual review to mitigate fraud risks.
- Customers may only request one refund per quarter (every 90 days) to prevent excessive refund abuse.
Transparent Terms and Conditions:
Customers must acknowledge policies before purchasing points, reducing disputes due to misunderstandings.
Proactive Customer Communication:
Real-time transaction alerts, purchase confirmations, and refund processing updates to prevent unauthorized disputes.
3. Dispute Resolution Process
Dedicated Dispute Resolution Team:
Trained specialists handle chargeback cases efficiently.
Prompt Response to Disputes:
All customer disputes are addressed within 24-48 hours to prevent unnecessary escalation.
Proof of Purchase and Usage:
Transaction logs, purchase confirmations, and refund records maintained for chargeback representment.
Friendly Fraud Prevention:
Customers educated on proper dispute procedures to reduce illegitimate chargebacks.
4. Chargeback Management & Representation
Comprehensive Documentation:
Detailed transaction logs maintained for strong dispute defense.
Chargeback Representment:
Invalid chargebacks contested with clear evidence of transaction legitimacy.
Collaboration with Payment Processors:
Acquiring banks and issuers engaged in dispute resolution efforts.
Chargeback Ratio Monitoring:
Maintaining a chargeback-to-transaction ratio below acquirer risk thresholds.
5. Financial Impact Mitigation
Reserves for Chargeback Coverage:
Dedicated financial reserves maintained to cover potential chargeback liabilities.
Risk-Based Customer Segmentation:
Transactions monitored for high-risk activity, with proactive intervention on flagged accounts.
Automated Dispute Management System:
AI-driven tools detect and categorize disputes to expedite resolution.
6. Compliance & Fraud Prevention Measures
PCI DSS Compliance:
All transactions processed securely to meet industry security standards.
AML & KYC Compliance:
Customers undergo identity verification to prevent fraudulent chargeback claims.
Transaction Monitoring:
AI-driven fraud detection and chargeback risk scoring implemented.
Quarterly Compliance Audits:
Internal reviews to assess chargeback trends and implement risk mitigation strategies.
7. Continuous Improvement and Monitoring
Monthly Chargeback Reports:
Evaluation of chargeback trends for policy refinements.
Merchant Training on Chargeback Reduction:
Educating merchants on best practices to prevent disputes.
Customer Feedback Analysis:
Insights gathered to improve transparency and satisfaction.
8. Conclusion
This Chargeback and Dispute Management Policy ensures that the Loyalty Points Program maintains a low chargeback ratio, efficient dispute resolution framework, and strong compliance with credit card acquirer risk management requirements. By leveraging automated refund systems, proactive fraud monitoring, and acquirer-approved chargeback prevention strategies, the program effectively reduces risk exposure while ensuring financial stability.
Important: 4Square operates under a proprietary non-financial digital asset framework in compliance with applicable consumer protection and loyalty program guidelines.