Can a customer dispute a charge because the chip card was swiped?

[tammymoses]

Square refunded a customer because her chip card was swiped instead of inserted into a reader.  Is this standard practice?  Can a customer really disupte this charge on these ground?  It was a legitimate charge for goods sold.  Now she has the good and I have no payment for them.

[GlassJudy]

Unfortunately, a customer can dispute any charge, and the customer's bank which issued the card is the one who decides how the dispute plays out.  The only way a chipped card should have been able to be swiped is if the chip was refused 3 times.  Anytime a card is swiped (chipped or not), the chances of the charge being bogus are increased.  Square should have worked with you throughout the process, requesting documentation from you about the charge.

If your customer is someone local, your best and probably only option now is to take her to small claims court and try to get your money that way.

[VanKalkerFarms]

Square only makes you dip a chip card if it knows there is a chip reader attached and then the 3 try failover happens.  so if they only have a magnetic swipe reader they can swipe a chip card.

as for the dispute you will automatically be found liable for a chip card that was swiped by the customer's bank after the liability shift that took place a few years ago.  unless you had the 3 unreadable dips fail-over fail-safe then you are still covered for trying to dip and then it comes down to your documentation.

[Texasdodie]

The same thing happened to me.  They say they send a form where you can challenge the dispute but I never saw it. And there is no way to contact the customer and Square won't give you the contact info.

I have been extremely happy with Square up to now.  The customer has ripped me off for a pair of $35. sandals.  Pretty dishonest if you ask me.

[isabelle · Accepted solution]

Hey @Texasdodie. 

Really sorry to hear that happened. 

@GlassJudy and @VanKalkerFarms are correct. Previously, credit card issuers (banks) were responsible for the disputed funds. Now liability for fraud or payment disputes goes to whichever party is least compliant with the new EMV system. So if you swipe a chip card when you should have dipped, issuers won’t reimburse you. It's the card-issuers way of trying to encourage business owners to use the most updated EMV technology. We've got a page about the EMV liability shift which goes into more depth about this. 

Ultimately, you probably weren't able to challenge the dispute because the dispute automatically resolved in the customers favor due to swiping the card vs. inserting. Again, so sorry about this. Let me know if there's any other questions I can answer about this, or do to improve your experience in the future. 

[Texasdodie]

Still doesn't seem fair that I cannot even contact the customer.  She knew the charge was legitimate when she filed a dispute.  Pretty dishonest way to get a free pair of sandals.

[isabelle]

Hey @Texasdodie.

I'm sorry about that. They should've reached out for a refund first. 

Sometimes you're able to locate the transaction in the Online Dashboard, and see the name of the customer. If their name is hyperlinked, they may have left some contact information. However, we wouldn't be able to release any customer information directly to you. 

[Candlestore]

@isabelle ;

Ok now I have Questions on this....

Dipping a Chip card is more secure than a Mag reader according to your post above.

Damaged Chips or ones that do not read, are where on this as another question was asked about damaged Chips earlier. by @cornerstore 

Where do the WiFI and Apple Pay, Google Pay come into play as being secure or better are we supposed to take that form of payment before inserting a Chip?

Apple Pay and Google pay are they counted as Card Present since there is actually no card?

Just looking for a clear explanation of these so I can establish rules for our business on which way to accept payments 1st to Last.

[PartyManiaMD]

I have a question about this part, " Now liability for fraud or payment disputes goes to whichever party is least compliant with the new EMV system. "

Is Square not taking proper precautions for online orders then? I lost a dispute for a gift card sold by Square online for my store... yet I'm the one that is paying for it.

I turned off Square gift cards but is the same verification used for regular online transactions? I'm trying to give Square the benefit of the doubt but it's like we're taking all the liability.

[JJ_]

Hello @PartyManiaMD

At this time you can challenge Chargebacks or Disputes for Online Orders. The lamentable situation here is that online fraud and stolen cards have increased significantly since the pandemic started. Since the liability shift happened Merchants are now responsible for Disputes or Chargebacks unless they challenge them and the decision of who wins the dispute lies on the Card holder's bank. Square has a dedicated dispute team that does its best to protect your business against these situations and is in their best interest to help you win.

That being said, I am personally sorry for your situation.

[SpectrumCurt]

As the old saying goes, there's the law, and there's justice. This same thing happened to me: swipe vs. insertion. It feels like it's a way for the customer with buyer's remorse to get out of having to honour their purchase. 

[cornerstore]

So I have a question about EMV rule.

If a customer is trying to make a purchase with a chip credit card, but chip is punctured and damaged.

It might even look like was damaged on purpose.

after three tries with square chip reader, it tells me to swipe using magnetic strip.

and the transaction is completed.

"As a merchant, are we supposed to deny accepting chip card that is damaged or for whatever reasons not work with chip reader?"

I know not all the people, but some that are thieves who tries to take advantage of this rule.

I have been hit few grand before with ATM machines by thieves charging back their withdrawals.  And I didn't even get to contest my side of story or show my video evidence.