Note; Credit Card/Bank Chargebacks are not to be confused with the PayPal dispute claim. I'm using the terms bank and credit card company are used interchangably, because credit card companies are banks.
Chargebacks have been a consumer protection facility on all major credit and charge cards since the '70s. Different credit card policies and varying situations mean a chargeback can occur anything between 6 months and 2 years after a purchase! In the UK, a clause known as Section 75 under the Consumer Credit Act (1979) means that a chargeback can occur any unlimited amount of time after a transaction, these would tend to be for larger purchases and would require some more evidence than usual if it's many years after purchase. PayPal is so quick to refund and biased towards the buyer, not just because they want to keep their precious customers happy so they continue to use it, but because they know the buyer will just resort to requesting that their bank reverse the payment and 'chargeback' the amount, and it will only end up costing PayPal more with the chargeback fees on top of that. The reason chargebacks are so dreaded is because the bank has the final decision on whether the chargeback will be upheld, not PayPal and generally speaking the bank will want to keep their customers happy. Perhaps PayPal claims would be fairer towards sellers if it weren't for the risk of chargebacks they have to consider. They have to weigh up if there's a good chance that they would lose the dispute if it went onto a chargeback then there's no way they're going to let the seller win that claim, and then wait to receive a chargeback for the amount and the associated fees.
A common misconception is that PayPal charge you a fee in order to fight the chargeback on your behalf. Regardless of what you may be told, this is a chargeback fee levied by the bank on top of the amount to be reversed, a bit like when you have a check bounce or other payment returned and the bank charges you a fee for insufficient funds or whatever the reason was. PayPal would love to win the chrageback on your behalf and see a decrease in the activity. As far as most chargeback representation departments go they are actually quite good, so please provide all the information they ask for and as much as possible in support of your case. They are on your side as far as fighting it, they just want you to bear the cost if they lose it.
There are a variety of reasons a cardholder can request a chargeback, I'm going to cover the main ones.
Unauthorised Use
The cardholder claims that they have not completed the transaction. All credit cards and banks have a zero fraud liability to their customers, only if it can be proven that the transaction is linked to the cardholder is there a chance of ruling against the chargeback. PayPal have a clause in their Policy that chargebacks relating to any unauthorised transaction will be your responsibility. It is worth providing all the evidence and as much information as you can to prove your case, occasionally banks will see reason and identify the transaction is linked to the cardholder. You will be pleased to know, however, that out of all the chargebacks you receive this is the least common (unless you're shipping high value electronics by express to Nigeria).
Goods/Services Not Received
I could not say this any more loudly than if I burned this onto your desktop background until you start doing it always. Always ship with tracking and signature proof of delivery. If you don't already do this and you take one thing away it should be this. If you can prove delivery to their address, which is why it's worth checking to confirm their address, then you stand the very best chance of winning. Credit Card companies can and do see reason on this. If you're selling non-physically deliverable goods, such as digital products, then it's important to clearly communicate your refund policy and have a good one, because remember if they're determined then they will file a chargeback and it'll just end up costing you more. You can secure your products with a key (just like
eBay Stealth) or only accessible via membership site, so if they do decide to take you up on a refund you can at least terminate their use of your products. If it's a determined fraudster who is trying to set you up to be liable for this chargeback, you should recognise these signs early on and just cancel the order.
Merchandise Not As Described (SNAD - Significantly Not As Described in PayPal terminology)
This is the wild card because it can cover almost any eventuality or excuse. Arrived damaged, faulty, not what was ordered, not in the condition that was advertised, are just some of the stories that will pop up. Your protection can be taking photographs before packing or having a postal worker witness it, but at the end of the day it's a case of you say one thing they say something else, they can claim that they've taken photographs or had it witnessed, there really is no indefatigable proof which is why it's such a wild card. The only solution in these cases and to avoid is to return and refund. If it's reached a chargeback clearly that hasn't happened, and presumably you haven't got your merchandise back. The rules surrounding chargebacks say that the goods must have been returned to merchant, this is not always adhered to, the buyer could send you back something worthless, forge a receipt, anything if they're determined to rip you off. This is the number one get it for free chrageback, and success rates are low, but it's not over - read on as shortly I come to what you can do if you lose. Even when the buyer has shown no signs of having returned anything they can still win chargebacks, but present your case as clearly and professionally as possible, banks are starting to moralise this practise somewhat. One example, was where the buyer received their merchandise used it for a couple of months then decided they didn't want it anymore and did a chargeback. It was pointed out that you wouldn't just buy a cake from WalMart, eat half of it, decide you don't like the cream inside and take it back expecting your money back. The bank saw it the same way and it was a good victory.
From time to time banks do see sense about a chargeback, so it's not wise to just give up as a lost cause or to just stamp and shout profanities down the phone. Albeit often banks want to keep their customers satisfied, so don't get the impression that they're on your side. Of those that have won, the evidence that supports the case has had to cause the bank to act responsibly, or where the bank recognises that the customer is a regular at this and they can't go on granting his chargebacks in any case.
Don't beat yourself up if you lose a chargeback, most will experience them at some point. It doesn't have to be the end of the matter if just the bank rules in favor of the cardholder. Some people have success contacting the buyer to arrange for the return of the merchandise if this is outstanding. In those cases, though, where the buyer has deliberately defrauded you out of your merchandise and hidden behind the favor of the credit card dispute to get the money back and keep your product.
You do still have the law on your side. This would generally depend on the amount in question and how much evidence you have so far as the buyer, and this has the best success rate among merchants. Send the customer a legal letter by registered mail, either from an attorney or a collections agency, most will not charge you anything for this up front and either ask for a percentage of recovery or a fee from the customer. Demand that they make full payment for the mentioned order within 30 days before proceeding to court action. They will usually pay right away if they are pulling a fast one thinking they're untouchable behind a credit card. If they still refuse you can proceed to take them to court, and they will listen fairly particularly if you have all the evidence and they can't prove they returned anything or you prove they just returned something worthless. Maybe even do a bit of background searching and see if this person has a chequered history of chargebacks. Judge Judy will get the truth.
Good luck!
Chargebacks Understood - A Guide to Your Best Chances of Success 
