When running an eCommerce business, chargebacks can disrupt cash flow, tarnish customer relationships, and increase operational stress. PayPal’s new Pre-Chargeback Alert system is designed to give merchants a proactive approach to handling disputes before they escalate. 

In this guide, we’ll cover how these alerts work, the main triggers, and the steps merchants can take to respond effectively, helping prevent chargebacks from negatively impacting business operations.

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What is a Pre-Chargeback Alert?

A pre-chargeback alert is an early notification system provided by PayPal to give merchants a heads-up about potential chargebacks. Unlike an actual chargeback, which involves a formal dispute from the customer with their bank, a pre-chargeback alert serves as an early warning, allowing the merchant to address issues before they escalate. When a pre-chargeback alert is issued, it appears as a high-priority case in PayPal’s Resolution Center, giving merchants a limited timeframe—usually 20 hours—to take action, such as issuing a refund or providing additional evidence to resolve the issue.

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This alert system is designed to help merchants reduce the risk of chargebacks, avoid related fees, and potentially retain more revenue by addressing customer concerns before they lead to a full dispute.

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Why PayPal Sends Pre-Chargeback Alerts

PayPal introduced the Pre-Chargeback Alert as a preventive tool, giving merchants a heads-up when a chargeback is likely but hasn’t been officially filed. These alerts appear as new cases in PayPal’s Resolution Center and are marked as high priority. 

They notify merchants of transactions that have been flagged for potential disputes, allowing them a 20-hour window to proactively resolve the issue by issuing a refund, canceling an order, or providing relevant documentation. 

PayPal’s Pre-Chargeback Alert system works as a preemptive measure in cases of suspected fraud, order discrepancies, or customer complaints, allowing merchants to address potential issues before they escalate into costly chargebacks.

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What Triggers a PayPal Pre-Chargeback Alert?

A Pre-Chargeback Alert is triggered by specific activities that suggest a high risk of dispute, such as fraud suspicions like unauthorized transactions, possibly resulting from account takeovers; order issues including complaints of missing, defective, or incorrect items; customer misunderstandings from billing errors or discrepancies between the item description and actual product; and friendly fraud, where a customer disputes a legitimate transaction, often unintentionally. 

PayPal’s system detects these patterns, issuing an alert as an early warning to merchants to respond proactively.

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How to Respond to a Pre-Chargeback Alert

Receiving a pre-chargeback alert gives merchants a unique opportunity to resolve potential disputes with minimal financial or reputational damage.

 Here’s a straightforward approach to handling alerts effectively.

1. Access the Alert in PayPal’s Resolution Center - Log in to the Resolution Center and locate the high-priority “pre-chargeback” notification. Use the “Case Type” filter to quickly identify and access the alert.

2. Review the Details Carefully - Each alert will include transaction details and the reason code, which could range from order not received to unauthorized transaction. If you believe the transaction is legitimate, prepare evidence that validates the order, such as shipping confirmations or customer communication records.

3. Issue a Refund Within 20 Hours (if Necessary) - PayPal provides a 20-hour window for merchants to issue refunds and avoid chargebacks altogether. If you see the alert in time, issuing a refund may help you sidestep additional fees or further complications.

4. Submit Evidence If You Fulfilled the Order - If you believe the transaction was correctly fulfilled, provide any supporting documents in response to the alert.

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How Disputifier Can Help Handle Pre-Chargeback Alerts Seamlessly

For merchants, managing potential disputes quickly and effectively is crucial, especially with limited timeframes like PayPal’s 20-hour response window for pre-chargeback alerts. 

Disputifier offers merchants a seamless way to handle pre-chargeback alerts and similar notifications. Once installed, Disputifier’s AI-driven system is designed to act instantly, detecting disputes as they arise and automating responses. 

This process includes leveraging chargeback alerts from services like RDR (Rapid Dispute Resolution) and Ethoca, giving merchants an extra layer of protection to address disputes before they officially escalate to chargebacks.

With Disputifier, merchants benefit from immediate detection and response for disputes, customized evidence submissions, and proactive alerts that can prevent chargebacks altogether. This solution frees merchants from the administrative burden of dispute management, allowing them to focus on growth and customer satisfaction without the risk of costly chargebacks