Subscription revenue is the best kind of revenue, right up until the disputes start showing up.
If you bill customers monthly, you already know the pattern. Someone signed up in January, forgot about it by April, saw a charge they did not recognize, and called their bank instead of you. The bank opened a dispute. You lost the money, paid a chargeback fee on top of it, and the customer probably stayed subscribed for another month while the whole thing played out.
None of that makes you a bad business. It makes you a subscription business. Recurring billing produces more disputes than one-time sales for one simple reason: the customer is not sitting there deciding to buy each time. The charge happens to them.
Here is the good news. Most subscription chargebacks come from a short list of causes, and every one of them can be reduced with things you control. I am going to walk through what actually works, in the order I would do it.
Why do subscription businesses get so many chargebacks?
Because the customer did not actively choose the charge on the day it happened. Almost every subscription dispute I see traces back to one of three moments.
They forgot. The charge shows up, they do not remember signing up, and the fastest way to make it go away is the dispute button in their banking app. Chargebacks911’s 2026 Chargeback Field Report found that more than a quarter of merchants with recurring billing send no reminder at all before charging. Those merchants are relying on the customer’s memory, and memory is not a business strategy.
They did not recognize the name on their statement. Your billing descriptor is the short line of text that shows up next to the charge. If it says your legal entity name or your processor’s abbreviation instead of the name your customer knows you by, you look like fraud. The same report found only about half of merchants know exactly what their own descriptor says.
They could not figure out how to cancel, so they disputed instead. This one stings, because the customer was trying to do the right thing. Chargebacks911’s cardholder research found 72% of cardholders believe a dispute is a valid alternative to asking for a refund. To them, it is just another way to cancel.
Notice that none of those three is fraud. These are reasonable people doing what seems reasonable in the moment. That is exactly why prevention works so well here: you are not fighting criminals, you are fixing communication.
What are the card brand rules for subscription billing?
Visa has had specific rules for subscription and free-trial merchants since April 2020, and they read like a prevention checklist. Mastercard’s rules are similar. If you bill on a recurring basis, Visa expects you to:
- Get the customer’s express consent to recurring billing when they sign up, not buried in the terms.
- Send a confirmation at enrollment that spells out the amount, how often you bill, and when it starts.
- Send a reminder at least seven days before the first charge after a free trial, and before any charge where the terms have changed.
- Offer a way to cancel online that is as easy as unsubscribing from an email list, no matter how the customer signed up.
- Put the word “trial” in your descriptor on the first charge after a free trial ends.
In my experience, most merchants have never seen this list. The reminder requirement in particular surprises almost everyone I show it to, including merchants who have been billing on a recurring basis for years.
Here is the part most merchants never hear. Visa also gave banks a dispute reason specifically for customers who “were not clearly advised of further billing.” But the same rule protects you if you can show the customer agreed and you can prove you sent the notification. In other words, the rules are not just requirements. Followed carefully, they are your evidence.
On the government side, the FTC’s “click to cancel” rule was thrown out by a federal court in 2025, and the FTC started work on a new version in early 2026. Do not wait for it. The FTC has kept fining companies over hard-to-cancel subscriptions under the laws already on the books, and the card brands never stopped requiring easy cancellation. Easy cancellation is the rule you are living under today whether or not Washington finishes its paperwork.
How do you prevent chargebacks on recurring payments?
Here is the list, in the order I would work through it. The first three fix the majority of subscription disputes on their own.
1. Fix your billing descriptor first
It should show the name your customers know you by, plus a phone number or website. Test it: sign up for your own service on a personal card and look at what shows up in the banking app. If you would not recognize it, your customers will not either. Your processor can change it, usually the same week.
2. Send a reminder before every charge, not just the first one
An email or text three to seven days ahead with the amount, the date, and a link to cancel, all in the same message. Most subscription merchants I talk to send no reminder at all, and most do not know Visa requires one before the first charge after a trial. Some merchants worry that reminders invite cancellations. Some will. But look at what each outcome costs you. A cancellation costs you the subscription. A chargeback costs you the subscription, the money from the disputed charge, a fee on top, and a mark on your dispute record. A customer who cancels can be won back. A customer who disputed you usually cannot.
3. Make cancelling easier than disputing
If a customer can cancel in under a minute without calling anyone, they will cancel instead of disputing. A cancel link in every reminder and in the account settings is the whole fix. Requiring a phone call to cancel feels like it protects revenue. In practice it converts cancellations into chargebacks.
4. Confirm the enrollment in writing and keep it
The signup confirmation email with the amount, frequency, start date, and terms is the document that wins a dispute if one is filed. Keep it where you can find it by customer and date.
5. Treat the trial-to-paid moment as the danger zone
More subscription disputes are born on the first paid charge after a free trial than anywhere else. That is the charge the customer was not paying attention to. Seven days’ notice, the amount in the notice, and “trial” in the descriptor for that first charge.
6. Refund fast when someone asks
When a customer emails you about a forgotten month, you have a choice about what that moment becomes. Refund it and it is a refund, which does not count against you. Argue about it and it is often a chargeback, which does. Chargebacks911 and Ethoca have both found that a large share of cardholders do not know the difference between a refund and a chargeback. You do, so make the choice for them.
7. Ask your processor about the programs that resolve disputes before they count
Visa and Mastercard both run programs that flag a dispute the moment the bank receives it and let you refund it before it becomes a chargeback. Disputes resolved this way are excluded from the score Visa uses to grade you. Not every processor sets these up for you automatically, and some never mention them. Ask the question in exactly those words: “Am I set up on the programs that resolve disputes before they count against me?”
What does one subscription chargeback actually cost?
More than the charge. You lose the disputed amount, you pay a chargeback fee that typically runs $15 to $45 whether you win or lose, you already delivered the month of service, and the dispute counts against your chargeback score. And subscription disputes rarely arrive one at a time. A customer who forgot about a $30 membership often disputes the last three months at once. That is $90 in charges, three fees, and three marks on your record from a single unhappy customer.
I run a small membership. Does this really apply to me?
Yes, and the math is harsher for small businesses, not easier. Chargeback limits are measured as a percentage of your sales count, not in dollars. A membership site with 200 monthly charges that gets three disputes is at 1.5% for that month, which is Visa’s line for excessive. A big company with the same three disputes would not even notice.
Chargebacks911’s Field Report found small businesses are the least concerned about friendly fraud of any merchant size. I do not read that as small businesses being safer. I read it as nobody having explained the math to them.
Frequently asked questions
Can a customer dispute a subscription charge months later?
Yes. Each monthly charge is its own transaction with its own dispute window, generally up to 120 days from the charge on Visa. That is why a forgotten subscription so often produces several disputes at once.
Should I require customers to call to cancel?
No. Visa’s rules require an online cancellation option that is as easy as unsubscribing from an email, and the customers who cannot find it are the ones who dispute. Keep the phone number available, but never make it the only way out.
Does a refund count against me the way a chargeback does?
No. A refund is a transaction you initiate, and it does not count toward your dispute score. A chargeback is filed by the bank and does. If you want the full picture of what happens to your money in a dispute, I wrote about it in What Is a Chargeback?
Why do my recurring payments keep failing, and does that cause chargebacks?
Cards expire, get reissued, or get replaced after fraud, and the subscription charge bounces. A failed payment is not a chargeback, but the retry often is, because the customer sees a charge they had already assumed was cancelled. Ask your processor whether you are set up for automatic card updating. It is a topic I will cover on its own soon.
Want to know where you stand?
If you are not sure how many disputes you are actually getting, what you are paying for each one, or whether you are set up on the programs that stop disputes before they count, send me three months of merchant statements. I will read them and tell you plainly. Request a free statement review here. It usually takes a few days and there is no obligation.
About the author: Julie Franke is a Certified Payments Professional (CPP) and has led Electronic Merchant Services since 2015. She has worked in payments since 2009 and specializes in helping high-risk and high-ticket businesses get approved, stay approved, and keep their money moving. EMS has served business owners since 2001.