Refunds, disputes and fraud

An email from a parent

Two weeks after launch, the studio gets this email: "There is a $4.99 charge from Superintelligent Game Studios on my card. I didn't buy anything!"

Maybe their child bought Hyper Shards without asking. Maybe they don't recognise the name on their statement. Or maybe a criminal really did use their card. Each case needs a different answer, and the wrong one can cost far more than $4.99. Real studios plan for refunds, disputes and fraud before launch.

Refund or dispute?

There are two very different ways money goes back to a buyer:

• RefundWe give the money back ourselves, from the Stripe dashboard. Quick and friendly. Stripe usually keeps its original card fee, at the time of writing.
• Dispute, or chargebackThe cardholder skips us and asks their bank to reverse the payment. The money is taken back from our Stripe balance straight away.
• The dispute feeFor US payments, at the time of writing, each dispute costs us US$15. Contesting it costs another US$15, returned if we win. Check Stripe's pricing page.

Why people dispute

When a cardholder disputes, their bank records a reason. Common ones are fraudulent (I didn't make this payment), unrecognized, product not received, duplicate (charged twice) and subscription cancelled.

Many "fraud" disputes are really friendly fraud: the real cardholder forgot, or a child used a parent's card without asking. A clear statement descriptor, the short name on the bank statement, helps a lot. "LEVELUP HYPERSHARDS" is easy to recognise. "LUS LLC 8821" is not.

Fighting a dispute with evidence

Stripe shows each dispute in the dashboard with a deadline, often one to three weeks away. To contest it, we send evidence to the bank through Stripe:

• The receipt and the email address used to buy
• Proof the buyer got and used the game, like our Firebase records showing the account unlocked Hyper Shards and played for hours
• The refund policy shown at checkout, and any emails with the buyer

The card's bank decides, which can take weeks or months. Contest only when the evidence is strong.

Stolen cards and card testing

Criminals buy lists of stolen card numbers, but they don't know which cards still work. So they run card testing: a bot makes hundreds of tiny purchases on a website to see which cards go through. A cheap item and an unprotected checkout make an easy target.

The real cardholders later spot the charges and dispute them, so each fake sale can turn into a $15 fee. Card networks like Visa and Mastercard watch every seller's dispute rate, the share of payments that become disputes. Above 0.75% counts as too high. Sellers with too many can be fined or lose their account.

Stripe Radar and 3D Secure

Stripe Radar is Stripe's fraud filter. It uses machine learning trained on payments across millions of businesses. It checks signals like: does the card's country match where the buyer is? How many cards has this device tried in the last hour? Then it blocks the riskiest payments. At the time of writing, the basic plan, Radar Lite, is free. Paid plans add a risk score and our own rules, like "block if the security code is wrong".

3D Secure asks the buyer to confirm in their banking app. If a confirmed payment is later disputed as fraud, the card's bank usually takes the loss, not us.

A clear refund policy

Most disputes can be prevented. Our refund policy is short and shown before anyone pays, for example: "Not happy? Email us within 14 days for a full refund." We reply quickly, and we refund when a parent tells us a child bought something by mistake. A $4.99 refund costs far less than a $19.99 dispute, and keeps our dispute rate low.

Consumer laws in some places give buyers extra rights, so check the rules where our players live. The team writes the policy together, and a parent agrees to it for the company.

Bolt says: Next lesson: pricing our games, putting everything in this stage together.