In e-commerce, high chargebacks don't just eat into profits, they threaten the viability of the business itself. A chargeback rate above 1% often triggers scrutiny or even blacklisting from credit card processors. Once flagged, a merchant risks losing the ability to accept payments altogether, regardless of product quality or customer satisfaction. A well-intentioned, fast-scaling e-commerce brand suddenly found themselves in exactly this situation: flagged for excessive chargebacks with rates peaking at 8%, well above the industry-standard 1% threshold.
The company was days away from losing processing capabilities entirely. Each chargeback cost the business $25 in penalties regardless of order size or value. Monthly losses from fees alone were exceeding five figures, not including lost inventory or labor. The merchant processor had issued a formal warning: reduce chargebacks within 30 days or face termination. Leadership was losing money, trust, and time, and they were still running paid traffic daily, unsure how to intervene without collapsing sales.
Pholus was brought in not just to fix the numbers but to stabilize the business without introducing panic or costly rebrands. What appeared to be a customer service problem was actually an order flow design problem. Customers weren't trying to defraud the company. They were genuinely confused about what they had ordered, and that confusion was destroying trust and triggering disputes that could have been prevented with better clarity at the point of purchase.
This case study is relevant if you're facing:
Chargeback rates climbing above industry thresholds that trigger processor warnings or termination. Your chargeback rate has exceeded 1%, and you've received formal notices from your payment processor threatening account closure if rates don't improve within a specified timeframe. Each chargeback carries financial penalties, and the cumulative cost is draining resources while your ability to accept payments hangs in the balance. You need to reduce chargebacks quickly but don't know whether the problem is fraud, customer service, product quality, or something else entirely.
Order flows or checkout processes that create confusion rather than clarity for first-time buyers. Customers are completing purchases but later claiming they didn't authorize transactions, didn't receive what they ordered, or don't recognize charges on their bank statements. The disputes aren't malicious fraud but rather genuine confusion created by ambiguous order processes, unclear quantity selections, auto-filled fields, or confirmation pages that don't adequately summarize what was purchased and why the charge appears as it does.
Payment processors threatening termination while you're still actively running paid advertising and acquiring customers. You're caught in a bind: you need to continue generating revenue to survive, but every new customer acquired through paid traffic carries chargeback risk that pushes you closer to processor termination. You can't afford to pause campaigns entirely, but you also can't afford to continue current operations unchanged. You need rapid intervention that reduces risk without shutting down revenue flow.
Customer service teams overwhelmed by disputes that could have been prevented earlier in the customer journey. Your support staff spends significant time responding to refund requests, chargeback notifications, and customer complaints about orders they claim they didn't intend to place. The volume of reactive firefighting prevents proactive improvement, and you recognize that fixing the problem requires going upstream to the point where confusion originates rather than continuing to manage consequences after transactions are complete.
Suspicion that the root cause is user experience design rather than product quality or customer intent. Your product has solid market demand, your ads are performing well in terms of clicks and initial engagement, and customers seem genuinely interested. But something breaks down between interest and post-purchase satisfaction. You suspect the issue is in how the offer is structured, how the checkout flow guides decisions, or how the confirmation and fulfillment process sets expectations, but you need external perspective to identify what's actually causing the trust breakdown.
We conducted a forensic funnel review that identified ambiguity as the root cause, not fraud or product failure. The issue wasn't that customers were attempting to defraud the company or that the product failed to deliver value. The order process was confusing first-time buyers in ways that destroyed trust after purchase. Customers were unintentionally selecting multiple items due to auto-filled quantities, misinterpreting "Next" buttons as skipping optional add-ons when they were actually agreeing to them, and reaching confirmation pages that lacked clear summaries of what they were purchasing. In many cases, customers only realized what they had ordered when they saw their bank statement, and by then trust was gone and chargebacks felt justified.
We mapped behavioral triggers by analyzing customer support logs and chargeback reason codes to understand when confusion occurred. We dug into customer service transcripts and payment processor data to identify patterns. The overwhelming majority of chargebacks were flagged as "unauthorized transaction" or "item not received." When products genuinely weren't delivered, the fix was logistical. But most of the time, these were trust breakdowns where customers didn't remember what they ordered or believed the transaction wasn't authorized because the funnel had failed to reassure or clarify at critical decision points. We traced these patterns to specific moments where language, sequence, and design didn't match customer expectations.
We implemented three core changes: funnel redesign with quantity checkpoints, visual confirmation that reinforced legitimacy, and customer service rescripting. We restructured the offer flow to include quantity review checkpoints that required active confirmation, simplified order summaries that appeared before final purchase, and an unmistakable "Review Your Order" screen that mirrored product, quantity, and shipping estimates in plain language. The thank-you page was redesigned to reinforce legitimacy and reduce buyer remorse by clearly restating what was ordered and when it would arrive. We also added a visible charge descriptor reminder on the final screen so customers could identify the transaction on their bank statement, cutting down "I didn't recognize this" disputes. Customer service representatives were retrained with new scripts focused on acknowledgment, non-defensiveness, and immediate confirmation steps to preempt disputes before they became chargebacks.
We preserved revenue flow by implementing changes without pausing campaigns, turning crisis containment into sustainable operations. The improvements were rolled out gradually to test impact without disrupting paid traffic or revenue generation. Within four weeks, the chargeback rate dropped from 8% to 2%, a 75% reduction that bought time and demonstrated clear movement in the right direction. While still above the industry standard, this improvement was sufficient for the payment processor to formally rescind the termination warning. By month two, the client had stabilized below 1.5%, and by month three they were operating within fully compliant ranges. The refund rate also dropped as customers became more certain about their orders, and support tickets shifted from reactive complaints to order clarifications and upsell questions.
The full case study details the forensic funnel review methodology that identified confusion points rather than fraud patterns, the behavioral trigger mapping process that analyzed support logs and chargeback codes to understand customer psychology, the three-part implementation strategy that reduced chargebacks without disrupting revenue, and the gradual rollout approach that allowed testing and iteration under time pressure.
If your chargeback rates are climbing toward processor termination thresholds, your checkout processes create confusion that destroys post-purchase trust, or you're caught between needing to continue revenue generation and needing to fix systemic problems, Pholus provides rapid funnel diagnostics, user experience redesign, and operational stabilization that reduces chargebacks without pausing business operations.
This expertise also applies when customer service teams are overwhelmed by preventable disputes, when you suspect user experience design is the root cause rather than product quality or fraud, or when payment processors have issued warnings and you need measurable improvement fast to avoid losing the ability to accept payments entirely.