Respond to disputes for canceled recurring transactions
About disputes for cancelled recurring transactions
A dispute for canceled recurring transactions refers to situations where a customer claims they canceled the payment method on file for the transaction but didn’t cancel the service itself.
Keep in mind that cancellation requests must be accepted in any form, whether by email, phone, or in-person. After a customer cancels their payment method, you must request an alternative payment method for the transaction.
In these situations, you need to provide evidence showing either that no cancellation request was received or that the charge was legitimate. Providing the correct documentation increases your chances of winning the dispute and recovering your funds.
To avoid these types of disputes, you must stop billing once a customer cancels their payment method — even if there's a contract in place.
Before you begin
You can respond to disputes from your Square Dashboard.
Customers aren’t required to provide proof of cancellation. Your records must show that no cancellation request was received.
Having a "no cancellation" policy is not a valid dispute defense. Customers can always cancel their payment method for a transaction.
Dispute evidence must be legible, verifiable, in English or with a translation, and clearly linked to the disputed transaction. Audio and video evidence isn’t accepted.
Identify the dispute reason and prepare evidence
Review the reason for the dispute to determine the applicable best practices and supporting documentation that’s needed before responding.
These types of disputes generally occur for gym and fitness, professional services, health and beauty, or digital marketing businesses. If a customer claims they canceled a recurring payment method but you have no record of a cancellation, prepare the following documentation:
- Documentation showing no cancellation request of payment method was received through any channel.
- A complete communication history of customer interactions reflecting no payment method cancellation request.
- Active usage evidence proving that the customer continued to use the service after the claimed cancellation date.
- Proof that the customer was asked to provide an alternative payment method but failed to do so.
These types of disputes generally occur for gym and fitness, professional services, health and beauty, or digital marketing businesses. If the cardholder contacted you to cancel the services, prepare the following documentation:
- Cancellation records, communication evidence, and contract terms to demonstrate that the customer canceled the service and not the payment method, clearly showing the distinction between service termination and payment cancellation.
- Proof that the customer was informed about the difference between cancelling a service and cancelling a payment method.
These types of disputes generally occur for gym and fitness, professional services, health and beauty, or digital marketing businesses. If a customer claims they canceled a recurring payment but the charge was an installment payment for a fixed term, prepare the following documentation:
- Provide a signed contract or signed digital agreement for the fixed term installment plan.
- This agreement must explicitly state the total program cost, the number of installment payments, the amount of each installment, and the fixed duration (e.g., “for 12 months from January 1, 2024, to December 31, 2024”).
- A screenshot of the online checkout page showing a “click to accept” checkbox next to the full terms of the installment plan.
- Evidence showing the payment is part of a predetermined installment plan, such as an installment schedule.
- Supply a detailed installment schedule that was provided to the customer at the time of purchase, outlining the date and amount of each of the monthly payments
- Transaction records showing that the transaction isn’t for a recurring service but rather an installment payment.
- Provide internal billing records, transaction logs, and customer statements that consistently label the charges as “Installment Payment - XXXXX” and clearly indicate “X of Y” (e.g., “Installment 4 of 12”).
- Proof that the customer agreed to the full installment payment schedule.
Submit your dispute documentation
Once you’ve compiled the supported documentation for your dispute, submit them in your Square Dashboard. Learn how to submit your documentation and manage payment disputes.