Drop-shipper vanished? How to handle the chargebacks

When a drop-shipper vanishes, the chargebacks still land on your store, because the cardholder disputes the business that took the payment. Act before day 30 from the order: refund every order without delivery confirmation now, and fight only the disputes where carrier tracking shows the goods arrived.

Who is responsible when the supplier disappears?

The bank disputes the store that took the payment, not the supplier. Picture a store selling garden furniture that takes 60 orders in a fortnight, passes each to a supplier who ships direct, then finds the supplier's email bouncing and its website gone. Three weeks later the first chargebacks arrive saying the goods never came.

Waiting to see whether the supplier resurfaces is the expensive choice. The bank is disputing the store, and the store is the only party that can still end the dispute cheaply.

We found no network or processor document that assigns liability for drop-shipped goods to a supplier, and none that says a supplier's disappearance excuses the merchant. Your supplier agreement may give you a remedy, so have a lawyer read it, but the cardholder and the issuer will never see it.

What does US law expect from the seller?

The FTC's Mail, Internet, or Telephone Order Merchandise Rule applies to the seller, which is the store that took the order. It requires a reasonable basis to ship within 30 days of a properly completed order. A seller without records of its shipping systems is presumed to have had no such basis.

A drop-shipping store usually does not hold those records, because the supplier does. A supplier that has gone silent cannot hand them over.

The rule also requires the seller to offer, without being asked, a choice to accept a delay or cancel for a prompt refund. For a delay of up to 30 days, silence counts as consent. For a longer or unknown delay, the order is cancelled unless the buyer agrees within 30 days of the original deadline, and refunds are due within 7 working days of the buyer becoming entitled to one.

How long do customers have to dispute?

Under Visa reason code 13.1, the code for goods not received, the issuer has 120 days from the processing date or from the last date the cardholder expected delivery, capped at 540 days from processing. If the order gave no expected date, the issuer waits 15 days before it may dispute.

Your real deadline is shorter than the bank's. A store that stays silent for 30 days risks breaching the FTC rule long before any bank deadline arrives, and hands the cardholder a clean complaint too. Count 30 days from each order date and act inside that window.

Which disputes are worth fighting?

Only the orders with carrier delivery confirmation are worth defending. Stripe asks that shipping evidence show the delivery date and the full delivery address, not just a city and postal code. Sort the 60 orders into those with that proof and those without.

The first group can be answered with the tracking file, a copy of the receipt and a short statement. The second group has no defence worth the fees. Stripe charges $15 when a dispute is received and does not return it, and adds another $15 if you contest, returned only on a win.

Timing matters as well. Stripe says a merchant cannot refund outside the dispute process while a dispute is open, so any customer who files while you delay locks that order into the dispute. Send the refunds before any bank files. The evidence rules for this code are on the Visa 13.1 reason code page.

Takeaway: what to do this week

1. Export every order the supplier handled. Include customer name, address, order date and carrier tracking.
2. Refund orders without delivery confirmation, oldest first. Keep each refund's date on file.
3. Offer customers a clear choice. A plain message offering a refund or a replacement from another supplier meets the FTC rule's requirement to offer a choice to cancel.
4. Answer disputes where tracking exists, accept the rest. Before the next launch, hold a copy of the supplier's shipping records or a contract that gives you access, since the rule's presumption falls on the seller.

Sources: eCFR, 16 CFR Part 435, sections 435.1(b), 435.2(a) and 435.2(b); Visa Core Rules and Visa Product and Service Rules, edition 18 April 2026, Table 11-92; Stripe Docs, "How disputes work"; Stripe Docs, "Dispute evidence best practices". All checked 24 October 2026.