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Merchant Protection Program

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1. Introduction

This document explains Kustom's Merchant Protection Program, which helps protect you, the merchant, from fraudulent disputes or chargebacks. The program allows you to retain the full purchase amount for eligible orders, subject to the terms outlined below. There is no limit to the number of orders you can claim protection for.

Kustom reserves the right to modify this Merchant Protection Program at any time.

All terms used here are defined in the Cooperation Agreement between you and Kustom. The Merchant Protection Program applies to Customer Claims, which arise in the following dispute scenarios:

  • Item not received The customer disputes a transaction with their card issuer, claiming that the purchased item(s) were not received.
  • Significant deviation The customer disputes a transaction with their card issuer, asserting that the received item(s) significantly deviate from what was ordered.
  • Unauthorized transaction The customer disputes a transaction with their card issuer, alleging that they did not authorize the purchase.

The above situations are collectively referred to as Customer Claims under this program.

2. General Requirements

For a Customer Claim to be eligible for the Merchant Protection Program, all of the following requirements ( General Requirements ) must be met, as well as any applicable additional requirements related to specific items or Customer Claims, as set out in Section 3-4 below.

  1. You have provided proof of delivery which meet the requirements set out in Annex: 6. Establishing Valid Proof of Delivery ; and
  2. You have provided an answer which meets the requirements set out in the Section 5. Significant deviation ; and
  3. You have either (i) shipped the ordered item(s) to the Customer’s shipping address, as approved by the the card issuer at time of purchase; or (ii) handed out the goods in accordance with the requirements set out in Section 4.2. Additional requirements for Buy online, pick up In-store. For clarity, the Merchant Protection Program does not apply for goods which have been originally shipped to the Customer’s shipping address, but later been redirected to a different shipping address;


EXCEPTION :

3.1. If the shipping carrier tries to deliver to the original shipping address but fails to do so, they are entitled to take it to their pickup point for collection (within 10km of the original shipping address); and

3.2. If a Customer requests the re-direction of the package to a designated pickup location (within 10km of the original shipping address) directly from the carrier.

  1. You have responded to Kustom’s requests for documentation and other necessary order related information by the deadline set in Kustom’s correspondence with you. If you do not respond to Kustom’s requests within the time requested, the Merchant Protection Program will not apply in relation to such Customer Claim(s); and

    IMPORTANT     : Responses requiring more time will not be considered as valid. A valid response includes the information requested within the deadline
  2. The order must have been approved by Card issuer at the time of purchase.

3. Guidelines

The section below includes guidelines for how Kustom expects you to act upon any Customer Claim(s) you may receive to ensure smoothness of the dispute process for both you and the Customer.

  1. ‍Refunding Customers:
    • If a customer claims they did not receive their order, and you cannot prove delivery, you must issue a full refund.
    • If a customer is dissatisfied with the order (e.g., significant deviation), you should offer a reasonable resolution, such as a replacement or refund.‍
  2. Shipping and Delivery:
    • If the customer paid extra for express shipping, you must refund the shipping costs if delivery is delayed.
    • If a package is lost in transit (i.e., no movement on tracking for 2 weeks for domestic orders), you must offer a full refund or replacement.
  3. Order Documentation:
    • Keep proof of delivery documents for 270 days after the activation date of the order.
    • Make sure your website is operational and includes your return policy, shipping policy, and estimated delivery time.
  4. Customer Communication:
    • You must provide clear communication to customers regarding returns, refunds, and order status, in line with the European Consumer Rights Directive.

Kustom determines, in its reasonable discretion, whether the contested Customer Claim(s) qualifies for the Merchant Protection Program. Kustom will make a decision, based on the coverage and eligibility requirements, any information or documentation provided during the resolution process, and/or any other information Kustom deems relevant and appropriate under the circumstances.

4. Additional requirements

Additional requirements for:

  • Intangible goods
  • Buy online, pick up in-store
  • Pick up in-store

4.1 Intangible Goods

For Customer Claim(s) related to sales of intangible goods to be eligible for Kustom’s Merchant Protection Program, the sale must meet the General Requirements as set out in Section 2, and the following additional requirements:

The Merchant must have complied with any integration requirements provided by Kustom;

  • For the sale of intangible goods like digital goods or licenses for digital content to be eligible for the Merchant Protection Program the Merchant must provide proof of consumption of the goods AND/OR delivery of the digital product to the Customer - e.g. email delivery, login data.
  • For unauthorized purchases both consumption and delivery are mandatory. In case the Merchant can not prove consumption of a service due to the departure/event/start date has not passed yet, the Merchant shall cancel the purchase and provide a refund on the statement.

4.1.1. Travel ticket specifics:

  • Only Customer Claim(s) regarding goods not received and unauthorized purchases are covered by the Merchant Protection Program.
  • The Merchant has to provide Extra Merchant Data.

4.2 Buy online, pick up in-store

For a Customer Claim for Buy online, pick up in-store to be eligible for Kustom’s Merchant Protection Program when distributing products and services in physical stores, the Merchant must meet the General Requirements set out in Section 2, and the following additional requirements:

  • Goods may only be distributed to the Customer or to a person authorized by the Customer;
  • The Merchant shall verify the ID of both the Customer, and, as the case may be, recipient of the goods;
  • The Merchant must provide proof of customer pick up with the customer's name, date and time of pick up, and the list of items collected.
  • The Merchant has to collaborate with us by providing the necessary data points either via Extra Merchant Data or sending information in case of a dispute for identifying Buy online and pick up in-store orders which is including evidence that the purchase was completed and the Customer received their goods.
  • If the Customer is a company, the recipient of the goods shall present a power of attorney evidencing that such person is authorized to pick up the goods and a copy of such power of attorney shall be made and stored for at least nine (9) months.

5. Significant deviation

A significant deviation occurs when the item received by the customer does not match the description provided on your platform or falls below the expected quality. Examples of significant deviations include, but are not limited to:

  • ‍Incorrect Item: The customer receives a completely different product than what they ordered.
  • Damaged or Defective Item: The item is received in a damaged or broken state, or fails to work as advertised.
  • Wrong Colour or Size: The item is a different colour, size, or variant than what the customer purchased.
  • Missing Parts or Accessories: The product is missing critical components, accessories, or parts that were advertised as part of the order.
  • Counterfeit Products: The customer receives a product that is not genuine, as indicated in the product listing.
  • Not as Described: The product significantly deviates from the description in a way that affects its intended use or functionality.

In any of these cases, the merchant is required to offer the customer a reasonable solution, which could include:

  • ‍Replacement : Sending a replacement for the item that meets the original description.
  • Repair : Providing a repair or fixing the defective item.
  • Refund : Issuing a refund for the full purchase price if the customer prefers not to accept a replacement or repair.

Examples of Unreasonable Solutions:

  • ‍Compensation in the form of a gift voucher when the customer explicitly requested a return.
  • Return instructions that include return costs for the customer.
  • Negotiating a discount when the customer has clearly requested a return.

You are protected from the following claims:

  • ‍Correctly Described Defects : If the defect in the purchased goods was clearly described by you in the item listing. For example, a phone with a broken screen that was highlighted in the description.
  • Expectation vs. Reality in Food : If the ordered food does not meet the customer's personal expectations but meets general requirements. For example, the ice cream isn’t as creamy as the customer expected, or the burger doesn't look exactly like the advertised picture.
  • Quality Expectations vs. Price Paid : If the quality of the product does not meet the customer’s expectations but is aligned with the price paid. For example, the customer bought a $50 dress but expected the same quality as a $500 dress.
  • Custom or Made-to-Order Items : If the customer ordered the wrong colour, material, or configuration for a ‘made-to-order’ item.
  • Product Performance Expectations: If the product does not meet the customer’s expectations but matches the description. For example, a TV with lower screen resolution than expected, but it matches the advertised description.
  • Used Items with Described Imperfections : If the product has minor imperfections like scratches, and it was clearly described as ‘used’ before purchase. For example, a used table with some scratches that was disclosed in the listing.
  • Customer Refusal of Reasonable Compensation : If you offer reasonable compensation and the customer does not accept it, and Kustom determines the compensation to be fair. For example, a partial refund or repair option that the customer declines.

IMPORTANT : Kustom will decide, in its reasonable discretion, based on evidence provided by both the customer and the merchant, whether the claim of faulty goods is valid.

  • If an agreement has not been reached within 21 days of the dispute being escalated, and the order is determined to be significantly deviating according to the requirements outlined above, the decision regarding compensation will be made by Kustom.
  • If the order is considered to have significantly deviated and is requested for return, you, the merchant, are responsible for covering the return shipping costs.
  • If the compensation offered is deemed unreasonable or the customer does not accept it, you must offer the customer a free return for a replacement, repair, or refund.

Exceptions to Claim:

  • If the customer has acknowledged the deviation before purchasing (e.g., a “scratch and dent” item or a product explicitly sold as “refurbished”), the claim for significant deviation will not be applicable.
  • If the customer ordered a product that was sold with a clear and obvious defect (e.g., damaged items listed at a discount), they are not eligible for protection under this program unless they have not been notified of such defects prior to the purchase.

Annex

6. Establishing valid Proof of Delivery

Merchants must provide proof of delivery (POD) from the shipping carrier in order for claims to be processed.

6.1 Physical Goods

The following details are mandatory for proof of delivery for physical goods:

  • Date of Delivery : Must include the date (YYYY-MM-DD) and delivery status.
  • Recipient Address : The delivery address should include city/province, postal/zip code (or international equivalent), street name, and number. The address needs to match the shipping address provided at checkout.
  • Orderer’s Full Name : The name of the person who ordered the goods must match the name on the order.
  • Recipient’s Full Name : The person who received the package must also be listed by name. For contactless deliveries , a recipient name is not required.
  • Tracking ID : The tracking ID from the last-mile carrier should be included.

6.2. Signature of Receiver for Disputes Above 700 EUR (or equivalent) *

Required if:

  • An order is split into multiple shipments, and one shipment’s value exceeds €700 (or equivalent).

Not required if:

  • Each individual shipment has a value below €700 (or equivalent).
    ** In countries with BankID or equivalent ID systems, this can act as a signature. The proof of delivery must clearly show that the customer verified their identity using BankID or an equivalent ID.*

6.3. Protection from Claims

You will not be held accountable for the following claims, provided the proof of delivery meets the mandatory requirements above:

  • The customer received the goods as outlined in the documentation.
  • The order was delivered according to agreed terms & conditions.
  • The customer did not pick up a customized or non-refundable item when notified.

IMPORTANT : Your choice of carrier and shipment options significantly impact your ability to meet the proof of delivery requirements. Ensure your carrier can provide a ‘delivered’ status with an address confirmation, especially for international shipments. If the proof of delivery cannot be consolidated in one document, Kustom will accept a combination of documents with mandatory information (e.g., screenshots of the merchant system, delivery company screenshots, etc.).

Note: A "contactless delivery" refers to a delivery where no physical interaction occurs between the delivery company and the customer, such as deliveries to storage boxes or mailboxes.

6.4. Pick-up Points

  • Proof of delivery must show that the package was collected from a pick-up point.
  • If the parcel has been redirected to a pick-up point, the tracking must display the pick-up point address. This address does not have to match the approved shipping address at checkout, but the pick-up point must be within a 10km radius of the original shipping address.

7. Proof of Delivery for On-Demand and High-Frequency Merchants

(e.g., food/grocery delivery, fast-moving delivery services, mobility. Examples of such merchants and delivery partners include but are not limited to Uber, Getir, TakeAway, and similar services).

Merchants offering on-demand or high-frequency services must provide the following details as proof of delivery:

  • Date of Delivery : Must include the date (YYYY-MM-DD) and delivery status.
  • Recipient's Address : A full address showing the city/province, country, postal/zip code (or international equivalent), street name, and number.
  • Recipient’s Details : The full name of the person receiving the delivery, along with their contact details.
  • Time of Delivery : Must include the exact time of delivery (DD-MM-YY HH:MM).
  • ‍Delivery Choice : Indicate if the delivery was made directly to a person or if it was a "no-contact" delivery (e.g., left at the door).
  • ‍Additional Documentation : It is strongly encouraged to provide a GPS map showing the delivery route or a picture of the item(s) delivered at the customer’s address to confirm the successful delivery.

IMPORTANT : If you use on-demand delivery services, you will need to provide the above Proof of Delivery to qualify for coverage under the Merchant Protection Program. **

8. Proof of Delivery for Intangible Goods

For intangible or digital goods, proof of delivery means compelling evidence to show the item was delivered or the purchase order was fulfilled. Compelling evidence could include a system of record showing the date (YYYY-MM-DD) the item was sent and that it was either:

  • Electronically sent to the recipient, including the recipient’s address (email, IP, etc.), where applicable; or
  • Received or accessed by the recipient.

The proof of delivery should provide enough details to match it to the order, including showing that the recipient matches the shipping information approved at checkout. The value of gift cards must be displayed on the proof.

‍IMPORTANT : Any purchases of services such as beauty treatments or purchases of someone’s time, such as private tuition, are not covered by the agreement.

Examples of intangible goods covered by the Merchant Protection Program : Subscriptions to streaming platforms, online courses, DIY guides, gift cards, event tickets such as concert tickets, and travel purchases such as flight tickets.

  • Only goods not received and unauthorized purchases are covered by the Merchant Protection Program.

9. Proof of Delivery for ‘Part Order Not Received’ Claims

When handling claims for part orders not received, you must provide compelling evidence to demonstrate that all items charged were delivered. This proof should include:

Required Evidence for Part Order Claims:

  • A Proof of Delivery for the full order, similar to the requirements for a full order, and
  • Compelling evidence that all items in the order were delivered. This could include, but is not limited to:
    • Weight of each article, matching the weight on the shipping note
    • CCTV footage or photography showing the package with all articles included in the delivery
    • A copy of the conversation with the customer proving they received the full delivery
    • A delivery note, such as a packing list, specifying all the items included in the shipment (only for non-sensitive goods)
    • Proof of fraudulent activity by the customer
    • An affidavit from the person who packed the order confirming that all items were included

IMPORTANT : Kustom will decide, in its reasonable discretion, based on the evidence provided by both the customer and you, whether we consider the "Part Order Not Received" claim to be valid. The examples provided above are not mandatory but serve as suggestions for what could be considered compelling evidence.

10. Exceptions

Customer claims will not be eligible for coverage under Kustom’s Merchant Protection Program if they involve any of the following:

  • Items equivalent to cash.
  • Services or private tuition.
  • Donations.
  • Purchases of financial products or investments of any kind.
  • Purchases made using an In-store card.

11. How to win a case?

After up to two contacts with the Merchant, a decision will be made based on the evidence provided by both the Customer and the Merchant. The Merchant must address the Customer’s claim directly and provide supporting evidence, such as proof of delivery or communication showing the claim has been resolved. The detailed requirements can be found above.

11.1 Goods Not Received

Decision in Favour of the Customer:

  • The Merchant did not respond within the required deadline.
  • The Merchant provided no or invalid Proof of Delivery (e.g., requirements not fulfilled, goods still in transit, or not sent).

Decision in Favour of the Merchant:

  • The Merchant provided valid Proof of Delivery, meeting the requirements outlined in Annex, Section 6: Establishing Valid Proof of Delivery.
  • The Customer refused delivery or did not pick up the order.

11.2 Faulty Goods

Decision in Favour of the Customer:

  • The Merchant did not respond within the required deadline.
  • The Merchant did not provide a prepaid return label for a valid claim.
  • The Merchant did not offer a reasonable solution* (see Section 11.4 for more details).
  • The Merchant did not resolve the issue within 21 days of the first contact.

Decision in Favour of the Merchant:

  • The Customer did not respond within the required deadline.
  • The Merchant already refunded the order and provided a return label.

11.3 Unauthorized Purchase

Decision in Favour of the Customer:

  • The Merchant did not respond in a timely manner.
  • The Merchant provided no or invalid Proof of Delivery.
  • The Merchant did not fulfil the delivery requirements (e.g., goods still in transit, or not sent).

Decision in Favour of the Merchant:

  • The Merchant provided valid Proof of Delivery within the required time frame and followed the Merchant Protection Program terms for unauthorized purchase claims.

11.4 Additional Information

11.4.1. Dropshipping Merchants

Return to China / Return instructions

  • Unless a Merchant is providing a prepaid return label, they should have the return address and return process published clearly on their website If customers have to cover the costs of the return, this must be clearly stated on the website. It is not allowed to have 'email us' or 'fill in this form' without explicitly including the return address.
  • Return policies must be compliant with applicable local regulations for consumer protection.

Discounts

  • Merchants are not allowed to negotiate discounts during our disputes process when consumers would like to return the goods.

Quality of goods

  • Faulty goods are items that the Customer received that are faulty and/or significantly deviates from what was advertised. This includes cases where the product’s quality is misrepresented in the advertisement or obviously misleading Customers, e.g.:
    • The item has visible wear, such as stains or seams coming apart;
    • The product does not work as intended;
    • The colour of the item is different from what was purchased;
    • The fabric is different or not as described in the product listing;
    • The size of the item received is different from what was ordered.
  • Merchants are accountable to provide prepaid return labels when goods significantly deviate from description.

11.4.2 Empty Boxes

  • Empty parcel delivery will generally be decided based on the proof of delivery document. If the POD clearly states damage, empty box or something that would indicate the box became empty during shipment/delivery, it would be decided in favour of the Customer. Otherwise, the decision will be in favour of the Merchant.