Chargeback Recovery

A Winning Formula to Handle Chargeback Disputes

A Winning Formula to Handle Chargeback Disputes

Table of Contents

  1. How do I dispute a chargeback?
  2. Maintain records for use in chargeback representment
  3. Know your chargeback reason codes
  4. How to compile compelling evidence for representment
  5. Write a winning rebuttal letter
  6. When to outsource chargeback management
  7. How long does a merchant have to dispute a chargeback?
  8. Why is customer service important for chargeback prevention?
  9. Why is a rebuttal letter so important?

Merchants who want to protect their bottom line and keep in good standing with their payment processor know how important it is to prevent and fight chargebacks. Chargebacks are a rapidly growing problem in the eCommerce sector, and the true cost of them goes far beyond the disputed amounts. For most merchants, chargebacks can end up costing more than twice the amount of the original transaction.

It would be great if there was a surefire way to challenge and prevail against illegitimate chargebacks, but unfortunately, chargeback representment is more complicated than that. Each card network and bank has their own set of rules, and a lot depends on the specific reason code attached to the chargeback you're fighting.

There's no magic bullet that works against any chargeback, but there is a winning formula for chargeback representment that will give you the best odds of success if you follow it correctly. While not entirely consistent, the banks are generally pretty clear on what kind of evidence they want to see and how you should present it. If you stick to the formula, you should see good results in getting false and fraudulent chargebacks dismissed.

To give them the best chance of winning chargeback disputes, merchants should keep thorough transaction records, understand chargeback reason codes, present compelling evidence, and write an effective rebuttal letter.

How do I dispute a chargeback?

Merchants can dispute chargebacks by responding to the issuing bank before the deadline with evidence that proves the transaction was legitimate and the cardholder's claim is false.

In order to win these disputes, there are a few things merchants need to do:

  • Maintain good records. In order to have the evidence you need to win representment, you'll need to record the details of each transaction you process, including information about the customer, identity verification methods and results, shipping information (if applicable), etc.
  • Know your reason codes. The reason code of any chargeback gives you an idea of what the claimed problem was from the cardholder. if this is not a legitimate problem, you can begin to organize your records to help your chargeback dispute. 
  • Present compelling evidence. In order to convince the issuing bank to reverse the chargeback, you'll need to prove to them that you upheld your end of the deal as the merchant and the transaction was legitimate.
  • Write an effective rebuttal letter. Your rebuttal letter summarizes your case and the evidence you've provided to support it. It's the first thing the bank will look at and can influence how they see the rest of the evidence.

Next, we'll dig into the specifics of each of these topics and explain how to maximize your chances of winning your chargeback disputes.

Maintain records for use in chargeback representment

New call-to-actionObviously, if you want to convince the issuing bank to reverse a chargeback, you'll need evidence. While we'll go over what evidence to present later on, you won't have that evidence in the first place if you're not keeping good records. Ideally, you should be recording all the information you have about every transaction and storing it in such a way that you can find all the info about a particular transaction when you need it.

While the information you need and have access to will vary depending on the type of business and the tools and systems in place, here are some examples of records that could help you win a chargeback dispute:

  • AVS/CVV match
  • Shipping records and delivery confirmation
  • IP address
  • Login records
  • Previous purchases
  • Emails to and from customer
  • Notes detailing customer service phone calls
  • Proof the customer used the product or service

Know your chargeback reason codes

Chargeback representment is won or lost based on the quality and relevance of the evidence you provide. In order to compile the right kind of evidence, you need to know what justification the cardholder gave to the bank for requesting a chargeback. The reason code will tell you this.

Each of the major credit card networks — Visa, MasterCard, American Express, and Discover — has their own set of reason codes, which you can look up using this handy tool.

When you receive notification of a chargeback, the first thing you want to do is look up the reason code.

Then you can research the transaction to see if the chargeback appears to be valid or not.

For example, you might get a chargeback on a Mastercard purchase where the reason code is "4853: Goods or services not provided." If you can look up the order and confirm via the shipping tracking number that it was indeed delivered to the customer (and signed for), you have a slam-dunk case to fight that chargeback.

Other reason codes can be more ambiguous and harder to fight, but finding out the reason for the chargeback is the first step in the process.

How to compile compelling evidence for representment

Once you know the reason for the chargeback, you can start putting together the evidence that will show the bank that the transaction was valid. Some of the documents you might assemble for chargeback representment include:

  • AVS and CVV match. Transaction receipts, available from your payment gateway, can show AVS and CVV matches, which can be used to rebut false claims of stolen card purchases.
  • Invoice copy. This should contain all the information about what was sold, when, and to whom, with addresses, shipping information, and other data that will confirm the details of the transaction.
  • Tracking confirmation. Don't just send tracking numbers to the bank, they won't have time to look them up. If you need to prove that an order actually made it to the customer's door, print out the confirmation page that shows when it was delivered.
  • Your terms and conditions. Clear documentation of the purchase terms and return policy your customer agreed to can help you win representment cases where they're saying you didn't fulfill your obligations.
  • Your checkout page. A "snapshot" of your checkout page should show that the customer checked a box indicating that they agreed to your terms and conditions.
  • Proof of usage. Sometimes, you need to prove that a customer actually received and used your product or service. In the case of an online service, you may have server data that shows that they logged in and accessed their purchase. You may even be able to find photos of the customer using your product on social media.

The evidence you provide should be tailored to the reason code for the chargeback. For example, if the cardholder claims they never received the product they ordered, submitting a pile of evidence proving it was the cardholder who authorized the purchase isn't going to get you anywhere.

Don't overwhelm the bank with stacks and stacks of marginally relevant evidence.

The documents you submit are going to be reviewed by a person who probably has hundreds of chargeback cases to look over, and little time to carefully scrutinize every document. Keep your paperwork lean and to the point.

Write a winning rebuttal letter

Last and perhaps most importantly, you have to write a concise rebuttal letter that explains why you're fighting the chargeback. Without a letter that lays out your argument in an easy-to-understand way, the person reviewing your case might not have the context they need to make sense of the evidence you're providing.

Keep your letter to one page if possible, Fight & Recover Chargebacks - Get The Guidebut don't just use boilerplate language — write each letter to the specifics of the case, as persuasively as you can. Explain how you know the chargeback is illegitimate and how the evidence you're submitting relates to the claims you're making.

When to outsource chargeback management

If you're overwhelmed with chargebacks, are getting close to your processor's chargeback threshold, or find that you're not succeeding in advocating for yourself in chargeback representment, it may be time to hire professionals to get your chargeback situation under control.

Chargeback management companies have the experience and know-how to deal with every imaginable type of case and should have staff on standby at all hours of the day, ready to respond to chargeback notifications well before the deadline to challenge them has passed.

When you're on your own, however, following the formula and crafting the best possible case for yourself can work wonders at fighting off chargebacks.


How long does a merchant have to dispute a chargeback?

Depending on the card network, merchants typically have 30-45 days to respond from the date of the dispute. This can also vary based on reason code.

Why is customer service important for chargeback prevention?

Chargebacks cost time and money. They also count against your chargeback ratio regardless of their merit.

Why is a rebuttal letter so important?

The letter summarizes the reason for your chargeback dispute and is typically the first thing the issuing bank will read when deciding on how to decide on your dispute.

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