A Winning Formula to Handle Chargeback Disputes
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 e-commerce sector, and the true cost of them goes far beyond the disputed charge amounts—chargebacks can end up costing you up to twice the cost of the original transaction.
It would be great if there was a surefire, failsafe way to challenge and prevail against illegitimate chargebacks, but there are many variables at play in chargeback representment. 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. 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.
Know Your Reason Codes
Chargeback representment is won or lost based on the quality and relevance of the documentary evidence you provide. In order to compile the right kind of evidence, you need to know why the chargeback was filed in the first place. 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.
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 with reason code 55: "non-receipt of merchandise." 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 practically 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.
Compile Compelling Evidence
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.
Some important advice: 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 any real context in which to make sense of the evidence you're providing.
Keep your letter to one page, but don't just use boilerplate language—write each letter to the specifics of the case, as persuasively as you can.
Explain how the evidence you're submitting relates to the claims you're making.
There's Always Outsourcing
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 experience and the 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.
Want to learn more about fighting chargebacks? In order to fight chargebacks effectively and recover lost your revenue, you must first understand how chargebacks are filed and how the dispute process works.
Download your copy of The Smart Way to Fight & Recover Chargebacks to learn how to fight and recover your chargebacks the "smart" way.