Chargeback Recovery

A Winning Formula to Handle Chargeback Disputes

A Winning Formula to Handle Chargeback Disputes

Table of Contents

  1. How to Begin with a Chargeback Dispute: Getting Started
  2. Know Your Reason Codes
  3. How do I Compile Compelling Evidence?
  4. Write A Winning Rebuttal Letter
  5. When Should I Consider Outsourcing
  6. Conclusion
  7. Frequently Asked Questions

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.

The best formula to manage chargeback disputes are being prepared with thorough records and security, understanding issuing banks and reason codes, compiling evidence and putting together dispute packages, and maintaining great customer service throughout. 

How to Begin with a Chargeback Dispute: Getting Started

Chargebacks are an unfortunate part of being a retailer, but that doesn't mean you can't fight them. There are a few steps you can take initially to prepare for what can be a difficult process:

Understand the issuing bank. Before you even start, know where the chargeback is coming from. Having a clear idea of who the bank is and what they might expect can go a long way in helping you prepare your case.

Know the reason code. 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. 

Start thinking about representment. A significant portion of chargebacks come from friendly fraud, which is unfortunate but also means that you can dispute them if you are prepared. Having a clear representment plan in place can help you strategically manage chargebacks as part of your overall business strategy. 

We will break down some of the specifics related to these steps, but the reality is that having a strategy in place for chargeback disputes is already putting you in a better position than not having any at all. Remember that no matter what happens, chargebacks are a bad thing for your business and signal that you need to take action across multiple aspects of your operations. 

Know Your Reason Codes

New call-to-actionChargeback 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.

How do I 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 Download the eGuide, 4 Reasons to Hire a Chargeback Management Companywas 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.

When Should I Consider 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.  


How long does a merchant have to dispute a chargeback?

On average, consumers have 60-120 days from date of purchase to dispute a charge, and merchants have about 45 days to respond from the date of the dispute. This can vary based on reason and card network.


Why is customer service important for chargeback prevention?

Chargebacks cost time and money. They also count against their 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.


Download your copy of The Smart Way to Fight & Recover Chargebacks to learn how to fight and recover your chargebacks the "smart" way.

Fight & Recover Chargebacks - Get The Guide