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.
In order to win these disputes, there are a few things merchants need to do:
Next, we'll dig into the specifics of each of these topics and explain how to maximize your chances of winning your chargeback disputes.
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:
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.
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:
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.
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,
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.
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