Chargeback Analysts Explained
Table of Contents
- What Is a Chargeback Analyst?
- What Are the Qualifications to Become a Chargeback Analyst?
- Why Are Chargeback Analysts Important?
- How Much Education Do You Need to Become a Chargeback Analyst?
Every year, eCommerce retailers lose billions of dollars to chargeback fraud. They may call it “friendly” fraud, but it can certainly sting when seemingly ordinary customers abuse the chargeback process to get things for free. The problem is so severe for some banks and merchants that a special job classification was created to deal with it: The chargeback analyst.
Not many merchants can afford to keep a full-time chargeback specialist on the payroll, but the right experts really can get an unmanageable chargeback situation under control. What do chargeback analysts actually do to protect merchants from avoidable disputes?
When a dispute reaches the chargeback stage, it’s always going to cost the merchant. Even if they fight and win the chargeback, they’ll have spent time and labor to do so, and even fraudulent chargebacks get upheld by issuers sometimes, costing merchants both revenue and fees.
Worst of all, a chargeback rate that exceeds 1% of your total transactions can get you dropped or even blacklisted by payment processors.
Merchants who are dropped by their payment processors are also often added to the MATCH list, which is essentially a shared blacklist for problem merchants. Merchants on the list will have a much harder time doing business, as banks, networks, and processors are less likely to want to work with them. Those who are willing to work with merchants on the MATCH list will typically charge much higher fees for doing so.
Even worse, once you're on the list, it can be difficult to get off of it. Even when the issues that caused a merchant to be added to the list are resolved, it can take three to five years to be removed from it. With all the problems being on the list creates, many merchants don't last that long.
When chargebacks have potential to create an existential crisis for merchants, it makes sense to hire expert help. Banks, card issuers, and very large merchants may keep chargeback analysts on staff permanently, but smaller merchants can obtain their services more affordably by contracting with a chargeback management firm.
Are chargeback analysts worth it? When they’re providing a positive ROI against the revenue you’re losing to chargebacks and processor fees, they absolutely are. By taking advantage of their training and experience dealing with chargebacks, analysts can reduce chargeback rates, determine which disputes are worth fighting, and win more of those cases, often essentially paying for themselves through avoided fees and recovered revenue. However, in order to find a good chargeback analyst, you have to know what to look for.
What Is a Chargeback Analyst?
Chargeback analysts are financial investigators. Their primary task is to investigate disputed transactions to try to learn more about why disputes are occurring and how they can be resolved or prevented. They may provide some or all of the following services to merchants:
- Respond to chargeback alerts, resolving disputes by refunding the customer when possible
- Determine which chargebacks to accept and which to fight
- Prepare evidence for chargeback representment
- Submit and monitor chargeback representments
- Identify and block friendly fraud perpetrators in your CRM
Most importantly, chargeback analysts will delve into your chargeback data to discover the root causes of your chargebacks, seeking to identify the vulnerabilities that made them happen in the first place. These vulnerabilities could include inefficient merchant operations, bad customer service policies, inadequate anti-fraud tools, or any number of other issues. Once identified, merchants can fix these root causes, which should lead to a lasting reduction in those types of disputes.
Chargeback analysts must be objective. When researching a dispute, they should make the best possible effort to understand the cardholder’s perspective and thoroughly examine the transaction details. False claims should be fought with representment and reported as fraudulent where appropriate, but when the dispute has a legitimate basis the merchant must take a frank assessment of the circumstances behind it.
Part of the chargeback analyst’s role may be to make specific recommendations about how the merchant can change their operations or policies to prevent future chargebacks. Some merchants bristle at the thought of changing the way they operate, but analysts don't recommend changes without a good reason for doing so, even if those changes may seem counterintuitive to some.
For example, if a business is getting a lot of friendly fraud chargebacks from unsatisfied customers, a chargeback analyst may identify the root of the problem as the merchant's overly restrictive refund policy. While offering refunds to more customers might not seem like a revenue-saving strategy, chargebacks, with their associated fees and potential revenue loss, often cost more than twice as much as the transaction itself, making a refund the more attractive option.
What Are the Qualifications to Become a Chargeback Analyst?
The scope of the job of “chargeback analyst” may vary greatly depending on whether they’re employed by a bank, a merchant, or a chargeback management company.
There’s no professional organization or certifying body that makes one a “real” chargeback analyst or not—which is why it’s important for merchants to understand what to expect should they go seeking one out.
Chargeback analysts need to be familiar with the laws that created the chargeback process as well as the regulations devised by Visa, MasterCard, and other card networks. They will collaborate and communicate with not only these card networks but issuers, acquirers, payment processors, and possibly even your customers. They should also be conversant in the current state of technology, eCommerce, fraud, and the merchant’s industry.
A qualified chargeback analyst will have a strong background in both finance and communications, with specific work experience dealing with the payments industry. In addition to relevant experience, a Bachelor’s degree in accounting, business, or finance might be expected.
Direct experience and expertise is one of the most important qualifications, but also the hardest to pin down. The rules for payments changes by region, card network, and issuer, and the card networks in particular like to hand down new mandates every year that can change key aspects of the process. The telltale patterns of dispute fraud, common merchant errors, and true fraud vulnerabilities are easier to identify when you’ve been seeing them for years.
As a new profession created in response to rapidly growing problems with chargebacks in the eCommerce sphere, seasoned veterans of chargeback analysis can be hard to come by. Some of the most knowledgeable chargeback professionals can be found working at chargeback management firms, which is why it often makes sense for all but the very biggest merchants to outsource the job.
Why Are Chargeback Analysts Important?
Chargebacks are a problem that just keeps growing for merchants, and a huge percentage of them fall under the category of “friendly fraud.” That means that, intentionally or not, the chargebacks were not filed with a legitimate basis, and should not be allowed to stand. You can fight those chargebacks and beat them, but for many merchants, staying on top of chargebacks to the extent required to effectively fight them taxes their resources and takes them away from their core functions.
Giants like Walmart and Amazon can afford to keep their own dedicated chargeback analysts crunching the numbers and solving their chargeback problems day-to-day, but for the vast majority of merchants who aren’t operating at that level, chargebacks often get pushed aside until they become such a big problem that they can no longer be ignored.
How Much Education Do You Need to Become a Chargeback Analyst?