Chargeback Recovery

Fighting Credit Card Chargebacks Like an Expert

Fighting Credit Card Chargebacks Like an Expert

Table of Contents

  1. How do credit card chargebacks affect your business?
  2. How to fight credit card chargebacks like an expert
  3. Your opening salvo: the rebuttal letter
  4. What is essential evidence for fighting chargebacks?
  5. Examples of good supporting documentation for representment
  6. Advanced chargeback fighting techniques
  7. How do you fight friendly fraud chargebacks?
  8. What does it take to prevent chargebacks before they happen?
  9. Does a chargeback hurt you even if you win?

As eCommerce continues to grow and expand, more and more merchants are dealing with credit card chargebacks on a regular basis. These chargebacks can be a massive drain on revenue, since once all the fees and hidden costs are accounted for, they often cost more than twice the original transaction amount.

Preventing chargebacks is always the best option, but no prevention plan is perfect. Every merchant will have situations where the only option left to them is to fight a chargeback they know to be legitimate.

Successfully fighting credit card chargebacks requires good records, compelling evidence, and a strong rebuttal letter. Let's go over what merchants need to know about credit card chargebacks in order to maximize their chances of winning these disputes.

How do credit card chargebacks affect your business?

Credit card chargebacks cost businesses their revenue and increase their chargeback rate, which can have serious consequences if it exceeds 1%. The tricky thing about chargebacks is that even if you win the dispute they can still affect you negatively. 

When a cardholder disputes a charge and you either accept the chargeback or lose the dispute, you don't just lose the product and the sale, you lose the marketing costs, the sales costs, the overhead costs, and the fees as well. A chargeback can cost a company up to 250% of the original transaction. 

New call-to-actionWhen you have too many chargebacks on your record, banks and credit networks will begin to see the problem as originating on your end. To help them measure this, they look at your chargeback ratio, or the number of chargebacks you have in proportion to your total transactions. If that number climbs too high, you may face fines, restrictions, or even termination of your merchant account.

While fighting credit card chargebacks won't stop them from affecting your chargeback ratio or refund the fees you were charged, it does at least recover the transaction amount, and it can also provide you with valuable information to help prevent future chargebacks.

How to fight credit card chargebacks like an expert

There are two things you need to submit during representment to have a chance at winning the dispute:

  1. A rebuttal letter
  2. Supporting evidence

Simple enough, right? In practice, however, fighting chargebacks is both an art and a science.

There's no one template that works for every issuing bank. While they have similar guidelines and requirements, each one makes decisions differently.

Even though the card networks dictate the rules for reversing or upholding chargebacks, not all issuers interpret these guidelines in the same way. Two different issuing banks can look at the same set of documents and arrive at two completely different decisions.

Smaller banks are a bit notorious for this—they have one-on-one relationships with some of their customers, and that can influence their decision to side with them over the merchant. 

This can't always be helped. You might not always get a fair outcome when you dispute a chargeback, but you can increase your chances of winning by providing the right documents. Per our experience, if you do everything right, you can anticipate a 65% to 75% rate of success.

Your opening salvo: the rebuttal letter

Your rebuttal letter is the cornerstone of your representment. It should explain the dispute in big picture terms, telling the bank why the customer is wrong to ask for a chargeback. But remember, brevity is your friend here. Think of it like being in front of a judge with two minutes to present your case.

You need to let the issuer know what your obligation to the customer was, whether you met that obligation, what communications transpired between you and the customer, and whether you ultimately refunded their money or not.

The rebuttal letter should fit on one page, running no longer than about 200 words. It needs to be sharp and precise, so that the person reading it can understand it quickly.

Your letter should also itemize the supporting documents you're including and reference your chargeback case number on the upper left side of the page. Make sure your letter and supporting documents are in black and white — most banks will scan them and convert them to grayscale upon receipt, and color printing can cause legibility problems.

What is essential evidence for fighting chargebacks?

If you're going to enter chargebackFight & Recover Chargebacks - Get The Guide representment, the first thing you need to do is make sure you have records of an AVS and CVV match for the transaction. Without that, you won't be able to win most disputes.

In order to have that information, as well as all the other evidence you'll need to successfully fight a credit card chargeback, you'll need to keep thorough records of every transaction you accept.

Make sure the evidence you include is relevant to the reason code for the chargeback. Every chargeback representment case goes to a person who manually examines the evidence. Don't assume that these bank employees have a lot of time to review and ponder the information they're given.

Think about how you can provide an explanation and evidence that can be read and understood within about five minutes. You need to give the person reviewing your case only what they need to make the right decision in a short amount of time.

If you send along twenty, thirty pages of evidence, you're going to lose. Nobody has time to read that, and you're likely to just end up confusing them.

Examples of good supporting documentation for representment

Here are some of the other documents you may want to submit:

  • A transaction receipt. You can obtain this from your payment gateway. It should confirm the AVS and CVV match, showing that the cardholder really is the same person who made the transaction. Stolen cards will rarely match both.
  • The order invoice. Make sure it fits on a single page. It should specify what was sold, when the sale was made, who the customer was, and should contain a billing address, shipping address, and tracking number.
  • Tracking confirmation. The issuing bank won't have time to look up the tracking number, so make sure you look it up yourself and print out confirmation that the parcel was delivered to the purchaser. If the dispute involves digital goods, try to provide some kind of information that confirms that the customer actually received and used the product.
  • Your website's terms and conditions. Don't print out the irrelevant parts, just the specific sections that pertain to the chargeback dispute. Highlight selected passages for clarity if needed.
  • A copy of your checkout page. This should show proof that the customer checked a box indicating that they agreed to your terms and conditions.

Advanced chargeback fighting techniques

No single template will fit every dispute or be equally compelling to every issuing bank.

Over time, you can learn what kinds of letters and documents are effective for which banks. Not sure what bank you're going to be dealing with in a chargeback dispute? The first six digits of the customer's credit card number can tell you.

If you find yourself consistently losing disputes with a particular bank, adjust your letter and the ways in which you format your supporting evidence. You can do A/B testing to determine what type of approach works best for that particular bank. (We told you fighting chargebacks was an art and a science!)

With time, experience, and experimentation, you can increase your win ratio and become a true master at fighting chargebacks. Of course, if you don't want to wait that long, you can always enlist the help of a professional chargeback management company to fight your chargebacks for you and find ways to prevent them from happening in the first place.


How do you fight friendly fraud chargebacks?

Collect your evidence, write a compelling rebuttal letter, and speak to the concerns of the issuing bank and the dispute the cardholder has raised. If it is legitimately friendly fraud, the issuing bank will have to decide based on the evidence.

What does it take to prevent chargebacks before they happen?

Transparency. Great customer service, quick resolution to customer problems, clear transaction information on receipts. Chargeback prevention alerts can also help.

Does a chargeback hurt you even if you win?

Chargebacks still affect your chargeback ratio, even if you win. Too many chargebacks, even if successfully disputed, can mark you as high-risk.

Thanks for following the Chargeback Gurus blog. Feel free to submit topic suggestions, questions or requests for advice to:
Get the guide, Chargebacks 101: Understanding Chargebacks & Their Root Causes