Fighting Credit Card Chargebacks Like an Expert
Table of Contents
- How Do Credit Card Chargebacks Affect Your Business?
- What is Essential Evidence for Fighting Chargebacks?
- How to Fighting Like an Expert
- Your Opening Salvo: The Rebuttal Letter
- Examples of Good Supporting Documentation
- Advanced Chargeback Fighting Techniques
- Frequently Asked Questions
This year, the rules for fighting chargebacks changed. Before April 2018, you could provide any compelling evidence you wanted, and the acquiring bank would review it and pass it along to the issuing bank for a decision. Now, Visa has changed the regulations governing chargeback disputes.
In the year 2021, these are still in place, but merchants are learning what it means to prevent and recover chargebacks. Expert prevention and management isn't just about bulldozing through chargebacks. It is a combination of great documentation, good compliance and customer service, and working with chargeback management to provide the best dispute packages you can when you run into cases of friendly fraud.
Specific documentation is required now; you can't just attach anything and everything you think will help your case. You have to provide documentary proof that the AVS and CVV you obtained at the time of the transaction matches the customer's actual payment credentials. You also have to actually acknowledge receipt of the chargeback or incur a fee.
The landscape has definitely changed.
How Do Credit Card Chargebacks Affect Your Business?
The interesting thing about chargebacks is that it doesn't matter if you win the dispute or not-they can still affect you negatively.
When you face a chargeback, you're facing a forced reversal of a transaction. When you have many chargebacks on your record, then 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 related to your total transactions.
However, none of that takes into account the cost of the transaction on your end in terms of dollars and cents. When a cardholder disputes a charge and you lose that 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.
If it has come to the point that you are facing chargebacks that you feel are friendly fraud, it is time to provide the evidence and case to make sure that you win that claim.
What is Essential Evidence for Fighting Chargebacks?
If you're going to enter chargeback representment and fight, the first thing you need to do is make sure you have that matching AVS and CVV. Without that, you can't win a dispute.
You also need to know exactly how to present your case the right way.
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.
Your best plan of action is to attach the right documents, presented the right way.
How to Fighting Like an Expert
You can narrow down the documents you need to submit into two broad categories:
Your rebuttal letter
All your other documentation
Simple, right? Fighting chargebacks is both an art and a science.
There's no one template that works for every issuing bank; each one of them 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 very important. 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 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.
Examples of Good Supporting Documentation
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. (See—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.
Fighting chargebacks? In order to fight chargebacks and your recover lost 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.
How do you fight friendly fraud chargebacks?
What does it take to prevent chargebacks before they happen?
Does a chargeback hurt you even if you win?