Chargeback Management

How to Handle Wells Fargo Chargebacks

Wells Fargo Chargeback

Table of Contents

  1. Why Does the Chargeback Process Vary Between Banks?
  2. What Is Wells Fargo's Chargeback Fee?
  3. What Are Wells Fargo's Chargeback Time Limits?
  4. Wells Fargo's Tips for Avoiding Chargebacks
  5. What Is the Wells Fargo Dispute Manager?
  6. The Benefits of Analyzing and Disputing Chargebacks
  7. How Can Merchants Prevent Wells Fargo Chargebacks?
  8. How Far Back Can Wells Fargo Customers File a Chargeback?
  9. How Does Wells Fargo Accept Disputes?
  10. How Many Chargebacks Are Merchants Allowed?

In order to minimize lost revenue, it's important for merchants to fight the illegitimate chargebacks they receive. Doing so not only recovers revenue directly, but also provides valuable insights that can prevent future chargebacks and improve customer retention. Unfortuantely, winning these disputes is made more complicated by the fact that each issuing bank has its own preferences when it comes to what evidence they find compelling enough to reverse a chargeback.

Wells Fargo is one of the largest banks in the United States, which makes it a common adjudicator of credit card disputes. Let's take a look at how Wells Fargo handles chargebacks, both on the customer's end and the merchant's.

Why Does the Chargeback Process Vary Between Banks?

While the rules and guidelines for the chargeback process are established by the credit card networks, the issuing bank is the one that actually carries it out. The bank also decides whether any evidence provided is sufficient to reverse the chargeback.

Chargebacks were first established for credit cards by the Fair Credit Billing Act of 1974, with chargebacks for debit cards coming with the Electronic Funds Transfer Act of 1978. Unfortunately, the chargeback process was not some financial version of Athena, springing fully formed from the head of the U.S. government. These laws required that card networks and banks establish some sort of chargeback process but provided little detail about what that process should look like.

Download the eGuide, 4 Reasons to Hire a Chargeback Management CompanyMost of the chargeback process we now know was created by the major credit card networks. While changes made by one card network are often copied by the others, each network developed the rules for its process individually, meaning there can be a lot of variation from one network to the next.

While the card network rules for chargebacks are fairly thorough, they do still leave a lot of room for interpretation by the issuer.

Each card network has a list of reason codes under which a chargeback may be filed, but it's up to the issuer to determine which reason code, if any, applies to a given cardholder dispute. The networks also state that the merchant must provide compelling evidence in representment to reverse a chargeback, but the issuer gets to decide what evidence qualifies as sufficiently compelling.

As the seventh-largest credit card issuer in the United States, Wells Fargo handles a lot of chargebacks, so you can expect to be dealing with them fairly often.

Wells Fargo has lost some market share in recent years because of the fallout from their 2016 account fraud scandal, and while that means they have extra incentive to keep their current customers happy, we would hope that it also motivates them to carefully abide by the card networks’ dispute rules.

What Is Wells Fargo's Chargeback Fee?

When serving as a payment processor for merchants, Wells Fargo charges a $25 fee for each chargeback. They also reserve the right to recoup fees levied by other institutions involved in the dispute.

When it's the issuing bank, Wells Fargo can’t hit merchants with any fees, but remember that in the event that a dispute proceeds past the representment stage and goes into arbitration, the card network handling the matter will collect as much as $500 in arbitration fees from the losing party. If you take a chargeback to arbitration, make sure the facts and the evidence are on your side.

What Are Wells Fargo's Chargeback Time Limits?

While many banks give their customers 120 days to dispute a charge, Wells Fargo customers only have 60 days, which is the minimum required by the Fair Credit Billing Act.

When a customer does dispute a charge, Wells Fargo may or may not sent a retrieval request to the merchant for more information. If they do, the merchant has 12 business days to respond before the bank proceeds with a chargeback.

Always respond to any chargeback-related notifications and requests promptly; this helps to ensure that the banks have enough time to properly evaluate your information.

Once the chargeback process has begun, the most important time limits for merchants to remember are the ones imposed by the card networks. Here’s a quick rundown of some of the key deadlines:

Visa

  • 30 days to respond to a dispute
  • 10 days to request arbitration

Mastercard

  • 45 days to respond to a dispute
  • 45 days to request arbitration

To avoid missing deadlines or making mistakes in a rush to meet them, we strongly recommend that merchants have procedures in place to respond to chargebacks promptly.

Merchants alsso have the option of outsourcing chargeback representment to a third-party firm that can handle the entire chargeback process, maximizing win rate and revenue recovery. This will ensure that no deadlines are missed.

Wells Fargo's Tips for Avoiding Chargebacks

Wells Fargo provides the following recommendations to merchants for avoiding chargebacks. We suggest that you follow this advice to the best of your ability and document it, so that in the event of a Wells Fargo chargeback, you can provide them with proof that you were following their recommended best practices:

  • Make sure you have a merchant descriptor customers will recognize
  • Respond promptly to retrieval requests
  • Use AVS to verify billing addresses
  • Verify the caller ID on phone orders
  • Provide Wells Fargo with a phone number they can include on billing statements
  • Obtain proof of delivery for all orders you ship
  • Require a signature for delivery of high-value items

Of course, these tips will serve you well for disputes with any issuer, not just Wells Fargo.

What Is the Wells Fargo Dispute Manager?

If Wells Fargo is your acquirer or payment processor, you should sign up for the Dispute Manager service they offer. This online portal allows merchants to receive chargeback notifications, acknowledge disputes, and respond to retrieval requests.

The portal also contains resources to learn more about chargebacks and how to respond to them. Using the Dispute Manager can greatly streamline the process of managing chargebacks and will help you respond in a timely fashion.

The Benefits of Analyzing and Disputing Chargebacks

Fighting chargebacks can be tough. Researching disputed transactions and putting together the right evidence takes time and effort, even for transactions that seem obviously legitimate.

As tempting as it can be to just let chargebacks slide, each one you receive hurts your chargeback ratio and depletes your revenue. Remember, the true cost of a chargeback isn’t just the transaction amount—you have to account for the fees and related expenses as well.

Download your copy of An Introductory Guide to E-Commerce Fraud PreventionIn many cases, a chargeback will cost twice the original transaction amount when all is said and done. That's why it's important to have a responsive customer service team that can issue refunds to customers with legitimate problems.

If a customer is put on hold until they give up or is unable to contact you at all, you'll be losing even more money when that complaint turns into a chargeback.

The silver lining of chargebacks is that each one is an opportunity to learn about the problems customers are having with your business. Whether it’s fraud, merchant error, or problems with fulfillment, you can look at every chargeback you get and think about how you could adjust your operations to prevent the same chargebacks from happening again.

By making the effort to understand the root causes of your chargebacks, you can learn how to prevent them, how to fight them better, and how you can meet your customers’ needs and expectations better.

How Can Merchants Prevent Wells Fargo Chargebacks?

The strongest anti-chargeback strategy is a universal one: Be honest and transparent, provide the best customer service you possibly can, use the best anti-fraud tools at your disposal, and thoroughly document your transactions and customer interactions.

One of the easiest ways to prevent many chargebacks is to make sure the billing descriptor that appears in a customer's account when they place an order with your business is clear and recognizeable. One of the most common causes of chargebacks is a customer simply failing to recognize a legitimate charge on their account.

Making sure your desciptor matches the customer-facing name of the business and includes contact information confused customers can use to get answers to any questions is an effective way to prevent most of these chargebacks.

When it comes to dealing with specific issuing banks, keep in mind that while experience will teach you some of the nuances that help you get the right outcome, most of the rules and requirements are coming directly from the card networks. Stay on top of the published rules (and new mandates), remember the key deadlines, and do the best you can to defend yourself from fraudsters and frivolous claims.

FAQ

How Far Back Can Wells Fargo Customers File a Chargeback?

Wells Fargo gives customers 60 days to dispute a transaction.

How Does Wells Fargo Accept Disputes?

Wells Fargo makes it relatively easy for cardholders to submit disputes, with options including a phone number and an online form through the Wells Fargo customer portal.

How Many Chargebacks Are Merchants Allowed?

The industry standard for a maximum chargeback ratio is 1% of all transactions (or 1 chargeback per 100 successful orders), though Visa now uses a lower 0.9% limit.


Thanks for following the Chargeback Gurus blog. Feel free to submit topic suggestions, questions or requests for advice to: win@chargebackgurus.com

Get the guide, Chargebacks 101: Understanding Chargebacks & Their Root Causes