How to Win a ChargebackThe Inside Guide for What Merchants Need to Know

How to Win a Chargeback Dispute: The Inside Guide for What Merchants Need to Know

So, you’ve received notice of an incoming chargeback...but you’re confident the claim isn’t quite right.

You remember the customer. You have copies of conversations and chat logs, or maybe you have a confirmation proving that the order was delivered on time and intact. Is that enough to win the chargeback dispute and recover your funds?

In this article, we'll explore how to win a chargeback as a merchant, and provide some tips to improve your odds of winning a chargeback reversal.

Why Do Chargebacks Happen?

Let’s start at the beginning.

Banks and card networks created the chargeback process to resolve credit card payment disputes. When a cardholder does not authorize a charge, or is unhappy with a product or service, they are entitled to challenge the transaction. If the cardholder’s issuing bank feels the consumer’s claim is valid, they will initiate a chargeback to reverse the payment.

This is an important consumer protection mechanism. Chargebacks play a crucial role in protecting consumers against fraud and abuse. However, the growth of eCommerce changed the game regarding chargebacks.

Learn more about chargebacks

eCommerce has made shopping faster and more convenient than ever. A side-effect here is that cardholders started to file more and more credit card disputes.

The anonymity of online transactions makes it difficult for merchants to fully validate buyers’ identities. To make matters worse, though, it’s also become a lot harder for banks to validate cardholders’ claims before approving chargebacks.

“Friendly fraud” covers any situation in which a consumer disputes a legitimate charge. This can happen innocently or maliciously. For example, if the cardholder:

• Doesn’t recognize or simply forgot about the purchase.
• Misunderstood the delivery date and believed they’d been scammed.
• Asked the bank about a transaction, unknowingly initiating a dispute.
• Confuses a chargeback with a refund
• Believes filing a chargeback will be easier or more convenient.

A cardholder might inadvertently file a false chargeback claim for any number of reasons. However, the negative impact on you, the merchant, is essentially the same either way.

Learn more about friendly fraud

Ignoring a chargeback is always a bad idea. This is particularly true when you consider that about 60% of cardholder claims are cases of accidental or intentional friendly fraud. That’s why you should fight against any chargeback claim that you can prove is an invalid.

So, with that in mind, let's get down to the core question: how to win a chargeback dispute.

What's the Process for How to Win a Chargeback?

Want to challenge the bank’s decision? There is only one way to go about it: chargeback representment.

Chargebacks are won or lost through a process called representment. During this process, you literally ‘re-present’ the transaction to the bank for a second review.

The representment process works basically as follows:

The first thing you should learn is to identify the chargeback reason code, which is a kind of shorthand that indicates why the transaction is being disputed. While the reason code may not reflect the true reason for the chargeback, you must respond to the chargeback based on the code provided.

Learn more about reason codes

You have a small window in which to respond to incoming chargebacks. You will automatically forfeit the case if you submit your representment package past the deadline, so you must keep within the allowed timeframe. The amount of time granted will vary by card scheme and reason code. Both will be explained in your notification letter.

Learn more about chargeback time limits

Your entire representment case hinges on the evidence you provide. If the bank finds your evidence compelling, you may win your chargeback. But, what banks find “compelling” also varies according to the institution, card network, and reason code.

Learn more about compelling evidence

Evidence is important, but it needs context. To make a compelling case, you have to share your side of the story and make a winning argument. Your chargeback rebuttal letter should include a concise summary of your evidence, clearly explaining how the cardholder’s dispute is invalid. It should present the facts professionally and dispassionately, avoiding emotions and overblown explanations.

Learn more about chargeback rebuttal letters

Once you have your evidence and rebuttal letter, it’s time to submit your representment to your acquiring bank. The acquirer will review the case and ensure that all necessary documents are included. They will then send it to the cardholder’s issuing bank for a final decision.

Learn more about chargeback documentation

So, now you know how the representment process works. Knowing the steps doesn’t really mean you know how to win a chargeback as a merchant, though.

Compiling the right evidence and presenting it in the right way takes a lot of skill and expertise. Like we mentioned above, the materials you need will depend on your product vertical, the customer’s claim, and a host of other factors.

Compelling Evidence for Different Merchant Verticals

When factoring your evidence against a chargeback claim, you have to consider the type of business you have. This can have a profound impact on the outcome of the representment case. It can also impact your calculations as to how to win a chargeback.

While the bank will usually include a letter detailing the evidence they require based on your reason code, they may also require additional information based on your merchant status. To illustrate, let’s look at three different merchant types, and see how to win a chargeback in one of these scenarios.

Improve Your Odds of Winning

Winning a chargeback as a merchant is not impossible...but it won’t be easy. If you want to increase your chances and keep your business safe, you should consider the following practices:

Ask for Help

This will be our last, crucial tip.

It isn’t always easy to obtain—let alone analyze—your chargeback data. It costs time and money to track patterns, calculate risk, and compile key performance indicators (KPIs). You have to learn what is or isn’t working and how much ROI you could receive. These are crucial steps toward learning how to win a chargeback as a seller.

Here’s the good news: you don’t have to do it alone.

Chargebacks911® has the innovative strategies and technologies you need to relieve the burden of representment. Our attention before and after every case ensures a better chargeback win rate than any other method, all backed by the only performance-based ROI guarantee in the industry.

Want to know how successful your chargeback representment efforts could be? Contact us today for a free, no-obligation ROI analysis.