Chargeback Recovery Seems Out of Reach? Not With This Valuable Insider Info!
Chargebacks seem like an impossibly-complicated topic sometimes. There’s dense industry regulation, strict time limits, no certainty that you will get your money back…it’s enough to make plenty of merchants give up on chargeback recovery altogether.
With the right tricks and know-how, though, you can win more disputes, recover revenue, and reduce your overall chargebacks.
Representment IS Chargeback Recovery
The key to chargeback recovery is a process known as representment (also referred to as a “second presentment”). You’re literally “re-presenting” the cardholder information to the bank to try and submit the transaction for a second time.
The first step when a dispute comes up is to determine what caused it, and whether you can fight back. Each card scheme has their own system of chargeback reason codes that are meant to explain the cause of a dispute. Visa and Mastercard chargeback reason codes are different from one another, as are other card schemes like Discover and American Express.
If you let friendly fraud go unchallenged, you will lose the revenue and any merchandise from the sale, AND be forced to pay a chargeback fee. There’s a lot more at stake than just a single transaction, though; you could face severe consequences if your long-term chargeback-to-transaction ratio breaches acceptable industry thresholds.
Chargebacks can literally destroy your business, so when you suspect friendly fraud, it’s your right—and your responsibility—to engage in representment. This is the only way to deter negative customer behavior and recover chargeback losses.
The 2 Keys to Chargeback Recovery
If you are confident that a dispute is friendly fraud, your first step toward chargeback recovery is to respond. Under Mastercard chargeback rules, failing to respond in a timely manner means you lose your ability to fight the chargeback. It’s even more extreme with Visa, though; under Visa Claims Resolution, failure to respond will result in an added penalty fine on top of the chargeback fee.
These two have a complimentary relationship; your evidence contradicts the customer’s claim, and the rebuttal letter makes your case and provides context to the evidence. When combined, they should be strong enough to convince the issuer to decline the chargeback.
What is Considered “Compelling Evidence?”
Here are some examples of commonly-used evidence in different situations:
- A legible copy of the sales receipt
- Order forms
- Tracking information or delivery confirmation
- Transcripts of any communication between yourself and the customer
- Forms bearing the customer’s signature
- Ancillary purchases or requests
- Records from previous transactions
Of course, there’s no perfect formula to gather evidence for your case. The documentation you need will depend on the customer’s claim, and you need to build your case to reflect that fact. And, just as your compelling evidence needs to be targeted based on the dispute, your rebuttal letter needs to be targeted based on your evidence.
What About Long-Term Chargeback Recovery?
You can recover revenue that rightfully belongs to you…that should be reason enough to fight back against unfair chargeback issuances, shouldn’t it?
If that’s not enough to convince you, though, the benefits of chargeback recovery go far beyond saving individual sales:
Benefit #1: Ensure Cash Flow
Every dollar you lose to chargebacks is a dollar that’s clawed-back from your bank account. Bad as that is, it will be much worse if you breach your chargeback threshold. Your acquirer might freeze your account without warning, making it impossible to cover expenses like inventory and payroll.
Fighting—and winning—your disputes will increase your net income, protect your bank balance, and reduce your risk of running into cash flow problems.
Benefit #2: Long-Term Prevention
Chargeback recovery doesn’t happen in a vacuum; whether you see it or not, each dispute you win does have an impact.
When you fight back against friendly fraud, it encourages issuers to give you the benefit of the doubt in future disputes. You develop a positive reputation for taking friendly fraud to task and defending your business, which eventually leads to fewer disputes making it to the chargeback stage.
Benefit #3: Encourage Widespread Reform
Representment offers you a counterbalance to a system that needs to be checked. If no one stands up to say, “the rules are broken,” then there will be no incentive for anyone to do anything that might address friendly fraud and other issues.
If more merchants start fighting back, then the card schemes will sit up and take notice. This was already demonstrated with the Visa Claims Resolution initiative introduced in 2018; the arrival of the Visa Order Insights plugin (previously known as Visa Merchant Purchase Inquiry, or VMPI) gave merchants a powerful tool to instantly eliminate a segment of their chargebacks. That kind of reform only happens when merchants make it clear that it’s necessary.
Get the Tools & Expertise You Deserve
Representment is your only shot at chargeback recovery. There’s just one problem: if you’re like most merchants, you probably don’t have the time, resources, or expertise to do it right.
In the State of Chargebacks 2018, researchers identified that merchants only win about one in five chargeback disputes. It’s not all bad news though; Chargebacks911® gives you the freedom to grow your business without worrying about your dispute response.
We deploy a proactive strategy based on our Intelligent Source Detection™ technology. We fight and intercept chargebacks for short-term recovery while applying machine learning tools and human forensic expertise for long-term chargeback reduction.
There’s a reason Chargebacks911® is the top name in chargeback recovery: we were doing it before—and doing it better than—anyone else. Click below to see how much you will save.[glove]