Do You Know How to Fight Chargebacks? Here’s a Basic Rundown, Plus Tips to Improve Your Odds
Noticed a bit of a spike in dispute cases? Or, maybe you’re already running close to hitting your chargeback threshold?
Whatever the case: if you’re reading this, you probably already know that you need to fight back. But how?
A lot of merchants think the time and money they’d spend to fight chargebacks is more trouble than it’s worth. They couldn’t be more wrong, though. Fighting back against chargebacks is an investment that can pay dividends... if done correctly, of course.
Recommended reading
- Chargeback Rebuttal Letters: Templates & Tips for Responses
- Chargeback Reversal: 6 Simple Steps to Get Your Money Back
- Maximize Your Chargeback Win Rate: 5 Tips From the Experts
- What is Compelling Evidence? Examples & Tips to Win Disputes
- Pre-Arbitration Chargeback Process: How do Pre-Arbs Work?
- Mastercard Chargeback Arbitration: What You Should Know
If you can prove the cardholder is committing friendly fraud, you should absolutely fight back. Every illegitimate chargeback you ignore costs you time and revenue. It can also damage your reputation, make it harder to maintain good relationships with banks, and make cardholders more comfortable abusing chargebacks in the future.
How to Fight Chargebacks: 4 Basic Steps to Win a Dispute
The process of fighting chargebacks is called chargeback representment.
Representment lets you provide the bank with your side of the story in hopes of having your funds returned. During the process, you will submit the transaction again (literally “re-present” it). Along with the transaction information, you also need to provide other documentation and evidence to prove that the cardholder’s claim is invalid.
If your representment case convinces the issuing bank that you were not at fault, they will reverse their decision and return your money. Your case needs to be airtight, though. Otherwise, the bank’s original ruling will stand.
Now for the big question: how do you fight chargebacks?
The representment process can get pretty complicated. But, we can generally break it down into four basic steps:
Step #2 | Assemble Compelling Evidence
Banks will decide whether or not to reverse funds based on how compelling your evidence is. You need to put together an airtight case, explaining why the bank should change their mind and reverse the chargeback.
Acceptable evidence will vary significantly between the bank, card network, and reason code. That said, a few examples of compelling evidence include:
Don’t forget: all evidence must be in response to the given reason/reason code. This is true even if you believe that reason to be false.
After you submit your representment, the issuer will review the case and make a decision.
Your submission has to be in by the deadline provided by your acquirer; not the deadline allowed by the card network. The acquirer will often need time to conduct their review before passing the case on to the cardholder’s issuing bank.
10 Tips & Best Practices to Fight Chargebacks More Effectively
You need a comprehensive chargeback management strategy to prevent as many chargebacks as possible. But, some disputes will still come through, and those need to be challenged, especially if they're invalid.
To stack the odds in your favor, consider the following tips for how to fight chargebacks more effectively:
#1 | Be Aware of Dispute Response Timelines
Card networks and banks have strict response times if you want to contest a chargeback. Depending on the card network, you may have between 20 to 45 days to respond to chargeback claims.
Specifically, Visa, Discover, and American Express require merchants to respond within 20 days, while Mastercard imposes a 45-day deadline. Acquirers may enforce even tighter time limits, though. You’ll automatically lose the dispute if you fail to respond within set deadlines.
#2 | State the Facts Only
Don’t get riled up — the only way to win a chargeback claim is by submitting a strong, convincing, and objective representment package. This means you should maintain a professional tone when drafting a rebuttal letter.
Rely on compelling evidence, rather than assumptions or emotional pleas, to convince an issuer to reverse a chargeback. Or, if the chargeback is valid, take responsibility for your mistake and handle your customers’ complaints directly; don’t pass blame to manufacturers or other parties.
#3 | Track Relevant KPIs
You have to put effort into tracking patterns, risks, and key performance indicators (KPIs). This is the best way to learn what is — or isn’t — working, and how much of a return on your investment that you’re seeing from your chargeback responses.
Figures like chargeback win rate, response rate, and monthly chargeback volume are all relevant numbers here.
#4 | Pick Your Battles
Losing revenue to disputes isn’t pleasant. But, not all chargebacks should be challenged. Re-presenting one-off, low-value transactions may be more hassle than it’s worth…at least from a financial standpoint.
When deciding whether or not to contest a chargeback, consider its transaction value and the strength of your evidence. If the chargeback is likely to favor the cardholder, or if you don’t have enough proof to give yourself a fighting chance, it might be better to accept liability and work on preventing future chargebacks instead.
#5 | Leverage Chargeback Reporting to Your Advantage
Review chargeback reporting data to identify recurring trends. Examine reason codes to pinpoint common chargeback causes; note the frequency and volume of disputes received, and consider whether some products/services are more chargeback-prone than others.
Data obtained from chargeback reports can help you improve your chargeback win rate. It can also help you decide whether or not your chargeback prevention strategy is effective.
#6 | Keep Detailed Transaction Records
Establish a central database to store all transaction records. We’re talking about delivery receipts, invoices, tracking numbers, order emails, and authorization records. Transcripts of conversations with customers concerning refunds or exchanges can be helpful, too.
Meticulously recording all transaction documentation gives you evidence you can use, when necessary, to challenge cardholder claims in representment.
#7 | Combine Chargeback Automation Tools With Human Oversight
Chargeback automation tools streamline the dispute management and representment process. These tools can provide you with automated alerts about incoming chargebacks, help you gather relevant evidence based on a chargeback reason code, and assist you in drafting a tailored rebuttal letter.
Though automation tools are highly efficient at reducing manual labor, human oversight remains important. In other words, chargeback analysts can leverage automation tools to carry out chargeback mitigation or response plans with greater efficiency.
#8 | Encourage Refunds & Exchanges
Services like Ethoca Alerts and Verifi CDRN can give you a short window of time to refund a customer after they have filed a dispute. If the customer agrees to the refund, they may cancel the chargeback.
As a general rule of thumb, a refund is pretty much always preferable to a chargeback. The former can spare you time, hassle, and fees. And, it lets you resolve the situation on your terms, rather than the bank’s.
#9 | Stop Fraud Before It Leads to Chargebacks
Implementing fraud prevention tools, such as Address Verification Services (AVS) and velocity checks at checkout, can stop fraudulent purchases before they happen.
These fraud prevention tools can help you lower your chargeback ratio and bring chargebacks down to a manageable level. Plus, once you’ve eliminated third-party fraud chargebacks, it makes it much easier to identify those resulting from first-party fraud.
#10 | Minimize Errors on Your End
Not all chargebacks are invalid. Sometimes, you may encounter disputes because of errors on your end, such as incorrect billing descriptors, duplicate charges, defective merchandise, or failed deliveries.
Double checking transactions for data entry errors, using the right billing descriptors, and issuing tracking numbers for parcel deliveries can help you eliminate merchant error chargebacks.
Here’s one last tip: know when to ask for help.
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 precisely how successful your chargeback representment efforts could be? Contact us today for a free, no-obligation ROI analysis.
FAQs
Is it hard to fight a chargeback?
Yes. Fighting a chargeback can be difficult and frustrating for a merchant who is unfamiliar with the representment process and who does not know how to select the right evidence to challenge a cardholder’s claims.
Do merchants usually fight chargebacks?
Yes, merchants often fight chargebacks if they believe the cardholder’s claim is invalid and that the transaction under dispute is legitimate. However, some merchants do not fight chargebacks because they lack the bandwidth to do so, believe it’s cheaper not to, or are discouraged by the low odds of winning.
What are the odds of winning a chargeback dispute?
The odds of winning a chargeback dispute are very slim: according to the 2024 Chargeback Field Report, merchants report an average dispute win rate of 45%. Exact odds vary depending on the chargeback reason code and the quality of evidence submitted. This implies that merchants who are able to consistently furnish compelling evidence in representment may experience higher chargeback win rates.
What is the burden of proof for chargebacks?
The burden of proof for chargebacks lies with the merchant, who must prove that the dispute is invalid; in other words, sellers are guilty until proven innocent.
Merchants can demonstrate they are not at fault by furnishing strong rebuttal letters along with compelling evidence, such as proof of cardholder authorization for fraud-related chargeback claims. They can also provide copies of signed delivery receipts for failed delivery disputes.
What happens if you lose a chargeback dispute?
If you lose a chargeback dispute, the cardholder retains the provisional credit previously issued to them by their issuer during the chargeback investigation process. If you consistently lose chargeback disputes, you’ll suffer reputational damage, incur fines and penalties, and could even lose your payment processing privileges.
How do you win a chargeback claim?
To win a chargeback claim, you’ll need to gather and submit compelling evidence, such as written correspondence with customers or proof that a cardholder authorized a transaction, that must clearly and convincingly prove that a transaction was legitimate. You should also include a rebuttal letter and submit your representment package within the required timeframe (45 days for Mastercard, and 20 days for Visa, Discover, and American Express).
