Getting chargebacks? It's time to FIGHT back.
If you're reading this, chances are you're worried about chargebacks. Maybe you're just now noticing an increase in disputes, or perhaps chargebacks represent a long-standing problem for you.
Even the most conscientious businesses can get hit with chargebacks. Most merchants believe it's not worth the effort to fight chargebacks, but they couldn't be more wrong.
Chargebacks cost you money in the short run …
- Loss of Merchandise
- Loss of shipping costs
- Loss of revenue
- Additional fees
… but over the long-haul, they can be much more damaging:
- Forced reserve accounts
- High-risk processing fees
- Reputational damage
- Loss of processing rights
What Makes a Chargeback Fraudulent?
Chargebacks an effective consumer safety net. But like anything else, the chargeback process can be abused by the customer.
Chargebacks based in identity theft or a stolen card are criminal fraud, and the cardholder is a victim. But more and more, customers are filing chargeback disputes using unsubstantiated claims.
This so-called "friendly fraud" is the online version of shoplifting: getting something for nothing, at the merchant's expense.
You Can't Win if You Don't Fight
To protect your business, you need a comprehensive management strategy designed 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.
Here are some tips for successfully fighting chargebacks and recovering revenue.
Pick Your Battles
Every illegitimate chargeback should be challenged, but sometimes your customers have legitimate concerns. If the customer’s complaint is valid or even borderline, create goodwill by offering to issue a refund.
Has the chargeback already been filed? By reaching out to the customer directly and offering to help, you may still be able to convert that chargeback into a simple refund or exchange. It’s not ideal, but it’s less damaging than a chargeback.
If you've determined the chargeback is invalid, however, it's time to take a stand.
Know What You’re Fighting
Every chargeback includes a “reason code” that allegedly explains why the dispute was filed. Too often, however, these codes are vague and generic, providing highly inaccurate information.
To effectively fight a chargeback, merchants must look beyond the reason code and find the true source of the chargeback...and that can be a challenge.
Understand What You'll Need
Every case is different, but there are some things you'll almost always need to fight chargebacks:
Combatting chargebacks is complicated, tedious, and driven by deadlines. So the first thing you need are blocks of time, available whenever a new chargeback is filed.
To win a chargeback dispute, you'll need compelling evidence that proves you did everything required of you, or that the customer's complaint is invalid. The requirements here will vary according to the card network. And on that note...
A filing system:
Maintaining, detailed documentation on orders is essential for fighting chargebacks: you must be able to locate what you need quickly. Keep all records, receipts, and notices logically filed and easily accessed.
Finally, you’ll need to write a professional, detailed rebuttal letter for each chargeback. Your letter should clearly explain context and demonstrate why the transaction should stand.
Chargebacks911 is the only service provider on the market capable of identifying the true source of each chargeback.
Follow the Rules
Each bank or card scheme has its own specific regulations on how—and when—chargeback disputes must be handled. You’ll need to tailor each response to the specific chargeback, sending all necessary documentation and evidence through the specified channels at the appropriate time.
Know What Works
Getting a preliminary decision on the chargeback dispute could take weeks, but even then, there’s work to do. You'll need to track wins and losses, noting what worked and what didn't for future reference.
It's also good to track the reasons for your chargebacks. Look for recurring causes that may be preventable. Remember to focus on the true source of chargebacks, not just the reason codes.