What is Chargeback Mitigation?

How Chargeback Mitigation Can Reduce Risk and Increase Revenue

For many merchants, chargebacks become a major liability. When chargeback rates start to increase, merchants have two options:

1. They can accept the financial loss as a cost of doing business.

2. They can create a strategy to reduce risk and recover lost revenue.

The only way to ensure longevity and sustainability is the second option—chargeback mitigation.

What is Chargeback Mitigation?

Chargeback mitigation is the process of preventing chargebacks and challenging illegitimate transaction disputes.

Chargeback mitigation might include the following:

  • Increasing the acceptance of valid transactions and decreasing false positives
  • Decreasing the acceptance of unauthorized transactions
  • Identifying the source of each chargeback
  • Eradicating preventable chargeback triggers (such as merchant error)
  • Challenging illegitimate chargebacks
  • Improving industry relationships

There's No Substitute for Experience

For chargeback mitigation, you don't want excuses ... you want the experts.


 Each merchant suffers from different and unique challenges; therefore, chargeback mitigation efforts will need to be customized to address applicable threats. However, when executed effectively, the outcome of chargeback mitigation should include some or all of the following:

  • Increased profits
  • Recovered revenue
  • Decreased costs
  • Greater sales conversions
  • Decreased declines
  • Improved customer retention and loyalty
  • Enhanced brand reputation
  • Stronger industry relations
  • Reeducated consumers
  • Sustainable growth
  • Sufficient payment processing capabilities
  • Longevity

The Two Sides of Mitigation: Prevention & Representment

There are two key components to chargeback mitigation: prevention and representment. Each plays a vital role in the process, and each calls for different technologies and bodies of expertise.


Effective chargeback prevention is dependent on one simple responsibility: identifying the source of each chargeback. Solving the problem, rather than just treating the symptoms, yields unparalleled results.

If merchants don’t identify the source of the chargeback, they’ll implement inefficient strategies that target the wrong problem.

All chargebacks originate from one of three sources:

1. Criminals: Criminal fraud results in unauthorized transactions.

2. Customers: Illegitimate or unwarranted chargebacks are known as friendly fraud.

3. Merchants: Chargebacks are unknowingly instigated by unidentified merchant errors and oversight.

Within each of those three sources, though, there is a multitude of potential chargeback triggers. The problem might be anything from improperly-deployed anti-fraud technologies failing to identify criminal activity to minute policy missteps that have major customer service ramifications.

To address all three sources, merchants need to implement a comprehensive approach to chargeback prevention, with insightful human forensics and specialized analytic tools. By doing so, merchants can determine how threats interact and then assess overall risk exposure.

A comprehensive chargeback mitigation strategy might include the following tools:

  • Anti-fraud technologies provided by card networks and processors—such as AVS, CVV, 3D Secure, blacklists, whitelists, velocity checks, and more—can reduce the risk of unauthorized transactions.
  • Fraud filters analyze transactions, looking for known characteristics of fraud. Suspected criminal activity is detected and blocked.
  • Chargeback Alerts allow merchants to refund transaction disputes before they progress into chargebacks.
  • Merchants can accept more valid sales and prevent chargebacks by terminating transactions resulting from false consumer activity with Affiliate Fraud Shield.
  • Identifying the source of each chargeback with Intelligent Source Detection enables targeted prevention tactics.
  • Merchant Compliance Review analyzes and rectifies internal errors, procedural shortcomings, and policy missteps that often lead to chargebacks.


While merchants can prevent virtually all chargebacks caused by merchant error or criminal fraud, faulty consumer behavior and insufficient industry regulations have led to a third chargeback source that is much more difficult to avoid—friendly fraud.

For cases of friendly fraud, or illegitimate chargebacks, merchants must be prepared to take advantage of the second phase of chargeback mitigation—representment.

“Representment” refers to the process of re-submitting a transaction to the issuing bank, along with careful research and a body of compelling evidence, to prove the original transaction was valid. Successful representments will recover revenue that would have otherwise been lost while retraining faulty consumer behaviors.

Unfortunately, engaging in representment takes time and an extensive understanding of payment industry regulation. Most merchants do not have the resources or expertise to craft effective representment cases. Professional assistance can ensure greater success while also reallocate valuable resources to revenue-generating departments.

When is Professional Assistance Required?

Professional tools and expertise can increase the effectiveness of any chargeback mitigation efforts. If you are unsure about how and when to solicit assistance, consider the following:

Industry regulations are updated regularly. A professional will have insight as to when these changes will take place, how internal processes will need to adapt, and the dangers of non-compliance. Your in-house team will need to carefully monitor regulations and implement changes to the best of their abilities, recognizing that outcomes might not be timely or successful.

Adopting ineffective or incomplete solutions may actually make your chargeback problem worse. For example, if your blacklist is too restrictive, you’ll suffer profit-stealing false positives. However, being too lenient with fraud prevention will cause a sudden spike in chargebacks. A professional would be able to assist you by finetuning rules and processes to optimize success.

Professional assistance is impartial, but you might not be objective enough to identify unintentional shortcomings or errors. A third-party analysis will reveal issues you might not be able to identify.

Hiring a chargeback mitigation expert doesn’t need to be an all-or-nothing process. You can fully outsource responsibility, but that isn’t the only option available. If you’d like to retain certain responsibilities, you might consider on-demand services or available management software.

Adding new chargeback mitigation products and processes doesn’t mean you’ll need to switch vendors or platforms. A true professional should be able to integrate with your existing payment processor, gateway, CRM, and fraud filter.

It’s important to note that not all chargeback mitigation experts are the same. In fact, some aren’t “experts” at all—they increase challenges instead of mitigate them.

Chargebacks911® truly is an expert at chargeback mitigation—one of the first vendors on the market and the only service provider with real-world, first-hand experience as a merchant. We are a recognized leader and innovator in the science of chargeback mitigation, having created a host of solutions to address the various threats and their sources.

With our proprietary technologies, research-backed expertise, and unparalleled insights, merchants can trust that their business is in excellent hands.

Contact Chargebacks911 today to learn more about your chargeback mitigation options.

Prevent Chargebacks.

Fight Fraud.

Recover Revenue.

3396    Chargeback Terminology, Chargebacks 101  

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