Documenting Transactions for Chargeback PreventionClear Evidence Can Stop Some Chargebacks Before They Start

How Strong Transaction Documentation Can Help You Avoid Chargebacks

Imagine going into court as a defendant and telling the judge, “No, your honor, I don’t have any way to prove my innocence. You’re just going to have to take my word for it.”

How far do you think that argument is going to get you? Well, that’s more or less what you’re doing when you try to challenge an invalid chargeback without solid proof.

In this chapter, we’ll show you ways to build a dynamic and automated evidence-gathering system that prepares you for disputes on any payment channel, now and in the future.

Using Documentation to Prevent Chargebacks

When it comes to re-presenting a false claim, clear and compelling evidence is your sharpest and most important weapon.

In many cases, documented evidence can keep a  customer inquiry from becoming a chargeback in the first place. For example, a buyer calls their bank, saying they don’t recognize a charge on their statement. The bank can pull up records using tools like Order Insight or Consumer Clarity, helping the buyer identify the charge and avoiding an unnecessary chargeback.

Now, solid documentation is not guaranteed to stop every dispute. A buyer could still attempt to dispute the charge with the bank. In that case, your documented evidence becomes even more important.

The Universal Evidence Framework

So what types of documentation should you be collecting? What we’ll call a universal evidence framework may be helpful.

Basically, there are some forms of evidence that you should always collect. The customer’s IP address, their billing and shipping address, the transaction timestamp, the card number involved in the purchase, and a clear description of the goods or services that exchanged hands are all good examples.

Then, there are some forms of enhanced evidence which may be useful in specific types of cases. More rigorous identity verification, for example, or a records check of pre-purchase customer interactions.

Documentation can be automatically handled on a case-by-case basis, dependent on pre-defined risk factors. A high-value order or a transaction from a high-risk region, for instance, might trigger an automated system to gather extra pre-transaction data.

Automating the process this way helps protect your revenue without causing unnecessary friction for low-risk customers.

Organizing the Data You Collect

Of course, collecting all the evidence in the world won’t help if you can’t find it when you need it. Disputes come with notoriously tight deadlines for response, so a quick retrieval system isn’t just for convenience; it’s non-negotiable.

A well-designed storage and retrieval system lets you file, organize, and find the documentation you need quickly. If you’ve automated the collection of documentation, as we described above, part of that automation should include filing the data for quick retrieval.

Depending on the size of your operation, the data storage requirements could be extensive. Also, don’t forget that storing customer information must comply with stringent data security requirements. Between those two mandates, partnering with a third-party data storage provider may be a more cost-effective solution.

That said, building your own storage system doesn't have to break the bank. Again, your needs will depend on your business to some extent:

If you’re operating on a small budget, you can start with template-based manual processes. Here, you use checklists and standardized procedures to ensure that you’re segregating high-risk transactions from the rest and capturing the evidence you need for every transaction.

Mid-sized businesses might opt for a hybrid system. You can deploy automated tools for high-volume tasks, then switch over to manual processes for more nuanced operations that require more oversight.

If you’re a large business handling tens of thousands of transactions per month, you might consider investing in full automation. This should involve API integrations that can handle everything from evidence collection to dispute response. Again, offsite storage with a reputable provider may work best for your business. Look for a provider you’re comfortable working with; one that can produce references from long-time clients, and above all, is compliant with PCI-DSS mandates.

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Multi-Channel Chargeback Prevention Strategies

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