Second Presentment: When to Keep Fighting Chargebacks & Why
As a merchant, your relationship with your customers should be pretty straightforward. You market, sell, and package goods and services. Your customers, in turn, pay you for those items.
What happens when that relationship goes awry, though? What if a customer decides to dispute a charge and tries to claw their money back? In these cases, a second presentment may be in order.
In this article, we’ll give a rundown on the basics of second presentments. We’ll explain why you would file one, how it works, and what happens after submitting your documentation.
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What is Second Presentment?
- Second Presentment
A second presentment, also known as “representment,” is the process of re-submitting a transaction, along with additional documentation, to the bank after a chargeback.
[noun]/*se • kənd • pre • zənt • mənt/
When you complete a transaction and send the information to the bank for processing, this is called “presentment.” Not all presentments are final, though.
A customer might dispute a charge and request a chargeback. In other cases, the bank might initiate a chargeback on the customer’s behalf if they notice an error. There are legitimate reasons to do this. For example, if:
- The customer did not authorize the transaction.
- The goods or services provided did not reflect what was promised.
- The item was paid for but never shipped.
- The customer was charged multiple times for the same purchase.
- The merchant committed a processing error.
If any of these circumstances apply, you might not have much choice other than accept the chargeback and lose the funds from the sale. But, if the cardholder files a chargeback without a valid reason (i.e., commits friendly fraud), then you have the right to a second presentment.
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Why Submit a Second Presentment?
Our research suggests that six out of ten chargebacks filed by cardholders may be cases of friendly fraud. If you’re confident that a transaction was legitimate, then it could be worthwhile to submit a second presentment.
The first reason to challenge a chargeback is to recover funds lost in a dispute. This goes far beyond just the sales revenue. After a chargeback, merchants stand to lose an additional $2.60 for every one dollar in transaction value. So, a chargeback on a $100 transaction can ultimately cost you $360 in lost merchandise and overhead, added fees, and threats to your reputation.
40% of buyers who get away with friendly fraud will file another chargeback within 60 days.
When you don’t fight back, the bad actors are empowered to repeat their actions. As a result, chargeback losses tend to accumulate over time. Facing more chargebacks will lead to heftier fees. Chargebacks could force your processors to terminate your contract if the situation gets out of hand.
Fighting back against friendly fraud is necessary when considering what’s at stake. Submitting second presentments in response to friendly fraud lets you recover revenue, protect your reputation, and build better relationships with banks and processors.
How Does Second Presentment Work?
Now that we’ve covered what a second presentment is, it’s time to talk about how to get started.
Before you begin, you should ensure that the chargeback in question is invalid. You must look at the chargeback reason code and compare the cardholder’s claim to the information on file.
If you’re confident that a second presentment is justified, your next step should be to:
Step 01 | Watch the Time Limit
The clock is ticking for your response. Banks set hard deadlines for chargeback representment. You will automatically forfeit your case if you’re even one day over the limit.
Remember, though: chargeback deadlines vary between banks and card schemes. You must know the requirements for any relevant agency.
Your bank may send you a form called the Chargeback Debit Advice Letter. This should provide a straightforward outline for when and how to respond to the specific reason code.Learn more about chargeback time limits
Step 02 | Gather Your Evidence
Your case rests on the quality of the evidence you provide to the bank. You could lose if you lack any photographic or documented evidence of conversations held with the cardholder. Examples of compelling evidence include:
- Copies of the sales receipt and/or order forms
- Tracking numbers and proof of delivery
- A copy of your return policy, with proof it is easily accessible on your site.
- Descriptions and screenshots of items as they appear on your site
- Any communications indicating successful delivery or customer satisfaction
Remember: all evidence must be in response to the given reason/reason code, even if you believe that reason to be false.Learn more about compelling evidence
Step 03 | Make an Argument
The next step is to make your argument to the bank based on the evidence you have provided. The vehicle for this will be your chargeback rebuttal letter.
Your rebuttal letter should be concise, clear, and lacking emotion or erroneous language. Just relay the facts as you received them, and keep it brief. While there’s a basic format you can follow, each rebuttal should be tailored to the specifics of the second presentment at hand.Learn more about rebuttal letters
Step 04 | Submit Your Representment
Once all documents are compiled, you will submit the package (including all evidence) to your acquiring bank for review. Once your bank approves the representment, it is then sent to the cardholder’s issuing bank for a ruling.
You may also need to include supporting documents as well. These can include a Chargeback Adjustment Reversal Request, a Chargeback Debit Advice Letter, etc.Learn more about supplemental documents
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What Happens Next?
The second presentment is a critical process. We won’t lie to you, though: the odds are stacked against you.
Only three in ten merchants who submit a second presentment on their own have a win rate higher than 30%. If the bank rejects your second presentment, you have two choices available:
Accept the Chargeback
Give up and allow the chargeback to
go ahead as filed.
Appeal the dispute to the card scheme,
and hope they rule in your favor.
Chargeback arbitration is a last resort as an attempt to recover outstanding debts through the courts. This option will be even more complex, time-consuming, and expensive. You may be required to pay:
- Filing Fee
- Administrative Fee
- Withdrawal Fee
- Technical Fee
These fees can be anywhere between $100 and $250 each, making arbitration an incredibly expensive process per transaction. There’s still no guarantee of success, and once a decision is reached at the arbitration stage, it is final.
Improve Your Odds of Winning
You want to avoid the options outlined above by winning your second presentment case. How, though?
Winning a second presentment is not impossible, but it certainly isn’t easy. We recommend adopting these practices to improve your odds:
Learn the System
Remain current with the most applicable rules and regulations regarding chargeback representment.
Ensure that you have an effective and comprehensive system for storing and accessing pertinent documents.
Don’t Waste Time
Never wait for a deadline to run down before you take action. Be proactive and meet deadlines.
Know the Codes
Utilize available resources that help you learn to navigate and respond to each reason code.
Nail Your Rebuttal
Your evidence and argument are key to a winning dispute, plain and simple.
Don’t ever let illegitimate disputes get past you. Fight back whenever you are able.
Lastly, more effective chargeback management can make the difference between secondary disputes and recovered revenue. It’s best to track patterns, risks, and key performance indicators (KPIs) to learn what is or isn’t working and how much ROI you’re receiving.
On that note, we can help.
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