Is it Possible to Win a Chargeback Dispute?
Chargebacks are the silent killer of online businesses. In order to stay afloat, merchants must integrate representment into their chargeback management practices.
What is Chargeback Representment?
When a merchant processes a card transaction, the sale is “presented” to the bank. Therefore, “representment” is the act of submitting a transaction a second time. The representment process essentially asks the issuing bank to nullify the chargeback and charge the cardholder again.
Merchants consider representment as the process of fighting a chargeback. It is also referred to as a chargeback dispute; the merchant disputes the issuing bank’s actions and the resulting loss of funds.
How Does a Chargeback Dispute Affect the Business’s Bottom Line?
Merchants must do everything they can to prevent chargebacks from occurring. This includes attempts to reduce friendly fraud, improve customer service, use fraud detection tools, and implement business best practices.
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However, no matter how vigilant merchants are about preventing chargebacks, transaction disputes will still happen because some consumers have learned how to exploit loopholes in the chargeback process and engage in a practice known as friendly fraud.
This is where a chargeback dispute becomes a useful tool.
When illegitimate chargebacks occur, merchants should be prepared to dispute this faulty consumer behaviour. By doing so, merchants accomplish two very important things. First, merchants recover revenue that would otherwise be lost forever. Second, the chargeback dispute challenges the faulty consumer behaviour that led to the illegitimate chargeback.
In cases where friendly fraud is successfully executed and not challenged through representment, half of these consumers will file another illegitimate chargeback within the next 90 days. That’s why it is imperative for merchants to take action.
However, chargeback representment will only generate results if it is executed properly. An overly aggressive approach could actually increase costs and unnecessarily alienate payment industry members.
Tips for Winning a Chargeback Dispute
Since the burden of proof lies with the merchant, winning a chargeback dispute is often quite difficult. In fact, card networks report merchants win just 21% of their disputes.
Despite the fact that professional assistance is able to generate far superior results, some merchants are determined to manage chargebacks in-house. In these situations, there are several things merchants can do to increase the likelihood of success.
- Understand the process. From start to finish, the chargeback process is complicated. It’s filled with strict deadlines, documentation requirements, and more. Before you try to fight, make sure you have a thorough understanding of what you are facing.
- Maintain accurate records. If you do not have the appropriate records from the very beginning, you’ll never win a chargeback dispute. Check with the card networks to learn more about acceptable forms of compelling evidence. Then, create an organisation system to save the documents you may need later.
- Check the reason code. Each chargeback is accompanied by a chargeback reason code. This reason code helps the merchant understand why the chargeback was filed. Each card network has its own set of chargeback reason codes.
- Start writing. Each chargeback dispute needs to be accompanied by a chargeback rebuttal letter. Become acquainted with the letter writing process.
- Avoid second chargebacks. Second chargebacks, or pre-arbitration chargebacks, needlessly increase costs. As the old saying goes, do it right the first time.
- Take action. While chargeback time limits are quite lengthy for cardholders, merchants must act quickly.
- Dispute with confidence. If you’ve taken the necessary steps to eliminate merchant error and minimise criminal fraud, then you can dispute friendly fraud chargebacks with confidence.
Ensuring Greater Success
The chargeback representment process is an essential right granted to merchants by the card networks. It is the only way for merchants to recover lost revenue and challenge illegitimate consumer behaviours.
However, unless your representments are optimised for success, you might be doing more harm than good.
- The industry lacks standardisation. Each processor, acquirer, and issuer is allowed to process representments in any manner they choose. Everything from required documentation to how those documents are ordered can vary from one entity to another, meaning every single representment needs to be checked for compliance against several different arbitrary regulations. Failing to adhere to a bank or processor’s preferences means the representment won’t even be considered. Are you confident in your ability to interpret what is expected of you?
- Chargebacks are processed by humans, who can and will form long-lasting opinions about your business. Anything that doesn’t reflect your business in the most positive light can damage your reputation beyond repair. Are you confident in your ability to craft a professional representment, void of errors or improper remarks?
- Identifying chargeback triggers is challenging. However, knowing which chargebacks are disputable requires an understanding of the real reason behind the reason code. That’s why The Chargeback Company created Intelligent Source Detection—which is the only way to determine the source of a transaction dispute and create management strategies that won’t negatively impact customer retention. Without Intelligent Source Detection, merchants run the risk of disputing chargebacks that shouldn’t be challenged or forfeiting representment rights when revenue is at stake. Are you confident in your ability to challenge chargebacks without damaging customer loyalty?
So, is it possible to win a chargeback dispute, recover lost revenue, and influence industry-wide change? Of course.
Is it easy to craft a winning dispute? No, it isn’t. Is this something you should try to manage on your own? Probably not.
Contact The Chargeback Company today to learn more about what’s required of a winning dispute and how successfully challenging more chargebacks could significantly impact your bottom line.