[Editor's note: January is Chargeback Recovery Month at Card Not Present (sponsored by Sift Science). While many retailers count on the holiday rush for revenue, more orders means more chargebacks. November and December may be jolly, but January can be a huge headache for those who are not prepared. Check back here throughout the month for updated content detailing what merchants can do to more effectively handle the increase in chargebacks coming in the new year.]
Even if you’ve been good all year, the holiday shopping rush always ends up dropping the worst kind of coal under fraud analysts’ trees: chargebacks. Friendly fraud chargebacks—when the cardholder disputes legitimate transactions—are among the worst pain points for e-commerce sites. But by harnessing the power of your fraud-fighting tool, you greatly increase your chances of recovering funds from friendly fraud chargebacks after the holidays. Here’s how.
To dispute a chargeback, you’ll need to gather “compelling evidence.” According to Visa’s chargeback dispute rules, merchants who present compelling evidence can prove a chargeback is invalid and recover funds. Compelling evidence includes:
- Photographs or emails that prove that the person receiving goods or services is also the cardholder
- Proof that there have been one or more undisputed payments for the good or service
- Proof that the goods or services were delivered
- Description of a downloaded good or service, the date and time it was downloaded, purchaser’s IP address, device ID, name, and email address
Though the “compelling evidence” language is unique to Visa, the dispute process is not. For example, the process for disputing Mastercard chargebacks doesn’t really differ from the Visa process. Fortunately, your fraud-fighting tool can grant you easy access to much of this compelling evidence.
Step 1: Gather identity information
Your fraud tool’s transaction review screen can show the user’s billing and shipping address, their device ID and their IP address. Use a screenshot of this screen to show that this information matches the cardholder’s information. Some consoles might have additional information you can harness too. For example, the Sift console also draws on the customer’s social media information, which can help verify their identity.
Step 2: Look up purchase history
To dispute a chargeback, it helps to show that the cardholder really did set up an account that was verified by the merchant. Use your fraud tool’s purchase history screen to see if the cardholder has a consistent transaction history with the same email address and phone number. That demonstrates the cardholder made purchases in the past and never filed a chargeback.
Step 3: Check geographic proximity
Many fraud tools contain a review screen that shows geographic proximity between the billing and shipping addresses. If they’re close, or the same, then the chargeback might not hold water. Coming out of the holidays, you might see an influx of legitimate transactions in which the cardholder shipped an item to a different address. To explain legitimate discrepancies, check to see whether the surnames match, whether the billing customer shipped the item to a business or university, and so on.
Step 4: Dispute the chargeback
Now that you’ve gathered your compelling evidence, it’s time to dispute the chargeback. The benefits extend beyond recouping losses; a chargeback dispute is also a helpful learning tool. The dispute process can help you gain insight into why customers are initiating chargebacks. You can then use those learnings to disincentivize them from doing so in the future.