If a consumer files a dispute against your business, you can either accept the chargeback or challenge it through what is known as representment: merchants literally “re-present” the transaction to the issuer in hopes of having it reversed.
Winning a chargeback reversal is not impossible, but the procedure is complicated and time-consuming, to the point where many merchants feel the end doesn't justify the means.
For long-term sustainability, however, ignoring chargebacks is not an option. In the short term, chargebacks are a huge drain on your resources; over time, however, disregarding them could put your company out of business.
Fighting for Chargeback Reversals
Merchants should challenge as many chargebacks as possible. You can increase your odds of winning by using these tips from industry experts to get started.
Tip #1: Fine-Tune Documentation
To win a chargeback reversal, you must provide adequate "compelling evidence,” or documentation that contradicts the cardholder's claim and supports your case.
Be sure to keep—and file—copies of receipts, order forms, tracking numbers, emails, and other customer communications. The stronger your paper trail, the more effective your case.
Tip #2: Write a Rebuttal Letter
You’ll also need to write a detailed rebuttal letter for each dispute. Stick to provable facts and clearly explain context and meaning to demonstrate why the original transaction should stand.
Tip #3: Act Quickly
All parties in a dispute must abide by pre-determined time limits—in some cases, 5 to 10 days after receiving notice of the chargeback. Worse, the timeframes vary based on the card network, the processor, and other factors. The sooner the chargeback reversal process is initiated, though, the more likely it is to succeed...so make a point of responding in a timely manner.
Tip #4: Understand the Reason
Every chargeback dispute comes with a reason code that shows the reason the cardholder gave for filing the chargeback. Each network has its own codes, but the reasons from card brand to card brand are similar.
Knowing the different reason codes can help win chargeback reversals, but does little to help prevent future disputes, since reason codes seldom show the real reason for the chargeback (typically friendly fraud).
Tip #5: Avoid Unwinnable Situations
While fighting for a chargeback reversal is never easy, some chargebacks are significantly harder to fight than others: winning a dispute that originated in the US or the EU, for example, is easier than reversing a chargeback from Russia or Indonesia. Avoid these unwinnable situations if possible.
Tip #6: Learn from Your Mistakes
Win or lose, the savvy merchant will examine the outcome of every chargeback dispute for ways to better handle the next case. These "real-world" experiences are the best barometers of your actual chargeback situation. Monitor every dispute and use that information to devise a long-term mitigation strategy.
Tip #7: Get Professional Help
Every invalid chargeback should be challenged, but that doesn't necessarily mean you should do the fighting. Turning to professionals is almost always the most cost-effective solution.
Filing chargeback reversal cases yourself means
- Reallocating resources that could be used to grow your business;
- Learning industry jargon that is technical, constantly evolving, and inconsistent; and
- Trying to affect change while not having the necessary insider access.
The sad truth is, merchants who do their own representment will lose over 70 percent of their cases.