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Chargeback Reversals: How to Win a Chargeback Dispute


Chargeback Reversals: How to Win a Chargeback Dispute

Merchants can do everything right in their e-commerce business, but sometimes, chargebacks happen. Not only are they frustrating, but they’re also expensive: For every dollar in chargebacks, merchants lose $2.94 in time, fees and penalties, physical goods, and shipping costs. And with that loss rising every year, too many chargebacks have the potential to cripple an e-commerce business.

That’s why it’s so important that when a merchant does decide to fight a chargeback, they do it the right way. Here are five tips for upping merchants’ chances of winning their next chargeback reversal and keeping more of their hard-earned revenue.

1. Know the Reason Code

Every chargeback has a corresponding reason code that explains the reason the customer gave for filing the dispute. These codes give merchants a better understanding of why the chargeback was filed and tell them what compelling evidence is required for a successful chargeback reversal.

By being aware of individual card issuer’s codes, merchants can also identify which transactions have the potential to affect their revenue, and which codes their product or service line is most vulnerable to — helping them become better prepared to prevent and defend against future chargebacks.

2. Have Compelling Evidence

A merchant’s business records will be the primary evidence used to demonstrate that the disputed charge is indeed valid, so without the right documentation, merchants will find themselves fighting an uphill battle with the credit card issuer.

Besides keeping a copy of the sales receipts, order forms and tracking numbers, merchants should also hold on to these pieces of compelling evidence:

  • Delivery confirmation, showing the order was delivered to the customer
  • Proof the customer logged in, downloaded, viewed and used a digital order (e.g., computer software, in-game purchases)
  • Correspondence between the customer and the merchant’s customer service department
  • Evidence the customer accepted the merchant’s service, return and refund policies
  • Screenshots of a customer’s public social media account that shows the disputed goods being used
  • Documentation showing the customer was notified about any upcoming recurring purchases

3. Respond Within Established Timeframes

While customers often have up to 120 days to file a chargeback on a purchase (even longer for those customers in the United Kingdom), merchants have a far shorter timeframe for responding. And these response timeframes vary by payment platform: Visa now gives merchants only 30 days to respond to a chargeback, while merchants have just 10 days to submit evidence for a PayPal dispute. That’s why it’s imperative merchants know exactly how much time they have to respond to a chargeback dispute and then submit their compelling evidence promptly.

For merchants who fail to respond promptly, credit card issuers used to simply assume the merchant accepted the chargeback. But with the Visa Claims Resolution initiative, merchants may now face additional fines if they don’t submit a formal response to Visa either accepting or denying the charge.

4. Look for a Pattern of Behavior

Has the customer filed similar disputes in the past? Have they been successful in their efforts? If merchants can find evidence these customers habitually file chargebacks — and lose in representment — this can bolster the case for fraudulent chargebacks.

5. Write a Rebuttal Letter

While the evidence a merchant submits will support their case, a carefully constructed rebuttal letter offers merchants the opportunity to succinctly highlight the facts that buttress their chargeback dispute. Here are some tips for effectively constructing this letter.

Keep It Short

The letter itself doesn’t need to be longer than one page, and keep sentences clear and concise.

Keep It Objective

No matter how frustrated a merchant is with a customer or the situation, merchants need to keep emotion out of the letter and stick to the facts.

Make It Specific

Each rebuttal letter should be customized to each dispute and should focus on the evidence a merchant has that invalidates the customer’s claim. Don’t forget to include details like the chargeback reason code and the dollar amount being contested.

While it is possible for merchants to win chargeback disputes when they follow these tips, they’re still out valuable time, money and resources. That’s why it’s important to have a fraud prevention partner like ClearSale, who offers a 100% chargeback guarantee. If we approve a transaction that turns out to be fraudulent and results in a chargeback, ClearSale will pay the entire amount of the chargeback. Contact one of our analysts today to learn how seriously we take chargeback protection and how our unique approach can protect your business.

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