How to Dispute a Chargeback

How to Dispute a Chargeback

When it comes to running a thriving e-commerce business, merchants must walk a fine line between providing a frictionless customer service experience and protecting themselves against fraudulent transactions. And sometimes, despite doing everything right, merchants find themselves on the receiving end of a costly customer chargeback.

But what are the right next steps? Accepting the chargeback may feel like an admission of guilt, and it results in fees and penalties and affects chargeback ratios. And yet, successfully fighting the chargeback isn’t guaranteed, and the time and effort spent addressing the chargeback takes a toll on revenue and productivity.

Merchants must carefully evaluate when it’s worth representing, or disputing, a chargeback. And if it is worth disputing, merchants must ensure they have the tools and solutions on hand that will increase the likelihood of a favorable outcome.

Note: While Visa now refers to chargebacks as “disputes,” we use “chargebacks” in this post to refer to customer-initiated reversals of payment.

Which Chargebacks Are Worth Disputing?

Many merchants don’t even bother disputing chargebacks; after all, only 21% of global chargebacks are decided in favor of the merchant. Plus, with so many consumers using chargebacks as a kind of “self-service refund,” it’s hard to allocate sufficient resources to dispute them all.

Yet every merchant knows the cost of chargebacks: lost sales, shipping costs and merchandise; expensive fees and penalties; the risk of losing merchant accounts; and damage to reputation. Too much of any of these, and an e-commerce merchant can be out of business quickly.

Many merchants wonder when expending the time, energy and resources needed to fight a chargeback is worth it.

There are certainly times when disputing chargebacks make sense, like when merchants:

  • Are confident the transaction was legitimate and want to challenge customers who are taking advantage of the chargeback system. (Nearly 50% of customers filing fraudulent chargebacks will file another one within 90 days.)
  • Have compelling evidence to refute the chargeback.
  • Feel the disputed dollar amount justifies the cost of protesting the chargeback.
  • Have already refunded the disputed dollar amount.

Successfully disputing a chargeback is harder than it sounds, but the tips below can help put the odds in your favor.

How to Increase Your Chances of Winning a Chargeback Dispute

There are strict deadlines and well-documented procedures that every merchant must follow when they begin the chargeback dispute process — but each set of standards varies widely by issuer. When a merchant chooses to fight a chargeback, they must ensure they know (and can deliver) what’s required of them.

1. Understand Chargeback Reason Codes

Each chargeback is assigned a reason code that clearly describes why a customer is disputing a transaction. Because some reason codes are more frequently abused than others, e-commerce merchants should be able to identify trends in their fraudulent activity. Noticing these patterns helps them avoid future disputes and prevent chargebacks, and it also helps them mount the right defense against a chargeback.

2. Gather and Submit Evidence

The evidence a merchant must submit to dispute a charge varies by chargeback reason. To cover their bases, merchants should ensure they’re keeping — and have easy access to — compelling evidence like:

  • Email correspondence between customers and merchants
  • Customer information, like user names and IP addresses
  • Order, shipping and delivery confirmations
  • Proof a customer downloaded or viewed digital goods (ebooks, games, computer software, etc.)
  • The merchant’s terms of service and return and refund policies
  • Any customer signatures authorizing payment
  • Proof the customer received or used the disputed merchandise
  • Evidence of a positive match between the address verification service and the billing address of the credit card
  • Records of previous transactions that weren’t disputed

3. Respond Promptly

Merchants must know how much time they have to respond to a chargeback dispute and be prepared to submit their compelling evidence within that strict time frame. It’s also essential for merchants to stay apprised of changes credit card issuers make to their chargeback procedures. For example, Visa recently shortened its time limits for responding to a chargeback from 45 to 30 days, and merchants who aren’t aware of this change will find themselves out of luck if they submit their evidence on day 31.

Defending Your Business Against Fraudulent Chargebacks

Representing chargebacks isn’t simple, isn’t fast and doesn’t guarantee a positive outcome. But that doesn’t mean a dispute isn’t worth pursuing.

However, over the long term, e-commerce retailers must focus on building their business, not representing chargebacks. That’s why they need a partner they can trust — someone who understands the chargeback dispute process and also how to help prevent chargebacks from happening in the first place.

ClearSale is one of only a few providers offering true chargeback insurance, providing a 100% guarantee against the costs of fraudulent chargebacks. We keep up-to-date with issuers’ changing guidelines and make sure your business is covered.

Give your business a fighting chance to defend its reputation and keep its hard-earned revenue. Contact a ClearSale analyst today to learn why so many businesses around the world use us as their trusted partner in the fight against fraud and chargebacks.

ClearSale Fraud Protection Buyers Guide

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