At Midigator, we believe data analysis is one of the most impactful elements of a successful chargeback management strategy. Data-driven decisions produce far better results than guesses and assumptions. The Year in Chargebacks report is designed to help you recognize the value of data analysis and the role it can play in chargeback management.
A reader who works in the chargeback section of a major credit card company has just about had enough with people tossing around “chargeback! chargeback!” as the solution to every customer service problem. While it is a great tool, you gotta make sure you use it right. To help you do that, here’s our credit card company insider’s guide to the top 10 reasons why your chargeback will get rejected.
10. LYING
Remember, the merchant does have a chance to rebut these things. If you tell us that you ordered widget A but received widget B but have no proof, and the merchant sends proof that you actually ordered widget B, you’ll probably be getting rebilled!
9. THE CHARGE IS TOO OLD
Please, please check your statement every month. We work within very limited timeframes, and, technically, you are required to notify us of a dispute (in writing! Just calling in doesn’t obligate us to do anything), within 60 days of the statement date the charge appears on. Visa gives some extensions: non-receipt and quality. With quality, you have to show you’ve been working with the merchant consistently to resolve the problem. MasterCard pretty much only gives extensions on non-receipt.
8. NOT GETTING A SECOND OPINION LETTER FOR CHARGEBACKS OVER $100
If you’re disputing the quality of something over $100.00 or so, it pays to get a second opinion letter. Within reason, of course. If you’re disputing the quality of a repair, on the other hand, you pretty much have to have one. These need to be on a merchant’s letterhead and have actual details about your dispute. “Car still broken,” will get you started, but if the merchant sends a rebuttal it’s probably not going to fly.
7. YOU BOUGHT IT IN FRANCE
The lovely consumer protections we enjoy in the U.S. do not follow you across our borders. If you buy something overseas, the burden is on you to return the item and prove it the merchant accepted the return before we can do anything. International quality disputes? Forget it. Strangely enough, this is the one category that MasterCard is better in as it does not differentiate between domestic and foreign merchants.
6. TRYING TO CHARGEBACK A DIRTY HOTEL ROOM AFTER YOU STAYED IN IT
If you go to a hotel and the room is filthy, leave within 20 minutes and get proof of your checkout, if possible. If you stay the night, you accept the room.
5. NO PROOF YOU MADE THE RETURN BY MAIL
When you return something by mail, GET PROOF OF RETURN. This can not be emphasized enough. Tracking numbers work best, return receipts work as well. When you return something you have the same burden of proof to show the merchant gets it back as they do to show you have it in the first place.
4. FORGETTING THE DATE IT HAPPENED
When asked for dates, please provide them and be as specific as possible. It doesn’t have to be exact, but if you called around the middle of the month, April 15, 2009 is better than April 2009, especially since we’re going to have to call you to get a more specific range and do the same thing anyway. “Don’t remember” is not a valid option.
3. NOT GIVING THE MERCHANT A CHANCE TO FIX THE PROBLEM
Get in touch with them before you get in touch with us. Believe it or not, most merchants are actually on the up and up! If the merchant offers to try to fix whatever problem you have without charging more, you have to give them the chance. If you’re from New York and got your car repaired in Florida, you get back home and the repair isn’t working right, still have to give them a chance.
2. DISPUTING THINGS FOR THE WRONG REASON
It makes things more difficult and makes it more likely that you will lose. Don’t dispute things as “unauthorized” unless you never gave the merchant your credit card number. Don’t dispute things as “non-receipt” if the merchant did do something but you didn’t get the results you wanted.
1. USING MASTERCARD
With Mastercard (MC) the burden of proof lies on you. If you buy something face-to-face, get home and realize that it’s not as described, you’re out of luck entirely as you had a chance to examine the merchandise. Also, with MC it’s entirely up to you to know the merchant’s cancellation/return policy, even if they don’t disclose it. They didn’t tell you that you couldn’t cancel after three days? Too bad. Seriously, just use a Visa. It’s easier for everyone.
(Photo: frankieleon)
Editor's Note: This article originally appeared on Consumerist.
You Can Win a Chargeback Dispute…But Only if You Have the Know-How
They say justice is blind…right? Well, imagine walking into a courtroom to plead your case, but the burden of proof isn’t on the prosecutor: it’s on you. Unfortunately, this accurately reflects the reality of the chargeback dispute process.
Disputes were not designed to favor merchants, who are effectively considered guilty until they can prove themselves innocent. This brings up the question: is it possible to win a chargeback dispute? Should you really invest the time and energy required?
Here’s the Bottom Line...
A chargeback dispute isn’t easy. It’s a time-consuming and costly process, but not disputing can be more expensive in the long run.
Chargebacks inevitably result in more than just lost sales. Each sale that turns into a chargeback also entails lost shipping costs, merchandise, and processing fees, plus all the added fees associated with the chargeback itself.
These losses can mount quickly; in worst-case scenarios, merchants who experience too many chargebacks risk having their accounts terminated and their processing ability revoked. That alone could mean going out of business entirely.
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There are, of course, numerous steps you can take to prevent legitimate chargebacks…but those actions won't help against fraudulent chargebacks. Given that upwards of 80% of all disputes may be attributable to friendly fraud, you won’t get far relying solely on prevention. That's why representment is such an important part of an overall chargeback management strategy.
[NOTE: Before delving too deeply into the chargeback process, understand that different credit card networks often use different terms to describe the same item or process. This can get confusing very quickly, so for this post, we're going to stick to some of the most widely used and understood terminology.]
What is Chargeback Representment?
Each time you process a payment card transaction, the sale is 'presented' to the bank. Thus, 'representment' is the act of submitting a transaction a second time. Representment is commonly referred to as second presentment or a chargeback dispute: you dispute the issuing bank's actions and the resulting loss of funds.
Representment: The process of “re-presenting” a transaction to the cardholder’s issuing bank.
This process begins when a customer files a chargeback, either claiming that the charge was unauthorized or that the purchase did not live up to the terms of service in some way. If a chargeback is essentially the process of overturning a purchase, then representment asks the issuing bank to nullify the chargeback and charge the cardholder again.
When you submit a transaction for representment, you’re essentially telling the bank that the transaction was valid and should not have been overturned. Thus, representment entails two key factors: a chargeback rebuttal letter, and compelling evidence to substantiate the transaction’s validity, including:
- Sales receipts
- Order forms
- Tracking numbers
- Transcripts of communication between you and your customer
- Records of previous transactions that were not disputed
Of course, even if you win a representment, the cardholder can file a second chargeback, and the process starts again.
Losing the battle against chargebacks? Let us help.
Why Is a Chargeback Dispute So Important?
You should be do everything you can to prevent chargebacks from occurring, including:
- Engage in practices to reduce friendly fraud
- Improve customer service
- Leverage fraud detection tools to stop criminal fraud
- Implement business best practices.
Of course, transaction disputes will still happen no matter how hard you work to prevent chargebacks. Consumers have learned to exploit loopholes in the process; they’ve been trained by years of lax standards to see chargebacks as an alternative to a refund, rather than an emergency consumer protection. A minority of consumers even deliberately manipulate the system, attempting to secure products at no cost; a form of chargeback fraud known as 'cyber shoplifting.'
Disputing illegitimate chargebacks accomplishes three important objectives:
- Recover revenue that would otherwise be lost.
- Challenge negative customer behavior and the faulty system that enables it.
- Send a message to banks: 'there's a problem here, but it's not us.'
Not disputing chargebacks has the opposite effect; merchants end up losing revenue, but they're also tacitly encouraging the fraudulent behavior. In fact, with friendly fraud cases that are not challenged through representment, nearly half of the offenders will file another illegitimate chargeback within 90 days.
Additionally, banks tend to view undisputed fraud as an admission of guilt. In their view, if you don’t challenge the chargeback, it must be legitimate…right?
This all helps explain why you should engage in a chargeback dispute through representment any chance you get. Unfortunately, fighting back isn't as simple as it appears.
Chargeback Disputes: A ComplicatedSolution
Representing chargebacks is complex, expensive, and time-consuming, and handling the process in-house can be a challenge. It requires a team of individuals who can:
- Understand chargeback reason codes, which vary greatly across different card schemes.
- Stay abreast of new policies for each card scheme like Visa Claims Resolution.
- Manage compliance with international initiatives like GDPR or the Digital Single Market.
- Spend time tracking down compelling evidence to support the merchant's dispute.
- Write and submit comprehensive rebuttal letters within a limited timeframe.
- Leverage Visa Resolve Online and other tools at your disposal according to best practices.
It’s possible to engage every illegitimate chargeback dispute and have them overturned. It helps, however, if you know the 'tricks of the trade.'
Tips for Winning a Chargeback Dispute
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 behaviors. But chargeback representment will only generate results if executed properly; inaccurate or incomplete disputes may do more harm than good.
Card networks report that merchants win about 21% of disputes. This figure is less a reflection of actual guilt or innocence, and more an indicator of how difficult representments can be. Nevertheless, there are several things merchants can do to increase the likelihood of success.
Understand the Process
The chargeback process is defined by strict deadlines, documentation requirements, and more. Before you try to fight, make sure you have a thorough understanding of what will be required, and adhere to those standards.Maintain Accurate Records.
Unless you have appropriate records from the very beginning, your chances of winning a chargeback dispute are slim. Check with the card networks to learn what each considers acceptable forms of compelling evidence. Then, create an organization system to save the transaction documents you may need later.Learn to Read Reason Codes.
Each chargeback is accompanied by a reason code that helps the merchant understand why the chargeback was filed. Each card has its own set of chargeback reason codes; some are simple and straight-forward, others less so. You'll need to be able to decipher which codes are which and identify the ones that are most often abused.Start Writing.
Every single chargeback dispute needs to be accompanied by its own chargeback rebuttal letter. Become acquainted with the letter writing process. Note which types of letters get the best results from each network.Chargeback Rebuttal Letters
Learn how to create a winning debit or credit card chargeback rebuttal letter. Download our rebuttal letter template and writing checklist today.
DOWNLOAD NOWAvoid Second Chargebacks.
These pre-arbitration chargebacks (referred to as an arbitration chargeback by Mastercard) needlessly increase costs without boosting recovered revenue. Get it right the first time by doing your research to make each case is as airtight as possible and optimize your efforts.Know the Regulations.
The industry lacks standardization. Each processor, acquirer, and issuer is allowed to process representments how they choose, so documentation requirements can vary from one entity to another. Failing to adhere to individual bank or processor preferences could get a representment denied without even being considered.Successful Chargeback Online Casino Games
Put Your Best Foot Forward.
Chargebacks are processed by humans, who can form long-lasting opinions about your business based on your submissions. You must craft professional cases that follow those requirements and are error-free. Anything that doesn’t reflect your business in the most positive light can damage your reputation.Admit When You’re Wrong.
While most chargebacks can be disputed, disputing a case where the customer has a legitimate complaint really shouldn't be. Knowing the difference requires more than the ability to read reason codes: it also depends on understanding the real reason behind the reason code. Otherwise, you run the risk of disputing chargebacks that shouldn’t be challenged, hurting your reputation, and damaging customer loyalty.Fighting Chargebacks is A Full-time Job
Is it possible to win a chargeback dispute? Of course. But that doesn’t mean it’s easy, nor is it something you should necessarily try to manage on your own.
You should be focused on growing your business, not defending against chargebacks. You need professional insight…fortunately, we can help.
At Chargebacks911®, we dispute chargeback cases: it's what we do, and we do it better than anyone else. Contact us today to learn how we can successfully challenge more chargebacks and significantly improve your bottom line.