In some cases, chargeback alerts are a lifeline for merchants. They offer an early warning, letting you know a dispute is coming before it hits your merchant account. Used correctly, alerts give you a chance to issue a refund and avoid a formal chargeback, helping to protect your chargeback ratio in some cases and sidestep costly monitoring programs like Visa’s VAMP and Mastercard’s ECP. Rapid Dispute Resolution programs deliver a similar value, by automatically resolving customer disputes and preventing chargebacks before they are officially initiated.
But what happens when you’re not under fire? Many merchants fall into a trap: they lean too heavily on alerts even when they’re safely below threshold. They refund disputes preemptively, fearing a chargeback that might never do real damage. In the process, they sacrifice recoverable revenue and miss the bigger picture.
More importantly, alerts aren’t cheap. When you accept the alert, you pay for both the alert and will never recover the lost revenue of the chargeback. That means you’ll be losing more than the chargeback amount.
Let’s break down why your alert strategy (or, as some in the industry call it “chargeback prevention”) might be costing you more than it’s saving.
1. Overusing Alerts When You’re Below Thresholds
If you’re not in danger of exceeding Visa or Mastercard’s chargeback limits, automatically refunding every alert might be overkill. Sure, alerts prevent chargebacks, but at a cost: you’re surrendering revenue that you could have fought for and won.
Not every dispute should be refunded. In fact, we see many merchants reflexively accept losses just to keep their ratios pristine, even when they’re nowhere near the red zone. That’s a defensive strategy, and it’s one that leaves money on the table.
Instead, you should treat alerts as a signal, not a command. Evaluate each one, and only refund those that actually threaten your thresholds or can’t be reasonably fought. Use your breathing room beneath the monitoring programs to be more selective and strategic.
2. Failing to Integrate Alerts Into a Broader Chargeback Strategy
Alerts shouldn’t live in a silo. They’re just one feature in a larger toolkit that includes chargeback disputes and an active strategy to minimize both fraud and chargebacks.
Yet many merchants treat alerts as the whole playbook – chargeback prevention. They don’t connect the dots between alerts and outcomes, like how often a refunded alert matches a valid transaction, or whether alerts are flagging true fraud or friendly fraud disputes.
Without this context, you risk reaction instead of optimization. Alerts should inform your broader chargeback strategy, not replace it.
3. Not Monitoring Alert Effectiveness
Are your alerts actually working? Many merchants don’t track key metrics like:
- How many alerts result in prevented chargebacks.
- The percentage of refunded alerts that were likely winnable disputes.
- Alert costs vs. revenue saved.
Without this data, you can’t tell if your alert provider is delivering value, or if you’re refunding good transactions out of habit. A smart alert strategy requires constant tuning. What worked last quarter may not work next quarter.
Rethink, Refine, Recover More Revenue
Alerts are powerful, but only when they’re part of a balanced chargeback strategy. By being more selective, integrating alerts with other fraud and dispute tools, and continuously tracking outcomes, merchants can protect their ratios and maximize revenue.
At Justt, we help merchants go beyond alerts. Our platform analyzes dispute patterns, evaluates risk thresholds, and automates smart decision-making, so you can automate chargebacks so that you win back the most revenue.
Let’s make alerts work for you, not against you. Ready to take control of your chargeback strategy? Book a demo with us and see how much revenue you could recover.
