For merchants, chargebacks mean lost revenue, lost product, paying chargeback fees, and in worse cases, losing the ability to process payments. Luckily, merchants are allowed to fight illegitimate chargebacks. The issuing bank needs proof from the merchant that they acted according to best policies and procedures, entitling them to the money.
To do this, you need to submit compelling evidence within a specified timeframe. But the question is, what constitutes compelling evidence when fighting a chargeback?
Unlike criminal cases, in chargebacks merchants are considered guilty until proven innocent. Although the case starts in favor of the customer, with strong evidence you can show reasonable doubt against the customer and win the case.
Some documents that can help you create a strong case include:
Not every document helps build a strong case. The evidence you submit should show the validity of the transaction in dispute. As such, considering the reason code is imperative.
Reason codes are alphanumeric abbreviations explaining the chargeback. Every code points to a specific rationale the credit card company considers a legitimate reason for a dispute. Your chargeback rebuttal letter, including compelling evidence, should be tailored to the reason code.
Unfortunately, reason codes don’t always accurately reflect the customer’s motivation behind filing a dispute. This is because issuing banks follow different criteria when assigning reason codes and sometimes cardholders misrepresent or misconvey the reason they are challenging a charge. Consequently, merchants receive mislabeled chargebacks. Despite these challenges, merchants should present compelling evidence based on the reason code.
Depending on the business model, product, method of selling, and industry, merchants have different documents available. Below are examples of compelling evidence for different merchants.
Retail merchants operating from physical stores often receive chargebacks caused by buyer remorse. To win these chargebacks, your evidence should contain:
Retail merchants who scan EMV chips and follow payment processing regulations aren’t liable for fraud claims. As such, EMV compliance is a great element in preventing chargebacks.
For merchants selling and shipping tangible items, the evidence submitted should prove receipt and usage of items. The best compelling evidence for eCommerce merchants is signed proof of delivery. Other types of evidence include:
To prevent chargebacks caused by account takeover fraud, merchants should implement two-factor authentication through email or a phone number.
Merchants with subscription-based business models or that sell digital products have a big challenge providing compelling evidence since it’s hard to prove product delivery.
The best evidence for these merchants is an IP match that confirms the customer’s IP address matches the address associated with the credit card used for the purchase. The IP address can also be used to prove the customer logged into their account to use or download the product.
Other compelling evidence for digital goods include:
For travel and hospitality merchants, revealing a CVV and AVS match is key for fighting travel chargebacks from online transactions, while voice authorizations are important for phone sales. Copies of customer communications and check-in details are compelling evidence for these businesses.Â
Other compelling evidence include:Â
Challenging a chargeback requires investing time and money without guaranteed success. Factors that cause challenges include:
Credit card networks update their policies and regulations frequently and irregularly. As such, documents considered compelling evidence change overnight.
Fighting chargebacks is a time-consuming and complex process. Even with a couple of chargebacks a month, a lot of resources are diverted to fighting and preventing chargebacks while other business operations are neglected.
Merchants fighting their chargebacks have a low return on investment. Even if they win a chargeback, they risk pre-arbitration, which involves higher fees and lower chances of success.
To have great chargeback management results, including higher win rates, and greater revenue recovery, consider outsourcing help.
Justt provides an end-to-end chargeback solution that is customized for each merchant and includes detailed reporting. Our solution uses human expertise combined with artificial intelligence to improve the evidence building process and optimize success rates in handling chargebacks. For more information on how to build compelling evidence, contact us today.
These are documents that a merchant submits with chargeback responses to prove the validity of a transaction. The documents submitted depend on the chargeback reason code.
You may not always get the outcome you want when fighting a chargeback. However, you can increase your chances of winning by providing correct evidence and sticking to deadlines. Average success rates vary greatly by industry vertical. The most recent overall benchmark for merchants who contest their chargebacks is a 32 percent success rate.
You must submit compelling evidence according to the reason code proving that you met your end of the deal within the specified timelines. Learn more about Chargeback dispute
Yes. Banks do this by requesting more details about a transaction from the cardholder and merchant before deciding the outcome. Read more.
It's a cover letter for the chargeback representation package that summarizes the case and contains evidence supporting the transaction's legitimacy. It's the first thing the representative at the bank will read.
A chargeback rebuttal letter should be short with bullet points and have persuasive language. A rebuttal letter should include:
Merchants can opt to fight the chargeback by submitting a rebuttal letter along with compelling evidence against the claim or accept the chargeback.
