Dealing with chargebacks can be one of the more challenging aspects of managing a business. Despite implementing proactive measures to minimize them, as discussed in our previous article “9 Insider Tips To Prevent Chargebacks”, some chargebacks are inevitable. This is particularly true for businesses in sectors where chargebacks are more common. Understanding how to effectively contest these chargebacks is crucial.
When to Contest Chargebacks
Identifying the right moment to challenge a chargeback is essential. While transactions made with stolen cards must be refunded, chargebacks due to ‘friendly fraud’ (legitimate purchases disputed by customers) are contestable. This includes scenarios where customers are dissatisfied with a product, find it defective, or experience buyer’s remorse.
Understanding ‘Friendly Fraud’
Despite its name, ‘friendly fraud’ is a serious issue, often resulting from customers finding it easier to request a chargeback than to contact the merchant. With banks simplifying the chargeback process through online forms and apps, it’s increasingly important for merchants to be prepared to present convincing evidence that the disputed transactions are valid.
Preparing for Chargeback Rebuttals
- Record Keeping: Organize and maintain detailed transaction records. Since merchants usually have only 30 days to respond to a chargeback, having organized records is vital.
- Understanding Evidence Requirements: Familiarize yourself with the type of evidence required by different card networks and tailor your data collection accordingly.
- Recognizing Reason Codes: Be aware of the reason codes associated with each chargeback to understand the nature of the dispute.
Effective Evidence for Contesting Chargebacks
Compelling evidence can include transaction data captured by payment gateways, such as IP addresses, and for physical products, proof of delivery. For digital goods, evidence of customer login and product usage is crucial.
Automating Chargeback Management
Consider investing in chargeback management software for efficient handling. Such systems can provide early notifications of chargebacks, allowing for direct communication with the customer to resolve issues promptly.
Responding to a Chargeback
Upon receiving a chargeback notification:
- Contact the Customer: Address the issue directly with the customer to attempt a resolution before responding to the bank.
- Rebuttal Submission: Submit a well-organized and comprehensive rebuttal to the bank, including all requested information and additional supporting evidence.
Partnering with a Skilled Merchant Service Provider
While not all chargebacks may be worth fighting, preventing and contesting them effectively can have a significant impact on your business’s bottom line. Partnering with an experienced merchant service provider can offer access to advanced solutions and expertise, especially for high-risk accounts.
If you’re grappling with chargeback issues and seeking expert advice, we’re here to assist. Contact us for insights on managing chargebacks effectively, or click the link below to connect with one of our ETA Certified payment professionals.
