Chargeback Disputes and Your Business

Chargebacks are going to happen. There is no getting around this hard reality of running a business; however, it’s how you respond to chargebacks that can really impact your business. Other companies might tell you that all chargebacks can be avoided—this simply isn’t true. What we can do is make sure you’re prepared to respond when you do receive a chargeback. It’s this response that can make or break your business. Knowing the best ways to manage the chargeback dispute process makes an essential information packet to keep in your chargeback toolkit.

Experience has proven that employing an end-to-end solution will provide your company with the deep layers of protection needed to prevent and limit chargebacks, to help deflect or absorb the blow when you do receive a chargeback. Along with this front-end and back-end protection, you need to have some basic knowledge about chargeback disputes, so you can be ready to make key decisions and take action.

Key Chargeback Dispute Questions

Proceeding with a chargeback dispute is based on no light decision. There are instances when it makes smart business sense for you to proceed with the dispute and to represent your case. On the other hand, there are situations when the best decision for your company and its bottom line is to walk away and not pursue a chargeback dispute at all.

To help you determine how you should respond when you receive a chargeback, think seriously about these vital questions:

• Do you understand the chargeback dispute process?  There are few consistent industry standards to rely upon when it comes to chargebacks and the dispute process. Every bank and credit card company has its own approach and process to chargebacks, to which your response can result in costly confusion and red tape. To manage a successful chargeback dispute, you need to understand all aspects of the process and the evidence requirements. Be sure to have the requisite documentation easily available, and know who to contact with any questions during the dispute process.

• Can you represent your company properly?  Chargebacks and representment should be taken very seriously. Make sure you have the skills, knowledge, time, and resources to effectively pursue a chargeback dispute.

• How well do you understand the chargeback reason code?  The major credit card companies are not subject to industry-wide standardization on chargeback reason codes. The classification, descriptions, time limits, evidence requirements, and the number of digits in the many codes are unique to each credit card company. When you decide to pursue a chargeback dispute, you must fully understand the reason code and its requirements.

When responding to a chargeback dispute, make sure you can answer the above questions with understanding and confidence.

Chargeback Dispute Must Do’s

Once you feel prepared to successfully represent your company during the chargeback dispute process, keep in mind these important action points:

• Always keep your records up-to-date.  Presenting thorough evidence is key to winning a chargeback dispute: access to organized and accurate records makes it easier to collect the winning evidence.

• Know that reason code.  The reason code allows you to understand why the chargeback was filed. This should be the first item to research.
• Get advice on the chargeback dispute letter.  Your chargeback rebuttal letter must comply with the information you receive in the chargeback advice letter. For direction on this aspect of the process, contact us for helpful guidance.

• Avoid any mistakes that will lead to a second chargeback.  A second chargeback will be very costly and may negatively impact your business. Be careful in the decisions you make in the initial chargeback dispute so you can avoid a second chargeback.

• Know the time limits and respond accordingly.  Your response is bound by specific time limits. Make sure you’re adhering to the time limits as detailed in the chargeback reason code.

The early days of the dispute process and your initial decisions can make or break your chargeback representment case. While it’s not easy to win a dispute, it’s not impossible. What will make it more difficult to win is the failure to prepare.

To sum up, get informed and be prepared before you decide to dispute chargebacks. It will benefit your business and the industry as a whole when merchants like you stand up for their rights and push back against fraudulent and questionable chargebacks. But when the costs to you begin to add up, or when you lose more than you win, take a step back and think about your response process.

Remember to ask yourself the three key questions outlined above, to follow our chargeback dispute action points, and know that we welcome you to contact us with any questions you have about chargebacks.