How Businesses Can Dispute Chargebacks

Did you know the average chargeback to transaction ratio is 0.60 percent? This statistic means that for every 1,000 transactions, six of those will be a chargeback for businesses that accept credit and debit cards. While this may not seem like much, these fees harm businesses across every industry. Specifically, chargebacks affect organizations’ revenue, customer service, reputation with credit card processors, and long-term success. Even though merchants cannot eliminate chargebacks, they can take steps to dispute chargebacks. Keep reading to discover everything you need to know about handling chargebacks and some bonus tips for preventing these pesky fees.

Aside from credit card fraud, if your business receives chargebacks from legitimate transactions, there are a few steps you can take to dispute friendly fraud chargebacks and, hopefully, win your case. Indeed, businesses should not automatically assume that all chargebacks are valid. This is especially true when nearly 80 percent of chargebacks result from card fraud or friendly fraud. Friendly fraud occurs when customers submit a chargeback request for other reasons aside from legitimate fraud, such as never receiving a product. Let’s look at these tips below to learn how to handle a chargeback dispute.

Generally, customers tend to contact their card issuer to request chargebacks. A Chargebacks911 survey reported that 81 percent of shoppers contacted their issuing bank directly to ask for a chargeback, rather than working with the business regarding a product or service. The primary reason for this is that many customers believe it’s more convenient to work with their bank. This is an issue for merchants, especially when chargeback fees can cost them anywhere from $20 to $100 per chargeback.

Experts recommend that merchants contact their customers directly about any issues or concerns regarding their products and services before contacting the issuing bank. There are many reasons, but here are some common examples of why customers request chargebacks.

• The customer didn’t recognize the transaction because the billing details didn’t match the business name.
• The customer forgot about the transaction, such as recurring monthly or quarterly billing.
• The customer’s family member made a legitimate but unexpected purchase with their card.
• The customer never received their product, or it was defective somehow.

No matter the reason, businesses should respond to disputes in a professional, timely manner. Use this chargeback as an opportunity to improve customer service, brand reputation, and trust. Ideally, the merchant will help the customer find a simple solution to solve their issues and thus, end the dispute. It’s also not a good idea to expect the customer to call their card issuer and request that the charge be approved. Instead, businesses should keep a detailed record of all communication with their customer. This will be useful for providing the documentation necessary to prove that the card transaction was valid. After the business has updated the dispute, it’s essential to keep the customer up-to-date about their chargeback. Companies that maintain regular communication will avoid frustrating or worrying the customer about the status of their chargeback.

When it comes to chargebacks, it’s best to respond to these as soon as possible. Since chargebacks have specific deadlines and timelines, businesses should contact the card brands to determine how much time they have. Merchants can add these dates to their calendars and set phone reminders to avoid missing the deadlines. Indeed, it’s recommended that merchants gather and submit the necessary documents well before time is up. The last thing businesses want to do is rush at the last minute to send documentation and end up forgetting key evidence, such as an online receipt or delivery confirmation email. This will allow time for the various companies to send and receive information and review and make a final verdict regarding a dispute. Submitting documentation ahead of time will increase business owners’ chances of submitting everything on time and, hopefully, winning their cases.

After receiving a chargeback, business owners need to gather the essential information to handle the chargeback dispute. Remember that the documentation requirements will likely vary among card issuers and the type of transaction, such as card-present or card-not-present. For online purchases, merchants can take screenshots of order confirmations, tracking details, delivery confirmations, and anything else that provides proof of a legitimate purchase. As for card-present transactions, this can be a bit tricky to gather documentation, such as tracking or email confirmations. In this case, merchants can submit various documentation, including their documented return and shipping policies and signed transaction receipts.

While businesses are eager to send off the documents, it’s recommended to do a quality control check. Review all of the documents for any missing or incomplete information. The merchant’s payment processor can assist with answering questions regarding documentation requirements. Furthermore, it never hurts for companies to submit additional documents that may be useful for chargeback disputes. Indeed, it’s better to send more documents than necessary rather than submit only one or two items. When it comes to chargeback fees, a signed receipt will probably not provide enough evidence to indicate a legitimate charge.

Once a chargeback has been issued, it’s impossible to prevent it. This article discussed a few tips to dispute cases of friendly fraud. However, there are effective fraud protection tools to prevent future legitimate chargebacks, such as 3-D Secure. 3-D Secure refers to a three-step process that verifies a cardholder’s identification before an online credit or debit card transaction is authorized. By using 3DS, merchants can offload the liability to the issuing bank regarding fraudulent card charges. This is good for businesses because they will not have to pay chargeback fees for unauthorized charges. If you are interested in learning more about fraud prevention, contact IXOPAY today. IXOPAY is a leading cloud tokenization and 3DS partner offering customers the freedom and flexibility to work with any payment processor they need and the ability to establish a holistic security strategy using various layers like 3-D Secure and network tokenization.