Chargebacks: Tips to Fight Friendly Fraud and Get Your Money Back!

Ahh, chargebacks. If you’ve found yourself reading this, your experience may be like mine; your company has never fought chargebacks and has decided to start trying… and wouldn’t it be interesting for YOU to give it a go?!

Although this may be new for you, fear not. When I started my journey into the world of fighting chargebacks, there wasn’t a lot of literature or how to’s to walk me through the process, and there unfortunately still isn’t. Now that I’ve been in the business for 8 years, I’ve garnered tons of advice I wish I would’ve had when I got started disputing chargebacks. Let’s get you prepared for battle!

What exactly is a chargeback?

This is when a consumer contacts their financial institution and requests a refund for a purchase, instead of contacting the merchant. In turn, the bank contacts the merchant (you) to force you to return those funds. Originally, chargebacks were a way for consumers to protect themselves against fraudsters or unscrupulous merchants, but they’ve evolved into something else entirely: friendly fraud.

When you’ve gotten a handle on fraud prevention, the chargebacks you are usually left with are mostly friendly fraud. This type of fraud happens when the purchase was legitimate, but the consumer wrongly files a chargeback with their bank. This could be for so many different reasons:

• Buyer’s remorse
• They don’t want to return the item
• They’ve forgotten they purchased it
• A relative made the purchase
• They just plain don’t want to pay for it

The consumer will usually choose the chargeback reason of “fraudulent transaction” from their drop-down. So the burden falls to you, as the merchant, to prove to the bank that the purchase was legitimate and not fraudulent.

Why should a merchant fight chargebacks?

This is a great question! There is the initial loss of money from your bottom line and the fees related to receiving the chargeback, but more lasting are the programs and stigma that will affect your company. When you hit the 1% threshold of chargebacks versus transactions processed, the red flags go off with credit card card issuers. You will then start to find yourself in “programs” with credit card companies.

A program is designed to motivate you to rein in your chargebacks by imposing very large penalties (lots of $$$) and it can take many months to get disentangled from them. It’s surprisingly hard to keep chargebacks under that 1% threshold once they’ve gotten out of control.

There is also the “reputation” that comes with being a company with lots of chargebacks. You will find the list of payment processors that will work with you, shrinking quickly, as you become a risk and liability to work with.

So, how exactly do you dispute a chargeback?

Now for those tips. These are things I’ve learned from manually working disputes, and things I’ve picked up after many a conference call with payment processors.

How to prepare and submit your evidence:

1. Remember that everything you submit is going to eventually be reviewed by a human being, who is probably also reviewing hundreds of other disputes. Don’t include a wall of IP addresses or an extra-long explanation. Less is more. All the bank cares about is:

• A quick explanation of who you are and what the charge covers.
• The checkout/confirmation page
• Relevant IP addresses
• Proof of current activity, if applicable.
• A history of payments or if charge is currently still live, if applicable.
• Terms of Service (that should include refund, cancellation, renewal policies).

2. Be sure to circle the important info in every screenshot so there is no need for the bank to search.

3. The more information that directly connects the customer, the better. If you have access to a billing zip or postal code that matches either the IP address or the mailing address, include this. Visa and MC want that zip code and AMEX would love the full address, if available.

4. The screenshot of the checkout page should be what is visible to the customer when confirming their purchase. The following items are imperative and need to be visible on the checkout page, if they aren’t then they should be added:

• The price the customer is agreeing to.
• Is this purchase going to renew monthly? Make sure that’s visible on the page.
• A blurb summarizing your cancellation policy.
• A blurb summarizing your refund policy or “no refund” policy.
• A button or checkbox indicating the customer agrees to your Terms of Service and confirms their purchase.

5. If you have access to a copy of the email receipt the customer receives when they’ve made their purchase, include this as well.

6. Depending on the portal, you may not have enough slots for all your uploads when submitting evidence…most portals will allow you to upload a PDF or word doc. You can compile all your materials into one single upload and VOILA!

Things to remember:

• It may be 2017, but banks are still quite antiquated. Everything you submit is going to be printed, and then faxed. Repeatedly. Send clear and concise information, that won’t be lost after multiple printings.
• Since everything is going to be faxed multiple times, there is no need for color screenshots. This will just muddy up your evidence. So, no need to include Facebook photos of the customer wearing the item, etc.

After you submit your evidence:

• Once you submit your evidence, banks have up to 60 days to respond to the chargeback. It will take time to see results, and every time you tweak part of your process it will take a while to see if it worked. So be patient!
• If you win the chargeback but the bank submits a 2nd chargeback on it, sometimes it’s better to just accept the 2nd chargeback. The reason for this, is that unless you have new evidence, the bank doesn’t care. And because you probably sent everything the first time, there usually isn’t anything new to upload. But if you do have new information, then go for it!

Some final thoughts…

One last piece of advice is: keep your chin up. Sometimes even when you send every last shred of evidence that positively identifies the charge as legitimate and belonging to that cardholder, the bank will still side with the customer and not you. Every bank is different and some will side with you and some won’t — it’s just the nature of the beast. The important thing is to keep fighting and identify what works for you. Eventually you can start running some data on wins and losses and see if there are reason codes or dollar amounts you should focus on. Or if you’re wasting your time on certain types of chargebacks that you might be losing every time you fight them.

Please leave any unanswered questions or “amens” in the comments below!

Keep fighting the good fight. May the force be with you all.