How to Fight a Chargeback? 6 Necessary Steps that Every Business Owner Must Follow

ChargePay Team
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January 4, 2024
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A chargeback is a financial burden on any business owner. If you've ever had a customer dispute a transaction and request their money back, you know the frustration it can bring. That's why knowing how to fight a chargeback is so crucial for merchants. 

To ensure that you win most of your chargeback disputes, we'll have outlined 6 necessary expert proven steps that every business must be familiar with. By understanding these steps, you'll be better prepared to handle chargebacks and protect your hard-earned revenue. 

So, let's explore and learn how to fight and win chargebacks like a pro.

Step 1: Identify the Reason Code

To fight chargebacks, the first step is figuring out the reason behind it. Card networks like MasterCard, Visa, American Express, and Discover has there own dedicated reason code.  

The platform specific reason code like 10.1 or 11.3 explains why the chargeback happened in the first place. Identifying this reason will make it easy for merchants to dispute a chargeback if it is illegitimate.

What's a Reason Code and Why Does it Matter?

A reason code is a short code that tells you why a customer initiated a chargeback. It's like a platform specified code that tells you about the reason leading to chargeback. 

These codes are used by banks to understand what went wrong from the buyer or seller side. It's important to get this code right because it guides your next steps.

2 Examples of Common Reason Codes

There are different reason codes, and each one falls in a generalized category. Let's break down a couple of genric ones:

  • Fraudulent Transaction (Code 10): This code indicate that a customer has claimed they didn't purchase at all. It means that someone else has made a purchase from their card or scammers have the information about customer card and are involved in scam.
  • Product Not Received (Code 30): If a customer says they never got the stuff they bought from you, this code is the reason.

3. How to Find the Reason Code

To find the chargeback reason code for a particular transaction, you typically need to check the chargeback notification or documentation provided by your payment processor. Here's a general guide on how to find the chargeback reason code:

1. Check Chargeback Notification

When a chargeback occurs, the payment processor usually sends a notification to the merchant. This notification will include details about the chargeback, including the reason code.

Look for emails, messages, or notifications from your payment processor regarding the specific chargeback.

2. Access Merchant Dashboard

Log in to your merchant account or payment gateway dashboard provided by your payment processor.

Navigate to the section that displays chargeback information or disputes.

3. Review Chargeback Documentation

Once you are in the chargeback section, find the specific chargeback in question.

Review the documentation related to the chargeback. This may include details such as the reason code, transaction details, and any supporting documents submitted by the cardholder.

4. Contact Payment Processor Support

If you cannot find the reason code in your online dashboard, consider reaching out to your payment processor's customer support.

Contact the support team through phone, email, or chat, and provide them with the transaction details. They should be able to provide you with the reason code and additional information about the chargeback.

Keep in mind that chargeback processes and information may vary among different payment processors, so always refer to the guidelines provided by your specific service provider.

4. Why You Need to Identify the Reason Code

Identifying the reason code for a chargeback is crucial for merchants to understand the specific nature of the dispute initiated by the cardholder.

Each reason code corresponds to a distinct issue, such as fraud, processing errors, or customer disputes. By pinpointing the reason behind the chargeback, merchants can tailor their response with relevant evidence and documentation.

This targeted approach not only improves the chances of successfully disputing the chargeback but also enables businesses to address underlying problems, implement preventive measures, and enhance overall transaction processes.

Understanding the reason code is a key step in effectively managing chargebacks, allowing merchants to navigate disputes efficiently and mitigate potential financial losses.

Step 2: Respond within Platform Time Limits

To deal with chargebacks, timing of response is quite crucial. Taking prompt action is a key factor in effectively disputing customers' claims. We have listed some common but essential information so that you can make the most of provided time limits.

1. General Time Frame 

Chargebacks come with a specific time limit within which they can be disputed. This time frame varies based on the card brand involved, but it typically falls within the range of 60 to 120 days from the date of the original charge. 

It may seem like a decent amount of time, but it's important to remember that it's a finite window.

2. Importance of Acting Quickly 

Disputing a chargeback disputes like resolving any other issue in your business – the sooner, the better. When you receive a chargeback notice, don't consider it the cost of going business and start with the step 1 and then respond with provided time limit. The time limit starts the moment chargeback notice arrives. 

By acting swiftly, you're showing the cardholder's bank that you take the matter seriously and are proactive in addressing it.

3. Advantages of Early Action 

Disputing a chargeback promptly offers several advantages. First and foremost, you have a better chance of retrieving and organizing the evidence you need to make your case effectively. Waiting until the last minute can lead to rushed and incomplete submissions.

Moreover, timely action can help prevent potential financial strain. Chargebacks impact your cash flow and overall financial stability, so the sooner you resolve them, the sooner you can minimize their impact on your business.

4. Avoiding Missed Opportunities 

Waiting until the last minute to dispute a chargeback can result in missed opportunities. The more time that passes, the more difficult it can become to gather relevant documentation, communicate with customers, and build a strong case.

Additionally, missing the dispute window altogether means forfeiting your chance to challenge or dispute the chargeback. Once the time limit expires, your ability to fight the claim diminishes.

Step 3: Assemble Compelling Evidence

To fight a chargeback, having solid evidence is a must to win the dispute and recovery your money. This evidence shows the cardholder's bank that you've fullfilled your service as a merchant and that the chargeback claim is unjustified. 

Here's how you can gather compelling evidence to back your case:

4 Types of Evidence That Help in Winning

  1. Receipts and Invoices: These are your proof of the transaction. Keep copies of sales receipts, invoices, or shipping confirmations handy. They show that the customer made a purchase and received the product or service.
  2. Communication Records: Any chats, emails, or messages exchanged with the customer acts as a solid evidence. They demonstrates that you've addressed their concerns or provided support. These records can reveal the true nature of the transaction and the customer's satisfaction level.
  3. Visual Evidence: If you sell physical products, photographs or videos of the product can show its condition and quality. Visual evidences are more powerful in proving that the customer has received what they paid for.

Bringing in an expert or chargeback management solution can help your built a solid case. If you're dealing with a complex issue, having an expert's opinion can provide clarity. For instance, a fraud investigator's report can strengthen your argument if fraud is involved.

Make Your Evidence Clear and Concise

Clear evidence makes the fight and representment smoother. When you're presenting evidence, make sure it's easy to understand and directly related to the chargeback reason.

If the evidence is muddled or confusing, it will not help your case.

Relevance is Key

Provide evidences that directly relates to the chargeback reason. If the chargeback is about the quality of a product, focus on evidence showing the product's condition, not the shipping process.

How to Present Your Evidence?

You just randomly send your evidences to the bank. You'd organize it even if your fighting gaming chargebacks.

Make sure your evidence is well-organized and labeled. Create a clear document that lists the evidence you're submitting. Label each piece of evidence, explaining what it is and why it's relevant.

Step 4: Write a Rebuttal Letter

Writing a strong rebuttal letter is a key step that can make a big difference. This is your chance to explain your side of the story to the cardholder's bank.

Follow these expert guidelines to create a convincing rebuttal letter:

1. Address the Concerns Directly 

Begin your letter by acknowledging the specific concerns raised by the customer. This shows that you understand their point of view and are taking their complaint seriously. Address each issue one by one.

2. Be Clear and Concise 

Keep your letter focused and to the point. Explain your response clearly and avoid unnecessary details. The goal is to present a compelling case without overwhelming the reader.

3. Present Your Evidence 

This is where your gathered evidence comes into play. Attach copies of relevant documents like sales receipts, invoices, or shipping confirmations. If there were communications with the customer, include them too. These documents back up your position and help the bank understand the situation better.

4. Stay Professional 

Maintain a professional and respectful tone throughout the letter. Remember, the bank is reviewing your response, so professionalism matters. Avoid any emotional language or blame.

5. Logical Flow 

Organize your letter in a logical sequence. Start with a brief introduction, then address each concern with supporting evidence. Conclude by summarizing your key points and expressing your hope for a fair resolution.

6. Provide Contact Information 

Make sure to include your contact details in case the bank needs to reach out to you for further clarification. This adds credibility to your response.

Step 5: Compile and Submit Your Representment

When you're ready to fight a chargeback, putting together your evidence and presenting it correctly can make a big difference. Here's how to compile and submit your representment:

1. Organize Your Evidence

Gather all the evidence you've collected that supports your case. This includes sales receipts, shipping confirmations, emails or chat transcripts, photos, videos, and any expert opinions if you have them. Make sure everything is clear and easy to understand.

2. Arrange in Chronological Order

Sort your evidence in the order of events. Start with the initial transaction and move through to the point where the chargeback was issued. This helps the bank understand the sequence of what happened.

3. Craft a Clear Rebuttal Letter

Write a short and clear rebuttal letter to accompany your evidence. Address the concerns raised by the customer, explain your side of the story, and point out how your evidence counters their claim.

4. Follow the Submission Format

Different card brands might have specific formats for submitting evidence. Make sure to review the guidelines provided by the card brand or the payment processor. This helps ensure your submission is in the correct format.

5. Be Timely

Submit your evidence within the timeframe given by the card brand or payment processor. Acting quickly shows that you're serious about resolving the issue.

6. Online Submission or Physical Mail

Depending on the process, you might need to submit your evidence online through a portal provided by the payment processor, or you might have to mail it physically. Make sure to follow the specified method.

7. Double-Check Everything

Before you submit, double-check that you've included all the necessary evidence, that your rebuttal letter is clear and concise, and that you've followed the submission instructions accurately.

8. Keep Records

Keep copies of everything you submit – your evidence, the rebuttal letter, and any confirmation or reference numbers you receive upon submission. This is your backup in case you need to reference it later.

Step 6: Wait for the Final Decision

Once you've done your part and submitted all the necessary information and evidence, it's time to take a step back and wait for the final decision. This can be a bit nerve-wracking, but it's an important part of the process. 

Here's what you can expect during this waiting period:

1. Review and Evaluation

The cardholder's bank will review the evidence you've provided, along with any information from the cardholder's side. They'll evaluate the situation based on the reason code and the documentation you've submitted.

2. Communication

In some cases, the bank might reach out to you for additional information or clarification. They might ask for more details about the transaction, the evidence you've submitted, or any other relevant information. Make sure to respond promptly and provide the requested information.

3. Decision Timeline

The time it takes for a decision to be made can vary. It's a good idea to check the specific time frames set by the card brand you're dealing with. Generally, you can expect to receive a decision within a few weeks.

4. Possible Outcomes

  • Reversal: If the bank finds your evidence strong and relevant, they might reverse the chargeback in your favor. This means you'll get the funds back and won't have to cover the disputed amount.
  • Rejection: On the other hand, if the bank finds the cardholder's claim valid and your evidence insufficient, they might reject your dispute. In this case, the chargeback will stand, and you'll lose the disputed funds.
  • Partial Resolution: There's also the possibility of a partial resolution, where only a portion of the disputed amount is returned to you.

5. Notification

The bank will notify you of their decision. This might come in the form of an email or a letter. They'll explain the reasoning behind their decision and let you know the next steps.

6. Appeal

If the bank rejects your dispute and you strongly believe that their decision was incorrect, you might have the option to appeal. This involves providing further evidence to support your case. Check with the bank on their appeal process if necessary.

Final Thoughts on Fighting a Chargeback

To fight fraudulent and illegitimate chargebacks, ChargePay emerges as the ultimate solution for merchants seeking a robust and effective solution.

With Fully AI-automated technology, ChargePay ensures an unparalleled success rate, allowing businesses to effortlessly contest and triumph over chargebacks.

With a hands-free approach, ChargePay's automated system responds to new chargebacks in real-time, generating winning representments without any manual effort.

This seamless integration with major payment processing providers like Shopify, PayPal, and Stripe empowers merchants to reclaim up to 3.5 times more chargebacks, significantly boosting revenue recovery.

ChargePay not only revolutionizes chargeback defense but also stands out as a comprehensive fraud management solution.

The AI-driven system is adept at identifying and countering fraudulent chargebacks, safeguarding businesses from malicious activities.

By recovering over 80% of lost revenue, ChargePay propels businesses toward faster growth and enhanced credibility with acquirers and issuers.

The platform's versatility extends across diverse industries, ensuring that merchants in eCommerce, entertainment, healthcare, and more can experience the transformative power of ChargePay's automated chargeback management, ultimately securing uninterrupted business operations and sustained profitability.

Request demo today and start winning chargebacks for free!

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