Mastering Chargeback Representment: A Step-by-Step Approach

No one likes to receive a chargeback notice. It means that at some point during a transaction, a problem occurred. Or at least, the customer thinks a problem occurred. Either way, the filed dispute automatically reverses your sale revenue—and includes several unwelcome fees and penalties. 

But what if the customer is, in fact, wrong? Customers make mistakes, and many people engage in friendly fraud (mistaken or purposeful fraud by the cardholder). You don’t need to pay for these types of invalid chargebacks. If you have sufficient evidence, you can fight such false claims. 

The process of challenging an incorrect dispute is known as chargeback representment. And the better you conduct the representment process, the more dispute cases you can win. That directly earns back "lost" revenues due to chargebacks. With that benefit in mind, let's explore all you need to know about representment. 

Understanding Representment

Chargeback representment allows merchants to question customer claims. Merchants use the process to “re-present” evidence to a card issuer. Like a court case, you and your customer offer proof to the judge (the card issuer). The cardholder tries to explain how the transaction failed or occurred incorrectly. In response, you show the transaction's authenticity. It's a civil way to work through a disagreement. 

After an investigation, the card issuer decides who is correct. If the customer wins, you must pay the chargeback. If you win, you earn back the original sale funds (and the chargeback fees are waived). 

Together, the chargeback and representment process builds a safe and secure payments industry. Consumers have the right to protect themselves from incorrect credit card charges (e.g. fraud, billing errors, double charges, etc). Merchants can also defend themselves from false disputes (e.g. buyer's remorse, forgetfulness, etc). Without these safeguards, no one would use or accept credit cards.  

The Chargeback Representment Process

So how does it work? If a customer disputes a charge and you believe that dispute is incorrect, here's what to do: 

1. Analyze the chargeback notice: When a customer files a chargeback, your processor or acquirer will deliver a chargeback notice. This notice will contain all the pertinent information (e.g. the chargeback reason code, transaction data, your submission deadline, etc). Take that info and compare it to your internal data. Note any problems or issues—inconsistencies hint at a false claim. Analyze to determine if the customer dispute is valid. 
2. Compile relevant evidence: After analysis, you have two choices: accept the chargeback or fight the claim. If you plan to refute the dispute, you must prove your case. Collect all evidence that shows you completed the payment in good faith. Evidence can include receipts, delivery notices, customer communication, cardholder verification, etc. 
3. Write a clear representment letter: Next, craft a formal rebuttal. The letter should summarize your evidence. Explain to the card issuer in your own words why the dispute made by the customer is invalid. The letter usually displays helpful proof such as tracking numbers, time stamps, and authorization codes. 
4. Submit a representment package: Send your representment letter and all supporting evidence to the acquiring bank. This will kick-start an investigation, which the card issuer will conduct. For tough cases – or if you sent in ill-prepared evidence - you may have to provide secondary material.
5. Conduct follow-up actions: Lastly, monitor any case updates. The dispute does not disappear once you submit your representment package. The customer can still refile a second chargeback. The case may also require arbitration. So stay aware, as you must meet these deadlines. 

Best Practices for Successful Chargeback Representment

As you can see, the representment process follows a step-by-step sequence. Still, the better you re-demonstrate your evidence, the higher your odds of winning the case. Here are some helpful best practices you can use to improve your win rate:

• Adhere to deadlines: Submit all dispute documents on time. Failure to meet a deadline can lead to an automatic loss, even if you have a valid case. Delayed responses also weaken the quality of your evidence, as you may lose important data (for example, third-party services you use may sale details on monthly cycles). Lastly, rapid action resolves the case faster, an all-important benefit for accounting teams and your cash flow. 

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• Ensure clarity and accuracy in the documentation: The outcome of the chargeback representment process depends on the decision of the card issuer ruling. Which means the ruling will involve a subjective judgment. With that in mind, write clear, legible response letters. Concise communication helps address any ambiguity related to the case. It also simplifies the process, as no one wants to resubmit evidence five or ten times over. Ideally, you can craft custom letters, as template responses fail to meet the specific evidence rules of each card issuer. 
• Create reason code action protocols: The accuracy of your evidence will depend on how well you know your reason codes. A chargeback due to “product not received” needs different actions than a chargeback filed out of forgetfulness. You may want to fight one claim and not the other. And both cases will require very different evidence. So it pays to be knowledgeable about your reason codes. Ideally, you build response protocols for each reason code. That way in-house employees take the optimal steps for each type of dispute.

• Maintain comprehensive transaction records: Without good record keeping, you have no proof. To refute a customer's claim fairly, you need a trail of evidence. More importantly, each card issuer also has its own set of evidence rules—failure to comply with these rules could result in a loss. Good record-keeping also lowers how much it will cost to fight a false claim. Transactions involve a large volume of data, so having a well-maintained system makes it far easier to compile the needed evidence. 
• Build a good business reputation: Each card issuer wants you to deliver the relevant data. Otherwise, your proof is not credible. That’s why new evidence rules (Visa Compelling Evidence 3.0) will also consider the strength of your relationship with the card issuer. A consistent track record of good evidence delivery is looked upon favorably. Those who maintain such “data authority” are considered reliable partners— and can improve outcomes from friendly fraud. 
• Improve: Conduct an internal investigation. There is a reason why the customer felt the need to dispute a charge. Look for problems or areas in your business that need fixing. When you update what isn't working, you help limit future disputes. 

Enhancing Chargeback Representment with Chargeflow

By integrating Chargeflow into chargeback representment, merchants can significantly improve their ability to deal with disputes quickly and efficiently. Through advanced analytics and automation, Chargeflow helps minimize the challenges of collecting the necessary evidence for merchants to represent their cases when facing a chargeback, ensuring that they are always ready to fight back. The solution offers the perfect balance between technology and expert knowledge, offering merchants a more effective method for navigating the nuances and complexities of a chargeback dispute.

The focus on data-driven strategies and strict compliance gives merchants a valuable resource in their pursuit of better dispute outcomes and the preservation of their hard-earned revenue. With Chargeflow, merchants will have the confidence to recognize when a chargeback is invalid, as they will be provided with a comprehensive solution designed to optimize their chances of success through the representment process.

Conclusion

Unfortunately, the average merchant chargeback win rate is only 12%. For many businesses, such a high level of lost cases makes the labor-intensive process simply not worth the effort. 

But with effective chargeback management, you can improve your win rates—without the enormous cost. Merchants that partner with Chargeflow earn win rates of up to 80%. And with our success-based pricing, you only pay when you win. Connect with the experts who can help guide you through the chargeback cycle. 

Want to learn more? Reach out to Chargeflow to try our solution for free. 

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