The Ultimate Guide to Winning Chargeback Disputes: A Merchant's Handbook

Winning chargeback disputes is a top priority for online retailers as chargebacks have become more effortless to file. But guess what the industry average success rate is today? ~12%!

That’s an abysmal number compared to the volume of work that goes into chargeback recovery. Chargeback disputes are complex, time-consuming processes that involve several hoops and curves. An average merchant can spend up to 120 days disputing a chargeback.

Each chargeback represents more than revenue loss. It triggers a chain of activities that can quickly escalate into a significant operational burden. Merchants must gather meticulous evidence, file formal responses, and adhere to stringent deadlines to win a dispute. In most cases, the administrative work involves multiple departments: sales, customer rep, finance, and legal teams.

Merchants who process large order volumes have it worse. Chargebacks drain their time and resources, damage reputation, and often lead to higher processing fees, account restrictions, and even termination of payment processing privileges.

But not anymore. This insightful guide will break down the chargeback dispute process and provide actionable insights for dispute resolution efficiency. Keep reading for all the insider secrets for winning cases with minimal effort.

Steps to Win All Chargeback Disputes

According to industry data, up to two-thirds of merchants don’t contest chargebacks, even when they know the dispute is false. Why? Some merchants mistakenly account for chargebacks as normal business costs. Even when they dispute them, they rarely win.

But all that changes today. Below are vital chargeback dispute best practices to even the odds and stop eating those meritless costs:

Step 1: Abort the Dispute Before it Reaches Full Term

Estimates from multiple sources indicate the global chargeback volume will reach $165 billion by the end of this year. That’s a spike from $72 billion in 2019. Businesses are increasingly susceptible to false chargebacks.

Using Chargeflow Alerts has proven reliable in helping businesses stop chargebacks before they become chargebacks. Seriously, available data shows that merchants using chargeback alerts get at least a 19% reduction in chargebacks annually.

Chargeflow Alert enables merchants to address issues proactively. Merchants are notified early in the dispute process. That "head start" allows them to resolve cases before they escalate. Resolving chargeback disputes proactively means you don't pay any chargeback fee. You get to also maintain your customer relationship.

Step 2: Look Beyond The Reason Code

Chargeback reason codes are vital in the dispute remediation framework. Banks and card networks use them to elucidate why the cardholder filed a dispute. They help you understand how to respond effectively.

Furthermore, chargeback reason codes also harmonize the chargeback dispute process for the various stakeholders involved. You know your attack vectors, and what you’re dealing with. You equally know how/when to respond for maximal winnability.

Again, financial institutions and banks require merchants to provide compelling evidence that counters a cardholder's claims in line with whatever reason code they received. Failure to do that means complete loss by technical mistake. Unfortunately, chargeback reason codes often complicate the dispute resolution process, instead of simplifying it.

Why?

Because many shoppers now use chargeback to defraud and steal from unsuspecting merchants. We discussed that in detail in this guide on friendly fraud.

Instead of using the chargeback reason code as a single source of truth in a chargeback dispute, savvy eCommerce merchants are looking beyond that. They even the scales with a tool like ChargeResponse. It pulls dispute evidence from several customer touchpoints to build the most compelling evidence. The result? Optimal dispute outcomes, with a maximal net win rate of over 75%!

Step 3: Make a Compelling Argument, Backed With Data

The two most essential elements required to win a chargeback dispute are:

1. Timely and compelling evidence.
2. Clear, persuasive narrative.

So why doesn't everyone who sends compelling evidence and persuasive narrative win their chargeback representment?

As we've noted in the previous point, submitting compelling evidence is not enough! There are several vital steps you must take to win a case:

• You've got to send your documentation within the limited timeframe provided.
• Your documentation must address all the concerns the issuing bank may have.
• Your representment case must equally be airtight, stipulating why the case is meritless and unwarranted.

Those are only the standard checklists.

Another reason manual chargeback disputes rarely yield commensurate results is that scammers have wised up. They use digital technology to beat your anti-fraud protocols, allowing them to charge back legitimate transactions for whatever reason. This growing threat shows why relying on your logic to win chargeback disputes is unprofitable.

To circumvent this – and save your team from unproductive chargeback representment – you must back your compelling evidence with solid data.

Here’s what I mean:

1. Include reasonable documentation showing the transaction was valid.
2. Excavate data to prove the shopper (or a relative with clear authorization) participated in the transaction.
3. Provide analytics showing successful product or service delivery to the correct address.
4. Include data from two previously non-disputed transactions.

If you need further insights, read our previous deep dive on compelling evidence and how to send your representment case.

Step 4: Prepare to Appeal if You Lose

Now that you’ve submitted your compelling evidence and rebuttal letter, the next step is to stay on top of the case. This follow-up stage is crucial. You want to know the exact outcome of the case immediately after they've reached a decision. That way, you can readily appeal it if you lose.

Recall that chargeback representment has stringent time limits of 20 to 30 days, depending on the card brand involved. So once you've sent in your evidence, keep an eye on the payment processor's portal for feedback. Your payment processor should notify you of the outcome. They will also inform you of any subsequent steps you can take.

If your processor doesn't issue real-time updates, contact them for a status check. And if you lose the case, you can appeal through arbitration.

Arbitration chargebacks may take anywhere from 60 to 120 days to remediate. Chargeback arbitration means that you’re unsatisfied with the decision from the customer’s bank and want the card network to step in. This can be a tedious process. Merchants rarely win chargeback arbitration without the help of digital technology.

Step 5: Automate Your Chargeback Disputes

The odds are historically stacked against merchants when it comes to chargeback remediation.

First, chargebacks, by their very nature, are a consumer protection instrument. That means card networks offer a no-fault rule that incentivizes cardholders to file disputes. When a cardholder “suspects” transaction anomaly or suffers any transaction wrong, the law allows them to seek redress by filing a chargeback.

Second, developments in eCommerce and digital payment have rapidly outpaced the chargeback system. This vital disconnect empowers bad actors to weaponize chargebacks, allowing them to commit fraud without consequences.

Today, we see a rising case of buyers using chargebacks to get freebies, blatantly stealing from online sellers with zero repercussions.

That’s where automated chargeback management comes in. From expedited evidence gathering to data-driven case filling, Chargeflow has changed everything you know about chargeback dispute resolution. The app (native on Shopify and Stripe) helps you win false and fraudulent chargebacks without lifting a finger. Chargeflow keeps pushing the boundary with new products like Chargeflow Insights, a 360-degree, bird’s eye view of your post-transaction data.

Chargeback Automation in Action: A Case Study of Maverick Drone Systems

Maverick Drone Systems has been hemorrhaging sales revenue, losing over $100,000 to chargeback fraud. Although the Minnesota-based B2B high-tech dealer has a solid reputation in the industry, such excessive disputes raise the eyebrows of regulators. That means deeper scrutiny and fines.

Maverick recognized they needed to:

1. Track down the underlying causes of the rising disputes
2. Prevent future cases without overhauling their processes.

Enters Chargeflow, the automated chargeback solution for eCommerce!

Upon examining historical chargeback data and patterns, it became evident their refund policy was the primary contributor to chargeback cases. In response, Chargeflow optimized the process by establishing clear sales-final points and other policies issued to customers.

Chargeflow further helped the team recover ~90% of the disputed revenue within four months! But, more than revenue recovery, Maverick has recovered its relationship with the card network and banks.

Recommended: See how Wordtune increased their chargeback win rates by 5.4x, even as their chargeback volume grew by 3x, a Chargeflow Case Study published by Stripe.

Final Thoughts on Winning Chargeback Disputes

The chargeback dispute rules have changed. So if you’re still playing the manual game of submitting compelling evidence according to the chargeback reason code from the bank, you’re far behind the times!

First, you’ll hardly win cases. Second, every case lost adds to operational burden and reputational damage.

Level up your chargeback disputes today. Use automated chargeback management. Join the best and brightest merchants to recover false chargebacks on autopilot. What have you got to lose?

With Charegflow, you only pay for cases you win. So why wait any further? Prevent false disputes and recover chargebacks without lifting a finger! Get $10,000 in free chargeback management with our Black Friday, Cyber Monday, and Holiday bonuses.