Chargeback Representment

Technique Overview

Chargeback representment is the process by which a merchant can dispute a chargeback with an issuing bank. The representment process allows merchants to present evidence to prove that a chargeback is not warranted.

The success rate for fighting chargebacks can vary greatly from merchant to merchant and from industry to industry. Some vendors offering outsourced representment services claim to have an 85% success rate on the chargebacks they select to represent. These vendors do not fight all chargebacks, they are selective in which ones they do fight.

Merchants do not have to turn to vendors or third party services for chargeback representment, they can handle it all in-house. Merchants will want to first reconcile the chargeback to its original transaction and prepare the supporting documentation to fight the chargeback. The documentation needed to successfully dispute a chargeback is contingent on the chargeback reason code. There are hundreds of reason codes and they differ by each card brand, but understanding the root cause of the chargeback, as indicated by the reason code, is one of the first steps in representment.

Key considerations when implementing or buying this functionality include:
  • Before you decide to start fighting chargebacks, make sure you analyze your business case. Representment carries a fee from your acquirer, so you may end up spending more money than you will get back from the process. In general, if your loss is less than $25.00 than you should evaluate the costs of representment first.
     

  • Make sure you are doing the right things in your order process such as AVS and proof of delivery, as these go along way with representment.
     

  • Be selective on which chargebacks you fight, not all chargebacks are the same.
     

  • Even if you are selling digital goods, there are chargebacks that are customer service related and chargebacks that can be influenced by compelling evidence, and you can still win.
     

  • Check with your acquirer if you are in a high risk market, they can typically tell you if representing makes sense for you.

How it Works

Merchants will need to gather information and evidence that can help their case that a transaction was legitimate or that the chargeback is not warranted. This evidence can include signed delivery receipts, proof the customer provided the correct Card Security Code (CVV2), the fact that the billing and/or shipping address matches what was on file with an AVS check or other evidence depending on the type of chargeback. For example, to dispute a Credit Not Processed or Duplicate Billing Chargeback the merchant can show evidence of when a credit was issued to the consumer.

Compelling Evidence should be used when available and some chargeback reason codes require it. When applicable, this can greatly increase your chances of winning chargeback disputes, especially around cases of friendly fraud. Merchants need to follow the specific guidelines in terms of what is considered compelling evidence for different chargeback types and when it can be provided. Also keep in mind that merchants only have a short time frame to respond and dispute a chargeback. The represent timeline for Visa disputes, for example, has been shortened to just 20 days.

Using the Results

If sufficient evidence is provided, and in the correct format, an issuer will reverse a chargeback and the merchant will be refunded. If the chargeback cannot be successfully re-presented than the merchant can elect to take the next step to resolve the issue: arbitration, which has additional fees for the merchant. One benefit of compelling evidence is that when provided correctly issuers are required to submit a second chargeback or go through a pre-arbitration phase.

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