In our technological age, criminals are becoming more and more advanced when it comes to committing credit fraud. The costs associated with this crime can negatively impact a company’s bottom line, which is why solid chargeback representments processes are more important than ever.
To first understand chargeback representments, we have to understand the concept of chargebacks. A chargeback, sometimes called a reversal, is a form of customer protection provided by banks. When a credit card holder files a dispute citing fraudulent activity on his or her account, the issuing bank will launch an investigation into the complaint.
If the investigation finds that the transaction does prove to be fraudulent, it refunds the value of the transaction to the customer. For merchants, this means the issuing bank will draw the entire value of the transaction from their account, plus a chargeback fee that can range upwards of $100.
According to the LexisNexis True Cost of Fraud Study, the volume of fraud cases is on the rise. The study reports that every dollar of fraudulent transactions costs merchants an average of $2.40. These costs add up quickly, which is why it’s important to understand the benefits of chargeback representments.
Chargeback representment is the process by which a merchant can contest a chargeback. By collecting and presenting evidence, retailers can attempt to prove that a chargeback is unwarranted and be refunded by the issuing bank. Chargeback representments give retailers an opportunity to prevent themselves from becoming victims of credit fraud.
Factors to Consider
For businesses, it’s best to be selective about which chargebacks to dispute. Consider the chargeback amount and whether it’s cost-efficient to put the time, energy and resources into fighting it. When considering whether or not to dispute a chargeback, choose your battles wisely.
In addition, success rates for chargeback representments can vary greatly, so it’s important to dispute only cases you have compelling evidence to win. The documentation you will need depends on the chargeback reason code. Hundreds of reason codes exist for each credit card brand, so identifying the correct one for your dispute within a short timeframe is crucial.
How Chargeback Representments Work
If your pros outweigh the cons of disputing a chargeback, there are several steps to take. First, you must decide if you want to handle the chargeback representment in-house or use an outside vendor. Outsourcing to a third party can be costly, but it can also be much more efficient in the long term.
If you decide to dispute a chargeback on your own, start by identifying the proper reason code and collecting evidence in the form of signed receipts, customer information on file and other documentation to use as compelling evidence.
Depending on the chargeback, there are guidelines you will need to follow when it comes to submitting your documentation by a certain deadline. Should the issuer find you followed these guidelines, you will receive a refund in the form of a reverse chargeback. Arbitration, which can have extra fees, is an option for merchants whose chargeback representment is unsuccessful.
By understanding how chargebacks work, it can be easier for merchants to identify ways to improve their chargeback representment process – and their bottom line.