How to Win a Chargeback as a Business

 I based this list on standard and best business practices, but it is important to note that there is no way to guarantee a 100%-win rate.

We will discuss: 

• Ways to win a chargeback case 
• A software program you can use to prevent chargeback from happening
• Commonly asked questions about chargeback cases

In the end, I am hoping you can set up processes based on what I am about to discuss. In addition. I also recommend that you try the software I am about to recommend. 

Key Takeaways: 

• Prevention is still better than cure
• The chargeback win rate is only 32% in the merchant’s favor
• A fail-safe method to prevent chargeback is a software program that detects it before it happens 

How to Win Chargeback as a Business

1. Always Maintain Honesty in Your Marketing

One of the most common reasons customers file a chargeback is that they believe they are victims of fraud. It is not uncommon for them to say that the item they received is not as described in the marketing material, or your product page. 

Sometimes, it can be the seller’s fault. 

If you were transparent from the beginning, the credit card company will rule in your favor. How do you practice honesty in your marketing, then? Here are some tips: 

• Do not use stock photos; only use real ones
• Do not misuse Photoshop or photo-editing programs to make your product look better than it is
• Always indicate measurements, and make sure there are no typos

If customers can prove their case, then they qualify for a chargeback. All they need to do is send photos of the item they received and photos of your product page. If they do not match, the bank or card company will rule in the customer’s favor. 

Prevention is better than cure. If you are honest in how you present your products, the only customers who will file a chargeback case against you are those who seem to have misunderstood your offer. 

2. Write a Clear Return & Refund Policy

Customers today believe that a refund is their right. In some countries, it is a legal requirement to accept requests for refunds, so the first thing you need to do as a seller is to understand what the law entails. 

Next, you need to write a reasonable return and refund policy and base it on the law. This policy must be visible and easy to find on your website.

How does it help fight or win a chargeback? 

If your refund policy is clear, a customer may not win because he is overstepping the boundaries of what is reasonable. 

Here are some examples: 

• You stated that you only accept refunds for unbroken and unused items
• You have a no-refund and no-return policy for underwear, intimate items, and clothing
• Your refund window is only within seven days after the customer receives the item

If you have policies like these, and a customer files a chargeback, you will win the case if their request for a refund falls outside these acceptable reasons. 

On the other hand, if you have no clear refund policy, the arbitrator of the case is not likely to rule in your favor. 

3. Keep and Maintain Accurate Records

Accurate records are your weapon against chargebacks. Here are some examples of records:

• Buyer name and address
• Shipping documents
• Payment or transaction records

All these will serve as proof in your case against the chargeback. They would show the chargeback case handler that you did your part as a seller and disprove the claims of the consumer. 

4. Verify Addresses & Purchases

Although records are necessary, it is also important that you cover your bases the right way. We cannot help if a consumer’s card has been stolen and used to purchase in our stores. Despite shipping the product, the consumer would win because it only proves that someone else used his credit card. 

You can fight this if you use a verification process right at the get-go. Before shipping out, send an email to the customer and ask for confirmation. If they respond with a yes, then you are pretty much-covered from a liability.

Here is a process I recommend: 

• Set up an automated email for every purchase
• This email must ask the customer to confirm that they placed an order
• The email must contain the consumer’s shipping address and the products they ordered
•  If they confirm, ship the item
• If they do not confirm, cancel the order in a matter of days

This confirmation is proof that you did business in good faith. Should a chargeback case be filed against you, you have evidence that you did your due diligence in confirming the sale before proceeding with the shipment. 

5. Address the Chargeback Case Promptly

One of the most important things you must do is to respond to the chargeback case as soon as you can. This response is what we call a rebuttal. 

A rebuttal letter is a document explaining why you are in the right and the customer is in the wrong. It is your formal way of fighting the chargeback. 

Your rebuttal letter must not be more than one page long. The longer it is, the more tedious it can be to read it. In this case, the bank officer may not be so keen on reading it. 

You must include important information in the letter. Here are some examples: 

• The reason code of the chargeback
• Details such as transaction amount, date, and your merchant ID
• Your business name, your name, position, etc.
• The case number of the chargeback
• Your customer’s name and address
• Shipping evidence

Typically, you have between 75 and 90 days to write a rebuttal letter, but this can change per bank. In addition, you must add a summary of what occurred and why the arbitrator must rule in your favor. 

6. Read the Tracking Code

All couriers and logistics companies use a tracking code for the parcel. You need to understand how the company’s delivery system works.

Some of them require a recipient to sign a delivery. Today, these signatures are done on tablets or digital devices. Once the delivery is made, the signature will get uploaded online, which you can access. 

The signature is evidence that somebody received the parcel and that this somebody lives in the house where it was delivered. Take a screenshot of that digital signature and use it to fight and win the chargeback. 

7. Use 3D Secure 

3D Secure (3DS) is an extra layer of payment security that you can use for e-commerce. What it does is called 2-factor authentication, and this will be executed at every transaction. 

In essence, it is almost impossible for a fraudster to use someone else's credit card. A payment will only go through if the real card owner validates the transaction and authenticates it to go through. 

With a system like this and proof of shipping, you can fight the chargeback and win it. You can use this to fight customers who are trying to defraud you. 

As a seller, you do not need to hire a financial software company to do this for you. You can use legitimate payment processors like PayPal and Stripe to process all payments. 

These companies spend a lot of money to build their financial security infrastructure. As a merchant, it is best that you take advantage of what they offer. It is free to use these payment processors, but you pay a transaction fee for every sale. 

In addition, payment processors commonly offer Seller Protection programs. Since they processed the payment, it is also their liability to ensure that the cards are not being used illegally. 

As a seller, your only obligation now is to ship the item (the correct one) promptly. If you can prove that you fulfilled your end of the bargain, PayPal or Stripe may take the losses for the chargeback. It means that they will refund the buyer, but they will also pay you for the cost of the transaction. 

Summary: There are several ways to win a chargeback, but the best approach is to prevent it. Always practice honest marketing and communicate with your consumers to prevent escalations. 

Fail-Safe Method: Use a Chargeback Prevention Software Program

A chargeback will not exist if you do not let it happen. There is a way to prevent a chargeback from existing, and you need a software program to do this. One such software program is Chargeback.IO. 

Chargeback is a chargeback prevention tool. Once connected to your business, it spots potential chargebacks and prevents them from ever happening. 

Here is how it works:

• You integrate it with your payment processor
• It spots a possible payment dispute
• You get an alert
• You decide to issue a refund to the buyer; you can also settle it in other ways
• The buyer does not contact the bank or card issuer for a chargeback

As you can see, this system puts you in a position to act before the problem begins. As a result, you get the following benefits: 

• Reduce your dispute rates
• Maintain or improve your merchant credibility
• Prevent the existence of unhappy customers
• Reduce financial losses from chargeback fees

Chargeback.IO integrates with several payment processors, including, but not limited to: PayPal, Stripe, Shopify Payments, Braintree, Charge Bee, and many more.

FAQ: How to Win Chargeback as a Business

How do you get a successful chargeback?

A successful chargeback leans towards the consumer. For sellers, you will get a successful case if you can prove that you complied with all legal expectations.  

How do merchants fight chargebacks?

Merchants can fight chargebacks with rebuttal letters explaining, and proving, that they shipped the item to the customer. 

How often do businesses win chargebacks?

Businesses win chargebacks based on their evidence. Although credit card companies usually favor the credit card holder, it is certainly not impossible to win as a merchant. 

What are the odds of winning a chargeback?

The typical rate is 32 of 100, which means merchants who contest a chargeback win cases 32% of the time. 

Summary

The next step they take is to visit your business standards and see if you have these prevention methods available. These steps are a must—they will help you win chargeback cases.

I also recommend that you sign up for Chargeback.IO. There is a free trial that allows you to explore the system. All you need to do is integrate it with your payment processor, and then upgrade as you deem fit.