A chargeback representment is a process in which a merchant disputes a chargeback. Merchants must fight chargebacks, which are when credit card companies demand businesses refund the losses of disputed or fraudulent purchases, or work to prevent them or face fees and possible merchant account termination. Whenever a merchant opts to fight a chargeback, it enters the representment process. Representment is especially critical due to the numerous cases of friendly fraud, which is when people claim that they didn’t receive items or services because they don’t want to pay for them.
During the chargeback representment process, a merchant must collect and offer up evidence that proves a transaction was completed properly. If the merchant wins, the issuer reverses a chargeback and the business is refunded.
This is a long and serious process that requires merchants to gather and present a lot of evidence, as well as a chargeback rebuttal letter, to prove their cases. The letter is a summary of the evidence that will prove that a transaction is valid. This needs to be submitted along with the chargeback reason code. Every major credit card brand has their own chargeback reason codes, which describes types of chargebacks. Merchants should completely review and understand reason codes before writing and submitting their rebuttal letters.
In addition to the letter and code, merchants should be prepared to submit:
- A legible copy of the transaction receipt or order form
- A copy of their refund and return policies
- Copies of emails and other communications that occurred with the customer that filed the chargeback
- Evidence that the product was delivered to the correct address, tracking numbers, and the date of delivery
- A copy of the signature, if it was requested upon delivery
- Proof that the cardholder approved and authorized the transaction
- A description of the product or service, and an image, if available
Also, if applicable, a merchant should submit a customer transaction history that shows previous sales history with the customer. If the customer picked up an item a business or another pick-up location, merchants should submit evidence of the delivery, such as a receipt or copy of the customer signature. For digital downloads, merchants should include proof of the download, such as IP address to which the product was delivered and the date and time of the download.
After all of the evidence is submitted, the issuer reviews the case. The chargeback is voided if the issuer finds that the merchant adequately disproved the cardholder’s claim. If the business failed to prove its case, the chargeback stands and the transaction amount is permanently removed from the merchant’s account.
There are plenty of steps merchants can take to increase their chances of winning. Merchants are most successful in the chargeback representment process when they act quickly and submit all important evidence in a timely manner. Also, since the success of a chargeback representment depends on the quality of evidence submitted, merchants should have a streamlined process in place to ensure that information is easy to locate and compile. Another good practice is for merchants to track and analyze their customers’ history, behavior, and transactions. By doing this, merchants will have a leg up on finding those areas that are vulnerable to chargeback fraud and other risks. Finally, merchants should take steps prevent the risk of chargebacks by keeping tabs on their chargeback ratios and using clear billing descriptions. Many chargebacks occur because customers fail to recognize a credit card charge. This can be avoided if merchants use clear billing descriptors that include their business names, addresses, and phone numbers on all correspondence. Merchants that know and understand their chargeback ratios can use the information they collect to improve customer service, website content, and internal procedures and processes.