Congrats! You’ve successfully weathered your way through the holiday season. It was hard, but you launched a great marketing campaign, had strong sales, and are “in the black.” To top things off, you finally got that gadget thing you really wanted all year long. Basically, you’re sitting pretty.

Then…your first chargeback of the new year rolls in. It turns out that $300 order you sent via overnight shipping may not have been really placed by the legit credit card holder. The credit card holder checked their bill, found an unrecognized or fraudulent charge on it, and is disputing it with their bank.

What are you going to do about this unexpected piece of coal?

What happens next

First, your payment processor is going to put a hold on your money. (Sorry.) If that money isn’t available in your balance with them, they’re going to debit your bank account that you have on file with them.

Then, they’ll slap you with a chargeback handling fee (usually around $20 per chargeback). You’ll need to fax or email over proof of delivery and other documents to plead your case to validate the order and get your money back.

Unfortunately, this whole process will take several weeks (if not longer) to resolve.

Tips for fighting chargebacks and winning

Contact your buyer directly if you think there was a mistake.

Often, buyers don’t recognize the charge on their card because the merchant’s name on the bill is vague (e.g., “Ray’s store” vs. “Ray’s Bike Shop.”) Getting a third party involved (like a bank) can be super painful and slow. If you’re able to get the card holder to drop the chargeback, you’ll be in the clear.

Respond to your payment processor in a timely manner (usually within 7 days).

If you wait too long they could close the case in the card holder’s favor.

Be prepared to send in documentation verifying the order.

Black and white (no color) is good enough. The reps reviewing these cases often have software that is pretty archaic so colors don’t show up properly and even worse can make the image distorted so they can’t see the text and thus are more likely to rule against you.

Be concise, direct, and to the point when presenting your case.

The reps that review your case are literally seeing thousands of these cases. This time of year is like their Black Friday/Cyber Monday. They don’t need to read an essay. Anything you can do to get your facts across (nicely) is good for them.

Nail in the coffin

Even if the chargeback is resolved in your favor, the cardholder has the right to re-dispute the charge and begin the process again. Why? The entire card network is based on trust, specifically cardholder trust. If cardholders lose trust in the system, they are going to use their cards less, which means the banks will make less money. And banks like to make money.

As you can see, the entire chargeback process can be quite tedious and painful. The best way to deal with this is to invest in tools, processes, and people to mitigate them from happening in the first place, so you are better prepared for the rest of the year.

I’ll be doing a series of posts later this quarter on what businesses can do to get ahead of the game!



Leave a Reply

Your email address will not be published. Required fields are marked *

Kevin Lee

Kevin is the Trust and Safety Architect at Sift Science. Building high-performing teams and systems to combat malicious behavior are what drive him. Prior to Sift, Kevin worked as a manager at Facebook, Square, and Google in various risk, spam, and trust and safety roles.