Updated on November 22, 2021
Friendly Chargebacks: Friend or Foe?
“Friendly chargebacks” are a recent epidemic infecting innocent merchants, especially after the holiday season. The contagion: buyer’s remorse. The supposed remedy: “friendly chargebacks”. The term refers to the regretful buyer issuing a “harmless” fraud alert to repair their self-inflicted consequences of overspending. But it’s not harmless – a friendly chargeback can pose a not-so-friendly threat to your revenues. It’s a fight to the finish…or so you think.
For one, it’s not always clear if a chargeback is a foe or a friend – if it is a warranted or an unwarranted dispute. This is the first leverage that you have as a merchant in receiving a dispute. Forget the time sensitivity and the stress involved in determining the best approach to your rebuttal, and focus on the fact that you can help yourself and that the banks are on your side.
Actually, facing the enemy (the disputed charge) head-on could lead to you keeping your revenue and can help you avoid chargeback alerts in the future. Why? Because combatting these charges will (1) keep you educated about the process gaps that can influence them and (2) help to improve your reputation among banks and credit card brands. So in the end, when you know that the cardholder did in fact purchase your product or service, your fight may not be so threatening afterall.
- Education about the process gaps influencing friendly chargebacks.
It’s simple math: analyzing your buyer’s reason for the chargeback + researching the original transaction = insight into the source of chargebacks against you.
- Reputation among banks and credit card brands.
60% of sellers who dispute buyers’ chargebacks win the dispute (Accertify – Javelin Strategy & Research). Further, merchants who challenge fraud chargebacks are 9.34% less likely to be faced with combatting chargebacks in the future (Chargebacks911).
It’s clear that the most powerful weapon in the battle against wrongful chargebacks is both knowledge of and confidence in the process.
In addition, new advanced technology is arming your arsenal.
A signed receipt is no longer your sharpest sword as a seller. Card brands have been developing techniques to help you prove validity of a charge. For one, Visa is updating the forms of “compelling evidence” that they will accept for any given dispute. Since their most recent update, they’ve seen a 20% higher success rate for merchants disputing friendly chargebacks (Verifi).
Visa’s developments are just one notch on the belt of simplified chargeback disputes for innocent merchants. Just as Airlines are capable of demonstrating the presence of a passenger onboard with a flight manifest, physical vendors can now provide mixed media (i.e. photographs or e-mails) and digital vendors can now provide IP address, geolocation, device ID, etc. to demonstrate proof of purchase.
Now you’ll look at “goods not received,” “credit not processed,” or “unauthorized transaction” and you’ll laugh, because you can make any chargeback your friend.
If you need help stopping chargebacks, see our recommended Chargeback specialist.
Tips from CNP:
“First and foremost, remember your audience is the bank. Not all of the people who work at the bank will know what your business is or does, so you need to ensure the support being sent is concise, clearly shows what the consumer received and includes any additional data needed to debunk the dispute, such as a cancellation policy, proof of receipt, proof of usage, etc.” – Michael Mallon, Director of Global Product Management, Accertify
“When it comes to chargeback reversals, we’ve found the old saying is true: do it right the first time. When merchants create the most compelling case possible and present an air-tight defense, they significantly reduce the odds of a second chargeback.” – Monica Eaton, Co-Founder and COO of Chargebacks911
“Invest the time and effort to understand the payment brand rules and requirements for compelling evidence by chargeback reason code.” – Lisa Tennant, Vice President of Business Operations, Verifi
“The comment you provide explaining the situation should clearly state that the chargeback should be reversed, per the included documents. And, if you are including compelling evidence, we have found it critical to say the support ‘includes compelling evidence,’ as the words seem to trigger a more open look at the support.” – Michael Mallon
“If merchants are determined to do it on their own, they should make sure they have an expert on board who is well versed in the latest regulations and guidelines and has a solid understanding of reason code logic.” – Monica Eaton
“Execute strong authentication steps to support reducing fraud up-front and capturing compelling evidence at the point of purchase.” – Lisa Tennant
Please contact us if you are having chargeback problems or if you need a high risk account for your business.