3 Mistakes Merchants Make When Handling Disputes

Sydney VaccaroChargebacksLeave a Comment

3 Mistakes Merchants Makes When Handling to Disputes

We were recently asked, "What are some common mistakes that you see merchants make when handling disputes?" We thought this was a great question and wanted to share the answer here. So, here are three of the common mistakes we see merchants make:

#1 Responding With Too Much Evidence

A response document should be formatted in a way that is clean, precise, and easy to read. Sending in a giant chargeback response with all the possible information about the transaction or customer may sound like a good idea, but it's not. Here is why: A person is going to be on the other side of the response, which means a real person will have to go through every piece of your giant response document. A customer service rep is not going to want to read through your privacy policy or other unnecessary information.

In fact, too much useless evidence actually buries the important evidence. The customer service representative has set requirements they need to check for in the chargeback response based on the reason code and transaction modifiers. So, they will have to sift through and check off what they actually need. By submitting extra information, you are just making their job harder than it needs to be. This is especially vital because they are deciding if you win the dispute or not. Instead of trying to hand over any information you have in a chargeback response, take the time to look at what is asked for by the card networks.

Here are a few tips for making effective dispute response:

  • Create a clean, concise document that only has the evidence asked for by the card networks.
  • The response should be free of emotion and have objective evidence.
  • At the top of your response, you should have an easy to read table with the transaction and chargeback information. This should include information like the merchant account ID, transaction ID, chargeback amount, and other basic information about the case.
  • Find the most efficient way to organize the rest of the document. We would recommend putting each argument and evidence to back up that argument on a different page. Then create a table of contents to walk the dispute analyst to the exact information.

#2 Not Backing Up Claims With Evidence

While merchants need to keep their response clean and concise, it is equally vital to attach everything that is required to disprove the customers' claims. Basically, any claim you make in the response needs to be backed up with evidence.

A frequent example we see is when merchants are trying to show what terms the customer agreed to at the checkout. This could be the subscription service terms, cancelation policy, return policy, among others. Merchants will send in the written copy of their terms but not including a sample of their checkout page. By not including a sample of the checkout page, they are not fully backing up the evidence. Without a sample page, the customer service rep would have to go to the merchant's site and check if the terms provided were actually at checkout. In this situation, by not providing this hard evidence, the bank can side with the customer or even file a pre-arbitration if the customer comes back saying they did not agree to the terms.

#3 Not Looking Into Your Specific Dispute Data

Every merchant's dispute and fraud landscape is unique. Merchants make the mistake of not looking into their specific dispute data to find what works for them. Creating a dispute response helps merchants regain lost transaction amounts, which is extremely important. But all the details surrounding a dispute and the response process are equally crucial for gaining and retaining revenue.

Dispute analysis can show merchants where there are problems with their operations, logistics, billing, communication, or even the dispute response process itself. It can also give data to the front-end fraud processes to make it more effective. This type of analysis can create a better customer experience and prevent the loss of revenue through chargebacks.

A few questions merchants can ask to get insight into their chargeback data are:

  • What reason codes are we receiving?
  • What dispute are we losing?
  • What dispute are we winning?

By asking these questions and thoroughly going through your chargeback information will allow your company to pinpoint what is causing chargebacks to happen, then fix problems and prevent disputes.

Want more dispute tips? You can download our Dispute Best Practices Ebook here.

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