Chargebacks can be a serious drain on a business's revenue, leading to lost products, hefty fees, and in extreme cases, the inability to process payments. 

Fortunately, businesses aren’t helpless. When faced with illegitimate chargebacks, merchants can fight back by providing compelling evidence to prove the validity of the disputed transaction. 

But what exactly qualifies as compelling evidence?

Understanding Compelling Evidence

In chargeback disputes, merchants are essentially guilty until proven innocent. This means the burden of proof lies on the business to show that the transaction in question was legitimate. Compelling evidence is the key to overturning a chargeback and securing your revenue.

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What Constitutes Compelling Evidence?

The evidence you provide should demonstrate that the transaction was valid and followed best practices. Some examples of compelling evidence include:

• Purchase Receipts: Detailed transaction records, including the date, time, and items purchased.
• Shipping Records: Proof that the item was shipped to the correct address, ideally with a tracking number.
• Delivery Confirmations: Signed confirmations from the customer acknowledging receipt of the goods.
• IP Address Records: Documentation showing the customer’s IP address during the transaction.
• Customer Correspondence: Any communication between your business and the customer that supports the validity of the purchase.
• Identity Verification Records: Evidence that the customer’s identity was verified during the transaction, such as AVS or CVV matches.

Not all documentation will help build a strong case. The key is to submit evidence that directly supports the reason code associated with the chargeback.

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What are Reason Codes & Why Do They Matter?

Reason codes are critical in chargeback disputes. These alphanumeric codes explain why the chargeback was filed and what the credit card company considers a legitimate reason for the dispute. Tailoring your rebuttal letter and the evidence you submit to these reason codes is essential for a successful outcome.

Reason codes don’t always tell the full story. Customers may misrepresent the reason for their dispute, and different issuing banks might categorize the same chargeback differently. 

Despite these inconsistencies, your evidence should be meticulously aligned with the reason code to increase your chances of success.

Compelling Evidence for Different Types of Merchants

Different business models require different types of evidence to effectively dispute a chargeback. Here’s how to tailor your evidence based on your industry:

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Retail Merchants

For retail merchants operating from physical locations, chargebacks often arise from buyer’s remorse. To win these disputes, consider submitting:

• Invoices: Clearly show what was purchased and when.
• Receipts: Including transcribed copies if necessary.
• Customer Photo ID: If available, to verify the transaction.

For merchants who comply with EMV chip regulations, demonstrating that the card was present and scanned during the transaction can be a powerful defense against fraud-related chargebacks.

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E-Commerce Merchants

For those selling tangible goods online, your goal is to prove that the item was both received and used by the customer. Compelling evidence includes:

• Proof of Delivery: Signed confirmations are ideal.
• AVS and CVV Matches: Showing that the card details were verified.
• Customer Communications: Emails or messages where the customer confirms receipt or satisfaction with the product.
• Social Media Evidence: Photos or posts showing the customer using the product.

Implementing two-factor authentication can also help prevent chargebacks related to account takeovers, providing an extra layer of security.

Subscription and Digital Goods Merchants

For subscription-based businesses or those selling digital products, proving delivery and usage can be more challenging. However, key evidence includes:

• IP Address Matching: This shows that the IP address used during the transaction matches the one associated with the credit card.
• Digital Invoices: Copies of purchase confirmations sent to the customer.
• Customer Communications: Records of any interactions with the customer regarding the digital product.
• Proof of Usage: Such as logs showing the customer accessed, downloaded, or used the digital content.

Terms and conditions signed by the customer at the time of purchase are also critical, particularly in disputes over recurring payments.

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Travel and Hospitality Merchants

For travel and hospitality merchants, chargebacks can be particularly challenging. However, compelling evidence includes:

• CVV and AVS Matches: Showing that the card details were verified.
• Check-in Confirmations: Copies of check-in confirmations and tickets.
• Customer Communications: Records of any interactions with the customer regarding the booking.
• Terms and Conditions: Documentation showing the customer agreed to the terms at the time of booking.

Overcoming Challenges in Chargeback Disputes

Fighting chargebacks is a complex and time-consuming process, with no guaranteed success. Several challenges can arise, including:

Inconsistent Practices and Policies

Credit card networks frequently update their policies and regulations, which can change the types of evidence considered compelling overnight. Staying informed about these updates is crucial.

Limited Resources

Even a few chargebacks a month can strain resources. The time and effort required to fight and prevent chargebacks can divert attention from other important business operations.

Lower Chances of Success

Merchants often face low returns on investment when fighting chargebacks. Even when a chargeback is won, there is a risk of pre-arbitration, which involves higher fees and lower chances of success.

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The Bottom Line

Winning chargeback disputes requires more than just providing evidence. It involves a comprehensive strategy that includes understanding the process, aligning evidence with reason codes, and being prepared to overcome the challenges involved. 

By implementing these practices, businesses can better protect their revenue and minimize the impact of chargebacks.

For a hassle-free solution, consider partnering with Disputifier, where chargeback prevention and recovery are streamlined, allowing you to focus on growing your business.