• Latest
Understanding Chargeback Representment

Understanding Chargeback Representment

November 1, 2021
Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud (Pt. 2)

February 22, 2023
Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

Germany’s Fraud Prevention Firm Hawk AI to Focus on Global Expansion with $17M Series B

February 15, 2023
Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

Merchant Fraud Journal Releases Biggest Annual Fraud Trends Report Yet with Insights from 16 Leading Payment and Fraud Solutions

February 7, 2023
Curbing emerging fraud types with network intelligence and data enrichment

Curbing emerging fraud types with network intelligence and data enrichment

January 31, 2023
Policy Abuse Fraud: What Is It and How to Protect Against It

nSure.ai Delivers Growth to Digital Commerce Leaders and Boosts YoY Revenue by 280%

January 25, 2023
Fraugster and Refurbed partner to increase approval rates and reduce fraud for refurbished electronics marketplace

Sift Appoints Former Ping Identity COO Kris Nagel as CEO

January 20, 2023
Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

Veridos Announces Innovatrics as Strategic Partner for Advanced DNA ID Verification

January 19, 2023
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: How to Stop Return Policy Abuse Fraud

January 10, 2023
How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

How to Write a Strong Chargeback Policy: Tips to Help You Protect Your Business

January 6, 2023
  • Contribute
  • Contact Us
  • About
  • Join Us
  • Advertise
Thursday, March 30, 2023
Merchant Fraud Journal
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
  • Home
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Resources
    • Recorded Webinars
    • Podcasts
    • Vendor Directory
    • eCommerce Fraud Reports
    • Training and Certifications
    • Jobs Board
    • Associations and Non-Profits
  • News
No Result
View All Result
Merchant Fraud Journal
No Result
View All Result

Understanding Chargeback Representment

by Bradley
November 1, 2021
in Articles, Chargebacks
Understanding Chargeback Representment

When a merchant contests a chargeback by submitting evidence in an attempt to reverse it this is known as representment. By “re-presenting” the transaction with a rebuttal letter explaining their position and any supporting documents, the merchant hopes to convince the issuing bank that the transaction was in fact genuine.

To help recover revenue lost to chargebacks, merchants can benefit from acquiring a detailed understanding of how chargeback representment works.

The Chargeback Process

A chargeback results when a customer disputes a charge by contacting their card-issuing bank. The bank will typically ask them why they believe the charge is invalid. As a customer service banks provide their customers, the bar for evidence is usually very low. In some cases, thebank will recommend the customer contact the merchant to try and settle the issue before proceeding with the chargeback process.

If the customer’s reason for requesting a chargeback aligns with one of the issuer’s approved categories, the bank will typically issue a provisional credit to the customer and process a chargeback transaction, debiting the funds for the transaction from the merchant.

Valid reasons for chargebacks include:

  • Unauthorized charges and fraud
  • Incorrect charges, wrong amounts
  • Good/services not received
  • Goods/services received not as described
  • Receiving damaged goods
  • Processing errors
  • Fulfillment errors

In cases where the reason for the chargeback request does not meet the issuer’s requirements, they will suggest that the customer engage in dispute management directly with the merchant.

Initially, a chargeback results in funds being debited from the merchant’s bank on a provisional basis, which means that the funds can be returned to the merchant if the chargeback is overturned.

Additionally, the merchant is hit with a chargeback fee and an increase in its chargeback count, the number of chargebacks they have experienced,which raises their chargeback ratio.

This chargeback fee is not reversed even in cases where the merchant is successful at overturning the chargeback in the representment process.

The Representment Process

When a merchant disagrees with a chargeback, they can challenge its legitimacy through the representment process. Once they have been notified that a chargeback has occurred, they have the option of sending information supporting their claim that the transaction is legitimate to their acquiring bank, which then transmits the information to the issuing bank.

After receiving this information, the issuing bank evaluates the evidence provided by the merchant and ultimately decides whether to uphold the chargeback or to rescind it and return the funds associated with the transaction to the merchant.

Should You Respond to a Chargeback Notification?

Whether or not you intend to dispute a chargeback through representment, it is important to respond to chargeback notifications and let the bank know whether or not you intend to contest them.

If you don’t, the bank will assume the chargeback is valid. In that case, the customer keeps the refunded amount and the merchant loses both the goods or services and the amount of the transaction.

Some card networks, including Visa, will levy a fee on merchants who fail to respond to a chargeback notification. Issuing banks prefer that merchants respond in a timely manner, so that funds aren’t held in provisional status for an extended period of time.

In 2018, Visa changed its chargeback policies to include a maximum of 30 days for merchants to represent after being notified of a chargeback.

Representment Evidence Types

Merchants will generally provide different types of evidence during the representment process depending on the type of item sold, and the chargeback reason code. As a merchant, when choosing what type of evidence to use in the representment process, the key factors to consider are the reason for the chargeback and the type of transaction. Chargeback notifications include a reason code specifying why the customer chose to dispute the legitimacy of the transaction.

In some cases, a card network will feature a “transaction modifier” in addition to the reason code, offering further details related to the chargeback. This information can help you determine what type of evidence to prepare for representment. Invariably, representments are for ‘friendly fraud,’ which occurs when a customer purchases a product or service and then tries to get out of paying for it by requesting a chargeback. Thus, representment is used when a merchant suspects the cardholder actually madethe purchase in question.  

All representments should feature a rebuttal letter specifying why you as the merchant believe that the chargeback was not justified. This letter should not be of excessive length. Instead, it should succinctly explain your reasoning for disputing the chargeback.

Along with the rebuttal letter you must include a record of the transaction in question containing the AVS and CVV information matching the payment credentials linked to the customer. If you don’t provide this linking information demonstrating that you performed the proper procedures when first processing the transaction, some networks will immediately reject your representment claim. 

In some cases, sending customer credentials that link them to a purchase is strong enough to win a case in and of itself. Even if this doesn’t happen, the more evidence you can provide via identify verification solutions of credential usage associated with the transaction, the better your chances of winning the representment are likely to be. 

Including information about your terms and conditions for sales is also helpful. If you require customers to indicate via a checkmark or other method that they have read, understood, and agree to these terms, thatacknowledgement should be sent as well.

Documentation of any communication between the merchant and customer should also be included if it relates to the transaction in question. It can also be advantageous to include receipts or invoices, which may provide details such as special requests that help link the customer to the transaction.

If the customer has made previous purchases of the same, or a similar, product it makes sense to include themto demonstrate that these transactions were processed without any issues.

To address chargebacks by type of goods sold, the following steps can be taken:

  • Physical goods: When representing in regard tophysical goods, an invoice should be included describing the product that was purchased and the time and manner in which it was shipped, including tracking info and delivery confirmations.
  • Digital goods: Disputes over digital goods should be represented by sending IP logs, customer service interactions, or any other data indicating that the customer used the digital good that was purchased. If the chargeback related to a recurring billing product, receipts from past billings can be included to show that the customer hadn’t previously rejected these charges.
  • Services: The receipt and usage of services can be difficult to prove. Merchants should send any written agreements they have customers sign agreeing to the terms of the contract. Providing invoices, IP logs, and social media attesting to usage of your product is the best way to support your representment.

Given the differences between the types of transactions eligible for representment, merchants should take care to adjust their approach depending on what works best for a particular transaction. The rebuttal letter and evidence should be focused on the specific reason given by the customer for seeking a chargeback.

Additionally, issuing banks may have their own preferences for representment. If you work with a chargeback management company, they will likely be able to offer specifics about the type of approach that should be taken for a particular issuer.

Resolution of Representment Cases

After reviewing the evidence presented during the representment process, the issuing bank will decide whether to maintain the chargeback or reverse it. Generally, they will notify the payment processor of their decision. The merchant can then learn the outcome of the case from their payment processor.

In cases where the issuer rejects the merchant’s representment claim, the customer gets to keep the provisional credit and the merchant loses the transaction amount and goods purchased. If the merchant convinces the issuer that the chargeback was not legitimate, the provisional credit is reversed and the funds for the transaction are returned to the merchant. 

Beyond Representment

Once the representment process is complete, both the customer and the merchant can continue to contest the issue by proceeding to pre-arbitration. When this happens, the merchant can consent to arbitration by the card network or can offer new evidence. 

If you are unsuccessful in a representment case, you can ask for arbitration, however, Visa’s rules require the loser of the case in arbitration to cover the arbitration fees, which can be in the vicinity of $500 at the high end.

You can also hire an attorney to represent your interests in the event of a lost representment cases. In some cases, an attorney’s letter may convince a customer not to continue to contest a chargeback case, particularly if their case is not all that strong. 

If a merchant loses a chargeback representment, or it is not clear that their case is strong to begin with, it may be best to simply accept the chargeback. Generally, a chargeback resulting from true fraud or an error on the part of the merchant will not be overturned by an issuer. 

Merchants can best use their resources fighting “friendly fraud,” in which a cardholder attempts to abuse the chargeback system by receiving goods or services without having to pay for them.

Chargeback Representment Options

Merchants who receive a chargeback have three primary options for dealing with it. These are:

Fight it themselves: If you have a large number or dollaramount of chargebacks on a regular basis, dealing with them in-house can be a fairly low-cost way of fighting them. One downside to this approach is that your staff may not be up on all the latest policies relating to chargeback management.

Hire a chargeback management company: A firm that specializes in fighting chargebacks can save you the time and effort it would otherwise take to handle them yourself. A skilled chargeback management company will keep up with all of the latest developments in the industry so they can improve your chances of winning in representment.

Don’t fight it: If you receive chargebacks due to true fraud or merchant mistake, there’s generally little point in wasting resources fighting them.

Using Representment Effectively

To use the representment process effectively, whether you hire a chargeback management firm or go it alone, it’s important to have a good grasp of the essentials of the process. This includes deadlines for submitting evidence and the best types of evidence to include. Another crucial step to being successful in representment is to adequately document all sales, deliveries, and customer service interactions.  

A proactive approach to defending yourself against chargebacks by keeping the necessary documentation to fight them and aggressively contesting those which appear to be illegitimate can pay for itself in the long run. Such an approach, combined with taking measures to avoid merchant-error chargebacks can go a long way towards reducing the amount of revenue lost to chargebacks.

Tags: chargeback representment
ShareTweetShareSend
Previous Post

Quantum Computing Startup Multiverse Computing Closes €10 Million Investment Round

Next Post

New Podcast: A deep dive into Magecart-style attacks

Next Post
New Podcast Episode: Walls of Thieving Cellphones with Nethone

New Podcast: A deep dive into Magecart-style attacks

Our Latest Reports

2022 Chargeback Consumer Survey Report

Fraud Prevention Tactics that Enable Exceptional Customer Experience

Addressing Payment Fraud and The Customer Experience in 2022

2022 Fraud Trends Report

ATO Fraud In Retail Report

2022 Customer Experience Report

3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue

Digital Trust And Safety Report: Combating the Evolving Complexities of Payment Fraud

On-Demand Webinars

Balancing Customer Experience and Fraud Prevention: What’s the Secret?

Stopping Fraud Across the Customer Lifecycle

Addressing Payment Fraud and the Customer Experience in 2022

 

Get the 2023 Fraud Trends Report

Search Our Site

No Result
View All Result

Our Sponsors

Featured Directory Listings

  • logo
    NoFraud
  • SEON. Fraud Fighters
  • sift logo
    Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Our Sponsors

Fraud Industry News

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

Moving identity authentication earlier in customer flow is top of mind at MRC Vegas 2023:

March 28, 2023
How to Strengthen Your Small Business’s Defenses Against Identity Theft

How to Strengthen Your Small Business’s Defenses Against Identity Theft

March 23, 2023
How Companies Can Avoid Zero-Party Data Fraud

How Companies Can Avoid Zero-Party Data Fraud

March 13, 2023

Connect With Us

Quick Navigation

  • Home
  • News
  • Join Us
  • About Us
  • Contact Us
  • Advertise
  • Contribute
  • Privacy Policy

The Payments Media Network

Merchant Fraud Journal
Payments Review

Privacy Policy

Our Privacy Policy
Our Terms of Use

Resources

  • Articles
  • eCommerce Fraud Reports
  • eCommerce Fraud Webinars
  • Training and Certifications
  • Jobs Board
  • Associations and Non-Profits
  • Podcasts
  • Vendor Directory

Popular Posts

  • How to File a Claim With FedEx + What To Do If Claim is Denied

    How to File a Claim With FedEx + What To Do If Claim is Denied

    0 shares
    Share 0 Tweet 0
  • How Does Two-Factor Authentication (2FA) Work?

    0 shares
    Share 0 Tweet 0
  • Top eCommerce Fraud Prevention Companies

    0 shares
    Share 0 Tweet 0
  • The Best Reverse Email Lookup Tools in 2022 (with pricing)

    0 shares
    Share 0 Tweet 0

Featured Vendors

  • NoFraud
  • SEON. Fraud Fighters
  • Sift
  • Signifyd
  • Ekata
  • Microsoft Dynamics 365 Fraud Protection
  • PayRetailers
  • Spotrisk

Download the 2023 Fraud Trends Report

No Result
View All Result
  • About Merchant Fraud Journal
    • Interested in Contributing or Guest Posting to Merchant Fraud Journal?
  • Advertise on Merchant Fraud Journal
  • Articles
    • Chargebacks
    • Fraud Prevention
    • Influencer Insights
  • Contact Us
  • Download Addressing Payment Fraud and Customer Experience Report
  • Download Chargebacks Consumer Survey Report 2022
  • Download Evolving Complexities of Payment Fraud Report
  • Download Fraud Prevention Tactics that Enable Exceptional Customer Experiences Report
  • Download Merchant Fraud Journal 2023 Fraud Trends Report
  • Download the 2020 Chargeback and Representment Report
  • Download the 2020 Merchant Fraud Journal Vendor Guide
  • Download the 2021 Fraud Trends Report
  • Download the 2022 Fraud Trends Report
  • Download the 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue Report
  • Download the MFJ 2022 Customer Experience Report
  • Download the MFJ ATO in Retail Report
  • Home
  • Job Dashboard
  • Join The Merchant Fraud Journal Community
  • Merchant Fraud Journal Advertising Agreement
  • MFJ Fraud Trends Report Giveaway
  • News
  • Post a Job
  • Privacy Policy
  • Resources
    • 2020 Chargeback Representment Guide for Merchants
    • 2020 Vendor Guide
    • 3 Ways a Unified Chargeback Management and Fraud Platform Increases Revenue
    • Addressing Payment Fraud and the Customer Experience in 2022
    • Associations and Non-Profits
    • ATO Fraud In Retail Report
    • Balancing Customer Experience and Fraud Prevention: What’s the Secret?
    • Chargebacks Consumer Survey Report 2022
    • Digital Trust & Safety: Combating the Evolving Complexities of Payment Fraud
    • eCommerce Fraud Reports
    • eCommerce Fraud Webinars
    • Fraud Prevention Tactics that Enable Exceptional Customer Experiences
    • Fraud Prevention Training and Certifications
    • How to Build a Recession Proof Chargeback Prevention Strategy
    • How to Stop Fraud During the 2022 Holiday Season
    • Jobs Board
    • Merchant Fraud Journal 2023 Fraud Trends Report
    • Merchant Fraud Journal’s Fraud Trends 2020 Report
    • Merchant Fraud Journal’s Fraud Trends 2021 Report
    • Merchant Fraud Journal’s Fraud Trends 2022 Report
    • MFJ’s 2022 Customer Experience Report
    • Podcasts
    • Prevent High-Velocity Fraud Attacks During the 2021 Holiday Season
    • Stopping Fraud Across the Customer Lifecycle
    • Vendor Directory
    • Webinar – Addressing Payment Fraud and the Customer Experience in 2022
    • Webinar – Mitigating Fraud and Risk on the ACH Network
    • Win January Chargeback Disputes
  • Subscribed
  • Terms and Conditions

© 2021 Payments Media Solutions Canada Inc.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?