Challenging Credit Card Disputes

Purpose

This article aims to provide our clients with information and tips about challenging chargebacks (credit card disputes).

Preconditions

The following conditions must be met before starting on the instructional steps below:

• Your facility must be using foreUP Payments as your integrated credit card processing solution.

Chargebacks

Chargebacks have become a regular part of running a business. As cardholders make more purchases, chargebacks will continue to rise. 

Cardholders have the right to dispute any charge they feel is invalid or unfair. Card network rules and federal law protect this right. Merchants also have the right to challenge a dispute/chargeback.

Should you challenge all cardholder disputes? What information should be included to challenge a chargeback? How can you increase your chances of winning a chargeback?

Use the information below to help you decide whether to challenge a chargeback and how to best increase your chances of winning.

Be Strategic

While spotting invalid disputes may be easy for you, it may not be as obvious to the issuing bank. They are also not keen to tell their cardholders they cannot have their money back after they have claimed to be a victim.

It is essential to be strategic in the chargebacks you elect to challenge. Some chargebacks are caused by extenuating circumstances while others are caused by errors built into your practices. While you should not ignore a chargeback, choose your battles wisely.

If you elect to challenge a chargeback by crafting a chargeback response, your ability to win will hinge on the evidence you provide and how well you present your argument. Issuing banks receive thousands of chargeback responses every month. To ensure your response is not discarded, you must be thorough yet concise. 

Chargeback Response

A chargeback response (also known as “chargeback representment”) must be thorough, detailed, and concise and include convincing evidence that the issuing bank should rule in your favor. 

All chargebacks are supplied with a reason code. Pay close attention to these reason codes, as they impact how you craft your chargeback response. 

Your chargeback response should include the following: 

• A well-crafted rebuttal cover letter. While the evidence you supply is the bulk of what helps the bank decide the dispute case, your rebuttal letter seals the deal. Your rebuttal is your opportunity to explain your side of the story. The details of your letter need to be delivered in a professional, concise manner free of fluff, feelings, or filler words. (See the Draft the Rebuttal Letter section below for more details on crafting a rebuttal letter)
• A copy of your terms and conditions to demonstrate the cardholder was properly informed about your facility's expectations/policies. This should cover relevant terms like policies on returns, booking tee times, no-show fees, cancellations, and refunds. 
• If the chargeback is filed with reason code 13.1 merchandise/services not received, provide tangible proof the cardholder received the merchandise/services to counter this claim.
• Include critical details like receipts, signed receipts, receipt agreements, statements, invoices, etc.
• If you attempted to resolve things with the cardholder before they filed the dispute, include evidence such as screenshots, emails, or phone transcripts to significantly help strengthen your case.
• Depending on the claim, you may want to include screenshots of the online booking workflow your customers must go through to book online tee times, as well as a copy of the confirmation email the cardholder received displaying the card holders name and email after booking an online tee time (we highly encourage you to include your no-show, cancellation, and refund policy for online booking in the tee time booking confirmation email. See the "Reservation Email Message" section of the following article: How to Update Online Reservation Messages). This confirmation email should contain the cardholders name and email. 

Submit a Chargeback Response

Once you have collected your evidence based on the provided reason code, you are now ready to organize your chargeback response by compiling the evidence and writing the rebuttal letter. It is important to note that the reason code provided by the issuing bank when the dispute is filed by the cardholder is NOT foolproof. However, you need to prepare your defense based on the reason code assigned to the dispute.

Compile the Evidence

Here is where you will provide documentation of the evidence you have gathered, such as receipts, screenshots, communication with the cardholder, etc.. A good rule of thumb is to follow the transaction from start to finish:

• Example: Cardholder visited our website and clicked "Book a Tee Time" [provide screenshot} > They were brought to our online booking portal landing page that has our online booking policy clearly visible [provide screenshot]> etc.

The more convincing evidence you are able to provide, the clearer the scenario will be to the reviewing bank.

Draft the Rebuttal Letter

When drafting the rebuttal letter, keep it simple. Tell the bank what happened, when it happened, and why the cardholder is in error.

The bank is only interested in evidence (receipts, screenshots, etc.) that would disprove their cardholder's claim. Anything else will be overlooked or damage your case. Remember to stick to the facts and keep your opinions and feelings out of this letter. 

For an example rebuttal letter, please see the attached document below.

Best Practices

• Review all disputes/chargebacks but know that not all chargebacks are worth challenging. It costs your business time and money to compile a chargeback response. You should weigh these factors before challenging a chargeback
• Pay attention to deadlines! Banks do not offer extensions or exceptions.
• Do not submit an incomplete response. You will be wasting your time and the bank will likely toss incomplete responses.
• Know that the bank may still rule in the cardholder's favor, even if you submit a submit a well-crafted rebuttal letter along with convincing evidence.

FAQ

Q: The bank ruled in the cardholder's favor. Do I have any other course of action? 

A: Yes, you can challenge the bank's ruling on a dispute by escalating the dispute into arbitration. Arbitration is when the card networks (Visa, M/C, DCVR, AMEX) step in when banks, merchants, and cardholders cannot come to an agreement.

If you elect to escalate to arbitration, you may be subject to up to $500-$1,000 in arbitration fees as assessed by the card networks. You have the option to accept the issuing bank's ruling on the dispute to avoid going into arbitration.

Q: The bank ruled in my (the merchant's) favor. Is that the end of it? 

A: No. Just as you, the merchant, have the option to challenge a bank's ruling, the cardholder also has that right to take the dispute into arbitration.

If the cardholder elects to challenge the bank's ruling with new evidence, the dispute will go into pre-arbitration where you, the merchant, will be informed of the cardholder intent to challenge the bank's ruling. You will have the option continue into arbitration with the cardholder, which may result in $500 - $1,000 assessed to you by the card networks.

If you choose to proceed to arbitration, you will need to submit an additional chargeback response. The card networks will then provide a final ruling that cannot be contested.

To avoid going into arbitration, you can accept the cardholder's intent to take the dispute into arbitration and the disputed amount will be returned to the cardholder.