More and more eCommerce shoppers are turning to chargebacks to dispute purchases. In 2022, approximately one-quarter of shoppers disputed at least one charge. This increase in chargeback volume, coupled with card networks updating their evidence requirements, has compelled merchants to find ways to increase efficiency and efficacy while controlling dispute process costs.
When it comes to selecting a partner to help your business, here are five things to look for:
Combined Fraud Management and Chargeback Solution
Fraud prevention and chargeback resolution work together to maximize your potential to fight fraud and recover lost revenue by intelligently representing (and winning) claims that are otherwise not being fought nor optimized to win.
Partnering with one vendor for both fraud prevention and chargeback resolution strengthens the evidence in your claims and automates your workflows. The fraud prevention solution provides critical insights into the transactional and order information, including historical order information and cyber insights (such as Device ID, IP address, etc.) to ensure the pertinent evidence is included in a claim. Additionally, this combination can streamline your workflows by automatically consolidating the transactional insights directly into a claim.
Today, submitting a claim to a chargeback can be arduous.
Analysts need to go to multiple disparate systems (i.e., order management systems, CRM systems, booking/reservation systems, returns management systems, multiple processor portals, and more) to understand the origins of a chargeback, search for the previous history of the customer, and collect the needed evidence if they want to dispute the claim. Due to the time required for each representment letter, teams often struggle to fight all feasible chargebacks, which lowers their dispute rates and impacts overall recovery rate performance.
Luckily, many opportunities exist to automate the dispute process to remove these manual tasks. Look for a vendor that can intelligently automate the chargeback process end-to-end. This should include automatically determining which chargebacks to fight, consolidating evidence from the initial transactions and previous history with post-purchase evidence, customizing templates by reason code, and submitting representment letters to processors.
By adding automation to your chargeback process, your business can more easily scale to dispute more chargebacks.
Many chargeback vendors require you to have a covered agreement to manage chargebacks. A covered agreement is essentially an insurance policy for fraud prevention. With a covered agreement, the business is mostly absolved from the risk of chargebacks, as the vendor takes on liability for the vast majority of chargeback requests.
On the surface, the simplicity of a covered solution is appealing. But for most businesses, an uncovered solution is a far better investment as it means your fraud prevention is aligned with your business objectives. An uncovered solution optimizes business outcomes by balancing chargeback and approval rates. In contrast, covered solutions are more likely to decline on-the-fence transactions for which they are liable.
Some vendors will also position chargeback recovery as managing chargebacks on your behalf at no additional cost. Although this sounds good on paper, this model primarily benefits the fraud vendor instead of the merchant as the fraud vendor receives any revenue from chargebacks they win.
In addition, with the right chargeback solution, your business does not need to add headcount when moving to an uncovered model. By looking for a solution that adds efficiency to the chargeback process, your business can eliminate the high costs associated with third-party chargeback management without pushing that burden onto your internal teams. With the right combination of an uncovered model and an effective chargeback recovery solution, the economics become far superior for a business.
Strong Dashboards and Reporting
It can be difficult to have complete visibility into your chargeback dispute process. Therefore, finding a vendor that provides that much-needed visibility is essential to see a holistic view of your chargebacks, understand the chargebacks you are fighting, and report on your dispute, win, and recovery rates.
Look for a vendor that provides a single consolidated, streamlined view of transaction data and claim recommendations, all from one portal. The vendor should also offer analytics to help you identify any patterns that are causing either fraud or service chargebacks, so your business can curb your chargebacks earlier in the process. In addition, ensure that the vendor provides you visibility into all key performance metrics, including dispute, recovery, and win rate. Some vendors may only share win rates due to cherry-picking easy chargebacks to artificially inflate their metrics.
Accurate Dispute Recommendations
Disputing the wrong transaction poses a few risks to your business. First, there is the risk of offending legitimate customers with poor service or product experience. To build customer lifetime value, it’s vital to distinguish the chargebacks that should be fought, perhaps due to friendly fraud, from those that are legitimate and should be referred to customer service. In addition, there is the risk of spending too much time or resources fighting chargebacks that you have a low opportunity to win.
Therefore, finding a tool that offers intelligent recommendations for which chargebacks should be disputed is important. Look for a solution that provides a recommendation based on cyber intelligence, shopper history, and buyer + order data collected in the initial transaction. It’s also essential that the solution recommends which evidence to include based on dispute reason codes to improve your win rates.
Forter Fraud Management and Chargeback Recovery
Forter’s holistic platform delivers complete end-to-end digital commerce protection. Our deep understanding of identities unlocks our ability to approve more transactions, reduce chargebacks, deter friendly fraud, recover lost revenue, and automate manual tasks to increase operational efficiency.
Our Fraud Management solution has proven success in minimizing fraud and reducing chargebacks by up to 90%. While merchants can significantly reduce chargebacks, they cannot be entirely eliminated, as chargebacks filed by legitimate customers who are confused or engaging in first-party fraud will continue to exist. Chargeback Recovery gives merchants the opportunity to address the additional 10% of chargebacks that slip through the cracks.
Chargeback Recovery layers on top of the Fraud Management solution to connect order and claims data across payment methods and processors to fight chargebacks. Chargeback Recovery benefits from the power of Forter’s fully automated decision engine to help merchants dispute claims intelligently.