top of page

Using Compelling Evidence to Combat Chargebacks for Your Business

Guest Post & Case Study by: J. Carlson, Certified eCommerce Fraud Professional

Chargeback disputes occur when a cardholder disputes a charge on their account with their card issuing bank. This is a protection provided by the issuing banks, which will allow cardholders to file a complaint regarding transactions on their account. Once a cardholder files a dispute, the issuing bank makes an investigation into the complaint. If a customer of yours files a dispute, you will get a notice from your acquiring bank that states a chargeback is pending. You can either accept it, or you can challenge it.

Chargebacks can cause major drawbacks for a business. You can lose revenue, any merchandise you shipped to your customer, services you provided, all while paying additional fees for the chargeback. Having too many chargebacks can also lead to increased chargeback fees, as well as potentially classifying you as a “high risk merchant” by the card institutions.

Chargebacks involve quite a few stringent processes and complex procedures. Making sure you provide adequate information when challenging a chargeback dispute is key. One thing that you can do is provide compelling evidence in those cases where the cardholder has claimed Fraud – Card not present (10.4) or Merchandise/Services Not Received (13.1).

Compelling Evidence refers to additional types of documentation provided by a merchant to show that the cardholder participated in, received goods or services from, or benefited from the disputed transaction. With the compelling evidence rights for merchants also comes the need to ensure issuers provide this information to their cardholders. Once compelling evidence is provided by the acquirer, issuers must certify that they have contacted the cardholder to review the compelling evidence and provide an explanation of why the cardholder continues to dispute this transaction.

Compelling evidence documentation can be used to provide support for various card not present transactions including charges for airlines, digital goods, and recurring billing services. Some forms of documentation that would be accepted as Compelling Evidence are: Purchase details and description of services, Renewal and cancellation terms accepted by the cardholder and proof of a previous transaction that was not disputed.

You can also establish usage by providing: Log of user updates, log-in from cardholder’s computer, Device ID, Device name or IP, proof that the merchant’s website or application was accessed by the cardholder for merchandise or services on or after the transaction date, evidence that the same device and card used in the disputed transaction was used in any previous transaction that was not disputed, and evidence such as photographs or emails to prove a link between the person receiving the merchandise or services and the cardholder, or to prove that the cardholder disputing the transaction is in possession of the merchandise and/or is using the merchandise or services.

Another helpful piece of information that can be provided to assist with the case is evidence the cardholder attempted to cancel the service with the merchant prior to filing dispute.

Some tips that are helpful when gathering evidence for combating chargebacks using compelling evidence:

  • Be sure to place your cardholder at the point of sale. This can be done by using the cardholders IP, by verifying billing address (AVS), and verify the CVV.

  • Establish intent to purchase the items. Using the IP you have taken from the transaction, you can track prior purchases that were not disputed and also (depending on your market) track their activity on your site.

  • Confirm delivery of products to the cardholder. Physical goods you can obtain delivery confirmation, digital goods you can obtain the logs that show that the cardholder logged in to download products.

  • Demonstrate the cardholder interaction with product or service.

  • The signed terms and conditions, as well as any documented contact to your Customer Support Department.

  • Reveal a pattern of behavior from the cardholder

  • Proper data capture is paramount in combating chargebacks using compelling evidence.

Case study on a merchant selling Health and Wellness products:

Recently this company ran into a rather large Fraud ring that had several years of order history totaling more $980,000 in total sales in 2017. These transactions were placed by a total of 105 accounts and 42 different payment cards. Coming from these linked orders with nearly $1 million in total sales, the merchant received 241 fraud chargebacks or disputes, totaling nearly $270,000.

The company compiled the IP Geolocation and Device ID Fingerprint information evidence proving the same device and card was used in the disputed transaction was also the same used in 50 previous transactions that were not disputed by the cardholder. The merchant compiled all invoices, and all shipping confirmations as well with the case with a detailed description of conversations that this cardholder had with their company.

This took the company roughly 170 man hours to pull and compile the compelling evidence, print and mail the 28,000 pages of documentation. This time also includes the collaboration with the Issuer and the Compliance team. This resulted in the Issuer receiving 6 boxes of paperwork to go through.

They successfully recovered all $270,000 and took no loss on this case; the cardholder was rebilled for all transactions. The representative later told them “It appears your guns were loaded on this issue.” All of this was possible because they had the proper data being collected with the help of their Fraud Management tool.

Author: J. Carlson, Certified eCommerce Fraud Professional


bottom of page