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Innovate Now: Dispute Management in the Frictionless Age (MAG Quarterly- Volume Seven, Issue One)

Verifi New  

By: Rick Lynch, SVP Business Development, Verifi, Inc.
 

March 7, 2019

Let’s face it. Technology has spoiled us to the extent that things we couldn’t conceive as possible are now part of everyday life. Whether it is communicating instantly via text, video-chatting with loved ones across the world, or making a purchase with a swipe, tap, or click, it is much easier to get things done now more than ever. We give little thought to these modern conveniences until something goes awry, like when a frictionless transaction hits a speed bump and a consumer begins the process that ultimately results in a chargeback. To remain competitive, merchants must satisfy consumer demand for instant gratification – but they often pay the price of increased inaccuracies and disputes. This balancing act can result in resource drain and lost profits.

As more merchants adopt omni-channel marketing strategies to meet consumer demand for rapid transaction and delivery, they run the risk of an increase in friendly fraud, which makes having a rigorous dispute management process in place even more important.

Historically, many merchants have accepted chargebacks as a cost of doing business. But given the alarming growth of disputes resulting from the increase in friendly fraud and cyberattacks, merchants will be hard-pressed to continue absorbing the costs associated with chargebacks.

The dispute process heavily favors the consumer and places the onus on merchants to address or resolve the issue, or they will suffer lost revenue and other damaging costs. Upholding best practices in dispute management offers the best opportunity for merchants to challenge unnecessary chargebacks. These practices are only effective when the responses are thorough and presented in time. Now more than ever, preparation is critical to success in this age of Visa Claims Resolution (VCR) and the shorter dispute response time frames.

The Need for Speed
Visa created VCR with the objective of simplifying and shortening the dispute process, and with the intent of bringing the average dispute resolution time frame down significantly. That leaves little time for merchants to complete an effective chargeback representment in their dispute management process. The most critical tool in the chargeback representment toolkit is a detailed chargeback rebuttal letter. Unfortunately, this letter is often left to the last minute or not even included in the rebuttal. That rarely ends well.

Thoroughness Begins with Preparation
Merchants that have the resources and processes in place for easy access to information on the disputed charge can improve their chances for success. Because they must work under tight timelines, it is essential for merchants to utilize a solution that provides visibility into purchase data, payment and delivery details, and order history. This enables them to build their case for challenging the veracity of the chargeback. The most compelling evidence that proves the cardholder authorized the purchase and received delivery includes:

  • Copy of the sales receipt, invoice or order form
  • Proof of customer purchase approval
  • Photos that prove the purchase matches the description provided
  • Confirmation emails/transcripts with the customer that verify the purchase
  • Deliver details such as tracking number, receipt signature, and delivery time/location
  • Evidence of the customer’s IP address and download time and date (if a digital service)
  • Proof that the customer lives or works at the delivery address
  • Indications that previous transactions from the same IP address, email address, physical address, or telephone number were undisputed
  • Proof that someone related to the customer could have made the purchase with the customer’s card
  • Copy of the refund/return policy

Be Vigilant or Outsource
Ensuring the strength of your bottom line compels you to take care of your chargebacks. Until your dispute management process dramatically improves or you can successfully prevent chargebacks from happening, without a thorough internal development of effective representment you may well lose more chargeback cases than you will win. Merchants with limited resources or other more pressing needs should consider external resources for chargeback representment. The combined impact of the rising number of disputes and limited time to address or challenge chargebacks will continue to place enormous pressure on merchants to be more efficient and better prepared with easily available transaction data.