The Ins and Outs of Chargebacks

A free Conexxus webinar gives merchants a blueprint for handling chargebacks.

December 14, 2018

ALEXANDRIA, Va. – Every merchant has to deal with chargebacks, and knowing the right way to handle these disputes can save both time and money. Caleb Burke with CITGO Petroleum recently presented a free Conexxus webinar, “Chargebacks 101: The Basics.” A recording of the webinar will be available soon on

“Fraud accounts for more than 80% of chargebacks,” he said. “Overall, fraud has increased 60% since 2015. And 80% of chargeback fraud comes from what issuers consider ‘friendly’ fraud by a customer who has a malicious intent, buyer’s remorse, or didn’t qualify for a refund.”

Burke noted that fraud is migrating to non-EMV-compliant businesses. If a retailer is waiting to convert to EMV, he recommended requiring ZIP verification, installing a POS prompt for last four digits of card for in-store sales, and limiting the purchase of high fraud merchandise, such as gift cards and cigarette cartons.

Overall, the burden of proof lies with the retailer in a charge dispute. “Merchants should have a roadmap for how to handle chargebacks,” Burke said. For example, retailers should review chargebacks for validity, respond to all requests in a timely manner and provide all relevant documentation during initial re-presentment (the processing of re-presenting a transaction to the customer’s issuing bank).

The major credit card companies have made recent changes in chargebacks, namely Visa’s Claim Resolution that went into effect April 2018. “This was designed to simplify chargebacks … and streamline the customer experience,” he said. However, it also shortened the response time to 30 days, which means retailers need to keep on top of chargeback dispute notices. MasterCard’s MasterCom Claims Manager will likely go into effect in April, with shortened response cycles and an alignment of reason codes, although the final form of this program hasn’t been released.