⚠ Critical: Chargeback Ratio Thresholds
Exceeding 1% chargeback ratio (Visa/Mastercard) or 0.9% (some processors) can result in account termination, placement on MATCH/TMF list, and inability to accept cards. Respond to every chargeback, even small amounts, to protect your merchant account.
Understanding Chargeback Reason Codes
Each card network uses different reason codes. Understanding the code determines your defense strategy and required evidence.
10.4 Fraud - Card Not Present
Cardholder claims they didn't authorize the transaction. Most common for e-commerce.
13.1 Merchandise Not Received
Cardholder claims item never arrived despite merchant showing shipped.
13.3 Not as Described
Cardholder claims product differs significantly from description or photos.
13.6 Credit Not Processed
Cardholder claims merchant agreed to refund but it was never issued.
13.7 Cancelled Services
Cardholder claims they cancelled subscription/service but were still charged.
10.1 EMV Liability Shift
Chip card was swiped instead of inserted, liability shifts to merchant.
Representment Timeline
Chargeback Received (Day 0)
Funds debited from your account. You receive notification from processor with reason code and cardholder's claim. Clock starts on response deadline.
Gather Evidence (Days 1-10)
Collect all documentation: order details, delivery tracking, customer communications, terms accepted, prior chargebacks from same customer.
Submit Representment (Days 10-20)
File representment package through processor portal. Include rebuttal letter and all supporting evidence. Format per processor requirements.
Issuer Review (Days 20-45)
Issuing bank reviews your evidence. They may accept representment (you win), reject it (you lose), or escalate to pre-arbitration.
Arbitration (Optional)
If pre-arbitration rejected, you can escalate to card network arbitration. High fees ($250-500+) make this viable only for larger amounts.
Required Evidence by Dispute Type
| Evidence Type | Fraud | Not Received | Not as Described | Cancelled |
|---|---|---|---|---|
| Order confirmation with billing address | ✔ | ✔ | ✔ | ✔ |
| Delivery confirmation with signature | ✔ | ✔ | ✖ | ✖ |
| AVS/CVV match confirmation | ✔ | ✖ | ✖ | ✖ |
| 3D Secure authentication proof | ✔ | ✖ | ✖ | ✖ |
| IP address and device fingerprint | ✔ | ✖ | ✖ | ✖ |
| Product description/photos from listing | ✖ | ✖ | ✔ | ✖ |
| Customer communications showing receipt | ✖ | ✔ | ✔ | ✖ |
| Terms of service/cancellation policy | ✖ | ✖ | ✖ | ✔ |
| Proof of cancellation process (or lack of request) | ✖ | ✖ | ✖ | ✔ |
Compelling Evidence for Fraud Disputes
🛡 Visa Compelling Evidence 3.0
Visa's CE 3.0 rules (effective April 2023) strengthen merchant position in fraud disputes by allowing historical transaction data as evidence. To qualify:
- Two prior undisputed transactions from same card with matching elements (IP, device ID, shipping address, or account)
- Transactions within 365 days of disputed transaction
- At least 120 days before chargeback - prior transactions must be outside dispute window
- Matching data elements: IP address, device ID/fingerprint, shipping address, or logged-in user account
If you can provide CE 3.0 evidence, liability shifts to issuer automatically.
Defenses by Situation
Friendly Fraud/Buyer's Remorse Strong
Customer received goods/services but filed chargeback instead of requesting refund. Often identifiable by customer using product before disputing.
Key evidence: Delivery confirmation, customer service logs showing no return request, social media showing customer using product, login activity after purchase
Digital Goods Delivered Moderate
Customer claims non-receipt of digital product (software, download, subscription access).
Key evidence: Server logs showing download/access, email with download link, account activity logs, IP matching purchase IP
Service Was Rendered Moderate
Customer disputes charge for service (consulting, repair, event ticket) claiming service wasn't provided.
Key evidence: Signed service agreement, check-in/attendance records, photos of completed work, communications confirming satisfaction
Subscription Properly Billed Moderate
Customer claims they cancelled subscription but were charged. Often no cancellation request exists.
Key evidence: Terms showing cancellation policy, account records showing no cancellation, continued usage after "cancellation" date, disclosure of recurring billing
Product Matched Description Situational
Customer claims item significantly differs from listing. Subjective disputes are harder to win.
Key evidence: Original listing with accurate photos/description, customer didn't attempt return, product specs match listing, industry standard terms used correctly
Refund Already Issued Strong
Customer filed chargeback but merchant already processed refund (double-dip).
Key evidence: Refund transaction record with date/ARN, bank statement showing refund, communication confirming refund processed
Representment Letter Template
Document Checklist
Evidence to Gather for Representment
💡 Prevention Is Better Than Response
Win rates for chargebacks are low. Focus on prevention: use 3D Secure, require signatures for high-value items, have clear refund policies, respond quickly to customer complaints, and use fraud detection tools. A resolved customer complaint is better than a won chargeback.