How to Select a Chargeback Management Company

Michael Mallon

Jan 13, 2021

According to SmartMetric, the rate of online fraud for merchants continues to be steadily on the rise. The fraud growth rate among online merchants sits in triple digits, with no relief in sight. Unfortunately, most digital retailers are all too familiar with chargebacks as it accounts for nearly 1.5% of their total revenue, with losses projected to reach $30 billion in the US at the end of this year[1].

There are some clear advantages in hiring a professional chargeback management firm to protect your interests. A chargeback management company can leverage its resources and experience to prevent and fight chargebacks on your behalf and alleviate the need for you to manage them in-house. Any online merchant that has devoted countless staff hours towards gathering evidence to answer payment disputes can appreciate the value and convenience a managed service provider can deliver. 

Deciding to outsource your chargeback prevention and response process is the first step toward controlling these costs. When evaluating chargeback management firms, you should look for a partner that offers a one-stop solution to minimize chargeback filings, can prepare compelling cases to help recover revenue, and whose philosophy and services match your company’s needs. 

Preemption, Prevention, Prescription

Your chargeback management company should use a three-pronged approach to help you eliminate the causes of friendly fraud and stop disputes before they escalate to chargeback status.

Pre-Chargeback Inquiries & Alerts

Top chargeback management companies receive and process pre-chargeback inquiries and alerts from Ethoca and/or Verifi, which are early-warning systems that are activated when customers initiate disputes. A total solution includes comprehensive upfront monitoring and management that allows the merchant to respond to dissatisfied customers before their inquiries progress to chargeback status. Vendors that aggressively address alerts can reduce chargebacks by one-quarter to one-third, or more.

Learning

Preventing future chargebacks is dependent on learning from past mistakes and current conditions. It is important to choose a chargeback management company that provides you with user account monitoring and fraud prevention components and considers legitimate account holders’ online behaviors and spot questionable activities. People who receive free merchandise through a chargeback – valid or not – are prone to trying it again. In fact, research from 2016 shows that 40% of customers who file a successful chargeback will file another one within two months.[2] Your partner should therefore be able to identify bad actors, analyze reason codes and purchase data, and work with your banking partners to mitigate friendly fraud.

Improvement

Your external chargeback management team members will act as an extension to your team to optimize marketing, quality, distribution, call center, and other operations that contribute to chargebacks. As a trusted partner, your chargeback management firm should have the ability to highlight trends in chargeback reasons and suggest adjustments to help minimize future chargebacks.

Review, Representment, Reporting

No partner can eliminate chargebacks completely. However, your chargeback management company should help you assess the likelihood of success by increasing your win rate, recover more revenue and respond to chargebacks accordingly. 

Win Rate

Select a chargeback management vendor that will review all of your chargebacks and challenge as many as possible where you have the data to be successful. Your total cost may increase slightly but your wins will increase and so will the revenues you recoup. Before engaging a chargeback provider’s services, be sure you understand its guidelines for fighting or accepting a chargeback. These should be defined by data available to dispute chargebacks and your business rules to maximize your return on investment.

Investigation

Wins rise when you team with chargeback managers who understand the intricacies of the process. Pick a company with managers whose experience spans across fraud prevention, payment processing, and chargebacks. They will remain up to date on the trends and regulations that govern digital payments and liabilities and will know what documentation carries the most weight in swaying case outcomes.

Communication

Insist on quality not quantity. And your chargeback management firm should provide regular, timely reports that contain enough detail to evaluate the reality of your chargeback performance and your partner company’s proficiency. They should list the number of cases received, challenged, won, and lost, as well as the amount of revenue recovered and the ROI. Most important, they should also deliver reports while the data is fresh so you can act on the insights presented promptly.

Any dedicated chargeback management company can support you to recover more of your revenue. Accertify’ s Chargeback Management service is powered by our Interceptas case management platform and services integrate with leading global payment processors, customer management databases and order processing tools, as well as our own comprehensive fraud-prevention suite.

Request a consultation to learn how Accertify combines proprietary software, AI-based decision engines and the best minds in the business to deliver complete protection from eCommerce scams.