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Everything You Need to Know About Merchant Chargeback Rights

  • Mike Conway (Platinum Partner, ChargebackHelp)
  • Aug 27, 2020
  • 5 minute read

Cathy Beardsley is president and CEO of Segpay, a global provider of merchant services specializing in subscription-based billing, high-risk payments and fraud mitigation. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are always safe and protected with its proprietary Fraud Mitigation System and customer service and support. Segpay Logo

Contributed by Platinum SUBTA Resource Partner, ChargebackHelp

Time to read you your rights… as a merchant. Even within a system that is so thoroughly pro-cardholder, and merchant-unfriendly by proxy, you do have rights when dealing with chargebacks. Like most other rights, they only offer protection to those that know them. So take the following to heart and position yourself to exercise them for maximum protection. 

Whether you’re in a high-risk vertical or not, chargebacks can threaten your processing, drain your revenue, and crush your dreams. Moreover, most chargebacks are like unforced errors. There are steps you can take to prevent them; inaction amplifies chargebacks into a bigger problem than they should be. 


Merchant rights ensure that you get the tools you need to manage your chargebacks effectively. After reading this article, we hope that you will gain a working knowledge of managing chargebacks to help provide your business with a stable future in processing transactions. 



Merchants can learn about their chargeback rights by reviewing the documentation provided by Visa, MasterCard, Discover, or American Express. These major companies supply a lot of information and rules about credit card chargeback laws and chargeback fraud. 

As you well know, terms and conditions are always changing; our inboxes are stuffed with change notices from every company we’ve ever interacted with. So your rights in transaction disputes vary between credit cards, banks, and processors. 


Still, some general things apply to any chargeback you will receive: 


1. You’ll be given reason codes. Every card association has an exhaustive list of reasons for a chargeback. Each reason has a code, and you will receive that code when notified of a dispute. 


2. Merchants are protected against late delivery. Late delivery does not have a reason code. If a purchased item arrives after it was promised, the customer must take up the issue with the merchant and not the issuer. 


3. There is a mandatory waiting period. Issuers must wait 15 days after they receive a dispute before it can become a chargeback. The issuer or card scheme reviews the dispute to determine if the merchant is at fault. This also affords merchants some time to approach a customer.


4. Chargebacks only apply to the item purchased. If the item in question was delivered, cardholders could not chargeback shipping, handling, or any attendant fees charged for order fulfillment. 


5. No chargebacks are allowed for cashback. Cashback transactions are final and cannot be refunded or charged back. 


6. Merchants have a right to representment. If you disagree with a transaction dispute for any reason, you can argue your case through representment. 


It’s incumbent on merchants to understand the terms and conditions of the card associations they process; that includes their various reason codes. A card scheme’s terms can sandbag a merchant’s rights with caveats and limitations. The more you know about these, the more prepared you’ll be. 



When your acquiring bank notifies you of an impending dispute, you can take three courses of action. 


You can now deflect a dispute by submitting comprehensive transaction data to the cardholder bank. Merchant and product descriptions, device ID, and delivery confirmations are just a few data points that merchants can provide for the issuing bank to reference if a dispute is raised. When this information ties the cardholder to a purchase, the dispute is nullified or “deflected” when the cardholder calls their bank. 


Failing that – as in the event a card was fraudulently used for a purchase – you can refund the customer. This is typically a good idea if you’re selling digital goods or services. You can’t keep the revenue from a fraudulent sale, but you can dodge the fees and penalties that come with a chargeback. 


The third option is to fight the chargeback. If you know, the cardholder made the purchase, and you can prove it, fighting back can recover the revenue at stake. This is known as representment. 


The burden of proof is always on the merchant. Your right to representment is only useful if you have the evidence to back it up. If you suspect a chargeback is fraudulent, you have to provide as much evidence as possible to prove it and present that evidence in a structured way that’s very easy to follow. 


Representment is initiated with a letter of chargeback rebuttal; you will have to submit all compelling evidence as one PDF document to your acquiring bank. This is your key line of defense against fraudulent chargebacks. An organized and valid proof will reverse a chargeback in no time. 



Be professional and always save data on each transaction and the customer who made it for at least six months after the purchase. Remember, there are many professional scammers out there that wait to file a fraudulent chargeback at the last possible moment, knowing many merchants do not keep the data long enough. 


Representment is a complex process that takes a lot of time, but if you want to fight for your rights (and your revenue), you need to be ready. 

Here’s a list of the documents you’ll need for a successful representment: 

• Product description and the URL (links associated with that product) 

• Customer name 

• Their IP address 

• ID of device used for the transaction 

• Signatures 

• Billing address 

• Receipts (scans or screenshots) 

• Correspondence that you’ve had with the customer (e-mails, chats, audio recordings, etc.) 

• Shipping address 

• Shipping documents that you have 

• The date of delivery 

• Tracking numbers 

• Information about the carrier 

• For digital products, provide server logs, user paths, download history, etc. 



Chargebacks were created to protect customers from fraud; the merchant’s role in the process is little more than an afterthought. However, merchants do have rights, and they can use them to defend themselves against chargeback abuse and friendly fraud. The most important of these rights is the right to representment. Not exercising that right correctly is tantamount to giving your revenue away. Be sure to review our resources on representment to ensure you’re in an optimum position to use it successfully. You can learn more about fraud, chargebacks, and representment by visiting us at


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Written by Mike Conway – Director of Marketing and Communications, ChargebackHelp
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