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Sick of Unfair Chargebacks? Here’s How to Fight Them and Win

So you've found yourself on the receiving end of an unfair chargeback. You've honored your end of the deal, done your work for the client, and now they're trying to take the money and run.

As a small business owner, clients disputing transactions for no good reason can leave you feeling frustrated, angry, or even downright betrayed. You feel like your hard work went to waste and wondering how you can ever trust a client again.

On top of the emotional rollercoaster they send you on, chargebacks can also put a significant dent into your finances. But what are you going to do about it? Fight and lose more time and energy or let it be and move on?

If you're thinking about the latter, know that it's exactly what this client is hoping you will do. Also know that, instead of rolling over and taking it, you can also stand up for yourself, fight the unfair chargeback, and win. Here's how you do it.

Understanding credit card chargebacks

Imagine this scenario: a customer makes a purchase from an online store, receives the product, but it's not at all what they ordered. They contact the store, but no answer for days. As a last resort, the customer decides to dispute the transaction with their credit card company.

No problem here, right? At the end of the day, this customer initiated the chargeback for good reason and is protecting themselves from a fraudulent seller.

Fraudulent charges, non-delivery of services, and unsatisfactory purchases are the reasons chargebacks exist in the first place. However, the problem is that there are clients who will try to take advantage of the system that's meant to protect against fraud to commit fraud.

And while you can sometimes spot a problematic client from a mile away, you can't know an unfair chargeback is coming your way before it's already there. What you can do instead is get your documentation in order in case you need to fight and hope it doesn't come to it.

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How to prevent unfair chargebacks

Hope for the best, prepare for the worst is a good summary of how to prevent unfair chargebacks. Since the chargeback system works on a guilty until proven innocent principle, the best thing you can do is prepare.

Be clear and transparent

Provide clear and accurate descriptions of products and services to make sure there are no misunderstandings. Clearly display your return, refund, and cancellation policies on your website. Ensure customers are aware of them by having them tick a box or sign before buying from you.

Document everything

Keep detailed records of transactions, including invoices, receipts, and shipping information. If you are selling services, make sure to document the scope, timeline, and deliverables.

Use a project proposal, statement of work, and/or a client sign-off sheet and only proceed with work once you have the client's signature. Using online signature software like Better Proposals, you can track the client's activity inside documents. In addition to that, their eSignature is legally binding, recording the signer's unique data. That way, you have solid proof in case a dispute arises.

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Be available

Support your clients throughout the transaction process. Send order confirmations, shipping updates, and invoices promptly.

Respond to clients' questions and complaints immediately by integrating live chat into your sales documents. More often than not, partial refunds, exchanges, or solutions to problems can prevent the situation from escalating to chargebacks.

Use secure payment providers

By using a reliable payment provider, you're making sure the person making the purchase is the legitimate cardholder. Apart from that, some processors offer tools and resources to help prevent and manage chargebacks.

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How to fight unfair chargebacks and win

Once you get over the initial shock of what feels like a client stabbing you in the back, it's time to start collecting evidence. Gather all relevant documentation related to the disputed transaction. This could include:

  • Invoices and receipts
  • Shipping information
  • Communication records
  • Documentation (project proposal, SOW, sign-off)

The more evidence you can provide, the stronger your case will be. When you've got all your documents in order, you can start writing your chargeback rebuttal letter.

Writing your chargeback rebuttal letter

Note that, during this stage, remaining as professional as you can is crucial. While you have every right to feel offended, refrain from resorting to personal attacks or emotional language.

The purpose of the rebuttal letter is to acknowledge a dispute exists, refute the dispute claim, and persuade the bank that the chargeback was uncalled for. Sticking to pure facts here is your best bet.

Rebuttal letters usually end up on a person's desk, so your job is to present the situation as objectively as possible in order to be taken seriously. When writing the chargeback rebuttal letter, make sure to include:

  • What your obligation to the customer was
  • How and when you met your obligation to the customer
  • An itemized list of supporting documents you've included

If the client contacted you for a refund before resorting to a chargeback, also explain why you denied it. Keep everything short and to the point.

What happens when you've submitted all the documents?

Once you've submitted everything to support your case, make sure to be available for any requests for additional information. Depending on the payment provider, you have a limited time to dispute a chargeback, so you need to stay engaged if you don't want to miss any deadlines. Keep an eye on the progress of your chargeback rebuttal until it reaches resolution. Remember that you'll need to be patient as these disputes often take time to resolve fully.

Final thoughts

While dealing with unfair chargebacks isn't how you'd want to spend your time, it's a part of doing business. The best thing you can do to protect yourself from financial losses is to document everything. That way, you'll have a much easier time speaking up for yourself when you run into a client that wants to use your work without paying for it.

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Patricija Šobak's profile image
Patricija Šobak puts her talent in spotting questionable grammar and shady syntax to good use by writing about various business-related topics. Besides advocating the use of the Oxford comma, she also likes coffee, dogs, and video games. People find her ability to name classic rock songs only from the intro both shocking and impressive.