Challenge Chargebacks

• How to effectively challenge a chargeback
• How the process works
• Types of chargebacks and the evidence you will need to supply
• Evidence types

How to effectively challenge a chargeback

When you receive a chargeback and feel it was taken incorrectly, we want to work with you to challenge that chargeback with your bank. To do so, we want to provide as much evidence as possible to make that challenge successful. 

In this article, we’re going to look at how the process works, the different types of chargebacks you may experience and the evidence required to effectively challenge them. 

How the process works

There are a few reasons why you might receive a chargeback. Each reason comes with a description of the evidence you need to provide to challenge it. In some cases, we will be able to collect the evidence ourselves, however in other cases we may need your help.

Once we have collected the evidence we need, we will then submit it to the payer’s bank on your behalf. 

When handling chargebacks, the banks try to be fair to their customers first and foremost. This means that the evidence we provide needs to be full and robust and demonstrate, with little doubt, that the chargeback was done incorrectly. 

Because banks are acting in their customers’ best interests, challenges can sometimes be unsuccessful. We don’t always receive feedback from the bank as to why a challenge was not accepted, however we will always endeavour to challenge the chargeback effectively. 

Types of chargebacks and the evidence you will need to supply

Evidence types

• A signed contract between you and your customer
• A copy of the advance notice email sent to your customer
• Proof that you have already refunded your customer
• Additional evidence for reason code 5 chargeback challenges

A signed contract between you and your customer

To challenge chargebacks where the customer is disputing whether they provided authority for the payment to be taken, you need to show that you and the customer entered into some sort of agreement about the services or products you provide. This can be in the form of a formal contract. 

If you don’t have a formal contract with your customer, demonstrating how they signed up to your service, the way they accepted your terms and conditions, and the date on which they signed up will help. It will help the challenge if you provide visuals of the sign up flow and where they accepted your terms. 

Examples of what you can provide:

• A formal contract 

• Screenshots of the sign up flow they used 

• Accepted terms and conditions

• Agreement should clearly state payment will be collected by Direct debit

• Agreement should clearly state customer account details and state date of agreement

What that evidence must include:

• An agreement between you and your customer 

• Clear indication of their intent to use your services 

A copy of the advance notice email sent to your customer

To challenge chargebacks where the customer is claiming that they never received notification of the payment, you need to prove that you’ve provided ample notice and details of the payment scheduled to be collected, normally in the form of an advanced notice email. 

For this type of evidence you must include:

1. Payer name

2. Business name

3. Total amount of Direct debit to be applied to the payer’s amount

4. Direct debit due date (include date, month, year)

5. Payer bank details 

6. Direct Debit Guarantee

7. Date and email address to which the notification was sent

Proof that you have already refunded your customer

To challenge chargebacks where a refund is being disputed, you need to provide proof that you’ve already returned the funds to the customer. Banks are looking for a legitimate source of evidence that clearly demonstrates that a payment was made. 

Examples of what you can provide:

• An email sent to the payer detailing the amount/date of the refund

• A table illustrating the flow of funds between you and your customer and the dates on which they happened, on your company letterhead

• If you process your refunds through GoCardless, you can supply a screenshot of the payment timeline as evidence

What this evidence must include: 

1. Payer name 

2. Payment amount

3. Date the initial payment was taken

4. Date the refund was processed

Additional evidence for reason code 5 chargeback challenges

For reason code 5, some banks request additional evidence: 

Where a contract is established between a Service User and a customer through digital means (such as a website or by phone):
 
1. Any details obtained from a customer to be used for a Direct Debit must be verifieD. The most common method of verification is to verify the details using Experian, or a similar service. As part of the Reason Code 5 Challenge, we would require evidence of this check being completed, such as a screenshot from the Experian website. We can then check these details against our records.
 
2. The customer must have read the relevant documentation agreeing to a Direct Debit being set up, and electronically acknowledged that they have read this. Evidence that could be provided to show that this step occurred could be a document which was sent to the customer and returned, digitally signed. Alternatively it could be evidence of the customer ticking a box to acknowledge the document being read if it were embedded on the website.