Chargeback Mitigation Plan

Chargeback Mitigation

How a Chargeback Mitigation Plan Can Reduce Your Risk

Chargeback mitigation refers to the set of processes and best-practices merchants can put into place to decrease the risk of chargeback losses. Common-sense policies will help to some extent, but a chargeback mitigation plan is needed for optimal protection.

A successful mitigation plan can help prevent future chargebacks. For some merchants, though, chargebacks are already a major liability. When chargeback rates increase to dangerous levels, merchants can either accept the financial loss as a cost of doing business...or create a strategy to lower that rate, recover lost revenue, and prevent ongoing chargebacks. Obviously, the latter is the more sustainable and profitable option.

Whether or not a business currently has a chargeback issue, the purpose for any type of management and mitigation plan is simple: proactively counter chargebacks and challenge illegitimate transaction disputes to stem financial losses.


[noun]/* mi-tə-ˈgā-shən/

Mitigation is the action of reducing the severity, seriousness, or painfulness of something..

Having said that, a merchant already suffering from a high chargeback rate is in more immediate danger. When chargeback rates spike, card networks and acquirers typically demand a formal mitigation plan that specifically outlines what steps will be taken to lessen the risk of further chargebacks.

If your business is already at the point where a mitigation plan is mandated, you have no time to lose.

Chargebacks for Dummies


Send Me My Free Book!

The Chargeback Mitigation Plan

It’s difficult to talk about a “standard” mitigation plan. The truth is every industry and every business deals with different and unique challenges. You must customize your chargeback mitigation efforts for to address the most applicable threats and circumstances.

A comprehensive chargeback mitigation plan might include:

  • Identifying valid transactions and decreasing false positives.
  • Lowering the acceptance of unauthorized transactions.
  • Identifying the source of each chargeback.
  • Eliminating preventable chargeback triggers, like merchant errors.
  • Challenging illegitimate chargebacks.
  • Improving industry relationships.

Obviously, the more of these tasks your plan can accomplish, the better. When executed effectively, the outcome of chargeback mitigation should produce some or all of the following benefits:

  • Increased profits
  • Recovered revenue
  • Decreased costs
  • Greater sales conversions
  • Fewer declines
  • Improved customer retention and loyalty
  • Enhanced brand reputation
  • Stronger industry relations
  • Reeducated consumers
  • Sustainable growth and longevity

Prevention & Representment: The Two Sides of Mitigation

As we implied earlier, there are two key components to a chargeback mitigation plan: (proactive) prevention and (reactive) representment. Each plays a vital role in the process, and each calls for different technologies, tools, and expertise.


The single most important element to chargeback prevention is identifying where your chargebacks come from. Card scheme reason codes can be of some help. But, as a rule, they seldom present a whole or accurate picture of the situation. If you don’t identify the true source of all chargebacks, you’ll implement inefficient strategies that treat symptoms instead of solving problems.

Realistically, all chargebacks originate from one of three sources:

  • Criminals: Unauthorized transactions that constitute criminal fraud.
  • Customers: Illegitimate or unwarranted chargebacks, also known as friendly fraud.
  • Merchants: Unidentified merchant errors and oversight.

Within each of those three sources, there lies a multitude of potential chargeback triggers. Effectively addressing all three sources requires a multi-tiered approach that includes both insightful human forensics and specialized analytic tools.

Such a strategy will almost always be composed of different elements, and might include the following tools:

  • Anti-fraud technologies provided by card networks and processors—AVS, CVV, 3D Secure, blacklists, whitelists, velocity checks, and more—to reduce the risk of unauthorized transactions.
  • Fraud filters that analyze transactions, looking for known characteristics of fraud.
  • Chargeback alerts, which allow merchants to refund transaction disputes that would otherwise escalate into chargebacks.
  • Identifying the source of each chargeback to enable targeted prevention tactics.
  • A Merchant Compliance Review that analyzes and rectifies internal errors, procedural shortcomings, and policy missteps that often lead to chargebacks.

Let us handle the dispute management while you focus on your business.



You can prevent virtually all chargebacks caused by merchant error or criminal fraud. However, cases of friendly fraud, which represent between 60-80% of all chargebacks, are much more difficult to avoid. You must take advantage of the second phase of chargeback mitigation: representment.

“Representment” refers to the process of re-submitting a disputed transaction (chargeback) to the issuing bank, along with compelling evidence that supports the validity of the original transaction. Successful representments will recover revenue that would have otherwise been lost, while at the same time helping to retrain consumers on proper procedures.

Unfortunately, engaging in representment takes time and an extensive understanding of complex and constantly evolving industry regulations. Most merchants have neither the resources nor the expertise to craft winning representment cases. Turning to professional assistance as part of an overall chargeback mitigation plan can ensure greater success while also reallocating valuable resources to revenue-generating departments.

Do I Need a Chargeback Mitigation Plan?

You may feel a chargeback mitigation plan is unnecessary if you’re not currently experiencing an excessive number of chargebacks. What you don’t realize is that chargeback rates can spike at any time…and by the time they do, it may already be too late.

From the network or acquirer point of view, increased chargeback rates equal increased risk. They’re not likely to take your specific circumstances into consideration. Whenever perceived risk goes up, immediate action will be taken to reduce liability.

Even if you do not feel your business is especially vulnerable, it’s still important to create and implement a plan that produces measurable results. Chargebacks911 can help you develop an actionable chargeback prevention strategy to ensure sustainability.

Our Chargeback Mitigation Plan Advising provides a strategy to not only keep you in business, but allow your organization to thrive by drastically reducing instances of chargebacks and other fraud losses. Contact us today to learn more.

Prevent Chargebacks.

Fight Fraud.

Recover Revenue.