What if my Representment is Incorrectly Declined?

April 10, 2024

Merchants have many options for fighting chargebacks, but they can generally be approached in two ways —

1. Merchants can submit a representment with their Processor. Representments are a document with supporting evidence that argues why a chargeback should be reversed.

2. Merchants can use also Rapid Dispute Resolution (RDR) and Ethoca Alerts to refund a dispute before it becomes a chargeback.

But both methods of fighting chargebacks are unfortunately never 100% successful. Merchants may lose a representment, regardless of providing sufficient evidence. or depending on which mitigation service a Merchant uses, they may see a high level chargebacks trickle in. Let’s unpack what happens next…

What Are the Next Steps If You Lose a Representment?

After losing a representment, the next step to recouping your money can be arbitration.

Arbitration is when the Merchant escalates their case to the Card Network (VISA, Mastercard, AMEX, or Discover) for a third-party ruling. Since Card Networks prefer not to get involved, filing for arbitration can cost anywhere from $250-$500 per case, plus potential administrative and documentation fees. If the Merchant wins arbitration, then the Issuer will pay for the arbitration fees—if the Merchant loses though, they will have to pay the fees.

Regardless of the massive upfront costs, arbitration is sometimes necessary. Here are some reasons that Merchants may consider getting a Card Network involved:

Significant transaction amount. Large transactions that exceed the arbitration cost can make sense
Clear violation of rules and/or overwhelming evidence of fraud
Wrong reason code applied to a transaction. Wrong reason codes can negatively affect compliance and make root cause analysis difficult
Merchant needs to contractually/legally legitimize transaction

Arbitration can start by reaching out to your Processor. Like filing a representment, your Processor can help package up your claim and evidence, then submit it to the corresponding Card Network. The filing window for arbitration can be 30-45 days after losing the representment and take several weeks to resolve.

What is RDR and Ethoca Alerts?

Processors might sometimes enroll their Merchants into a dispute and fraud management service. Or a Merchant might sometime self-enroll into a PSP to monitor and manage disputes and fraud. RDR or Ethoca is often integrated into those PSP solutions and services. Merchants can also enroll through Verify (VISA) or Ethoca (Mastercard)—but PSPs tend to have integrated plug and play solutions.

In short, they allow the Merchant to respond to a dispute before it becomes a chargeback. They can also be used for early warnings on disputes, giving the Merchant time to respond appropriately.

Though different services, one similar feature with both tools is the ability to refund disputes before they become chargebacks. You still pay for using the tool, but sometimes resolving the dispute can save your threshold or avoid losing money on a lost cause representment—meaning that Merchants can keep in compliance with Card Network guidelines.

Can RDR or Ethoca Alerts be Charged Back?

RDR rarely results in a chargeback, and if it does, RDR can’t be represented—those rare chargebacks go through a pre-compliance process to get the money back. Ethoca Alerts on the other-hand, due to the type of its implementation, can see more leakage. But unlike RDR, a representment can be issued.

What’s the Best way to Optimize Representments?

Slyce360 is the only tool that generates winning rebuttals and optimizes your best path to success. See the chargeback issues brewing and know which ones to fight, how to fight them, and how to win more.

Learn more about Slyce360 today