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1 CHARGEBACK AND FRAUD DISPUTES
To prevent instances of chargeback and fraud disputes, here are some useful suggestions:
1. Make sure that you provide your customers with all possible contact information and good customer service. This way, you will encourage them to channel their complaints to you first, before calling up their issuing bank to request a chargeback.
2. Be clear with your return policy, as well as your shipping policies, and make sure that your customer clearly understands them before transacting with you.
3. Aside from verifying the billing address and security code, request the name of the card issuing bank as one of your purchasing policies. Failure to provide this will be a big red warning flag.
4. Always send confirmation emails to your customer. These should be automated ones which contain the invoice. Once shipped, send another confirmation e-mail providing shipping details and tracking information.
5. When the shipping address is different from the billing address, try to confirm the information and exercise extra caution.
6. Many consumers ask for a chargeback when they do not recognize the charge being made on their credit card statement. Thus, make sure that your company name and a clear transaction description will be reflected on their bill.
7. While these methods are ways for preventing fraudulent transactions and for winning chargebacks, they are not sometimes enough in the real world setting.
8. This is because what causes most chargebacks is not fraud, identity theft, processing errors or the like.
Most common Chargeback and fraud codes, reports from International Card organisations:
There are three types of reports: chargebacks (file name consists CHB), fraud (fraudulent transactions, file name consists FRAUD) and retrieval requests (file name consists RR).
On fraud reports do not reply. These messages merchants and bank use as markers of possible problematic issues during the working process. In some cases, the Bank may request an explanation from the merchant about any of the issues.
You should observe the time to analyse the process of the issue and to send a request to challenge chargebacks and related documentation in timely manner – not later than 2 weeks from the date of receipt of the request.
If a merchant believes that the chargebacks exposed unnecessarily, he has a rights, to send to the Bank appropriate document (documents confirming a deals, report from the e-shop, that the service or product has provided and challenge chargebacks (both MasterCard, or by VISA). The application against chargebacks have to be sent to the same bank’s email, from which merchant received the report about the chargeback.
Application have to be written in free form – description of situation, ID number of transaction.
Regarding the necessary documentation to challenge chargebacks – it all depends on the particular Reason Code and of particular issue.
2 SHORTLY ABOUT MOST COMMON REASON CODES
VISA
30 – Services Not Provided or Merchandise Not Received – This chargeback occurs when a Merchant was either unwilling or unable to provide services or shipped merchandise was not received. This chargeback may be reversed if you can provide proof that the services were rendered to the cardholder, proof of delivery for the merchandise purchased, or evidence the credit was issued. This chargeback can be avoided by waiting to charge the customer until after the service has been provided or the merchandise has been shipped.
41 – Cancelled Recurring Transaction – This chargeback occurs when a Merchant continued to charge a Cardholder for a Recurring or Pre Authorized Health Care Transaction despite cancellation notification, or Transaction amount is not within preauthorized range. This chargeback may be reversed if you can provide evidence of credit issued, or evidence containing the cardholder signature with the correct cancellation date. This chargeback can be avoided by promptly removing the billing cycles from customers who cancel your services.
75 – Cardholder Does Not Recognize Transaction – This chargeback occurs when the Cardholder does not recognize the Transaction. This chargeback may be reversed if you can supply information or documentation to assist the cardholder in recognizing the transaction or evidence that a credit was issued.
82 – Duplicate Processing – This chargeback occurs when a customer claims they have been charged multiple times by an establishment when there is only one valid transaction. This chargeback may be reversed if you can supply a signed and imprinted/swiped sales draft for each transaction processed, along with an explanation and description for items purchased during each transaction or evidence credit was issued.
83 – Fraudulent Transaction – Card-Absent Environment – This chargeback occurs when a customer does not recognize the transaction and is stating they did not authorize the charge to their credit card. This chargeback may be reversed if the Merchant is 3D secure or if you are delivering goods to he Cardholder and you have a signature that he has received them.
85 – Credit Not Processed – This chargeback occurs when a customer claims they are due a credit from your establishment that has not been processed. This chargeback may be reversed if you can supply proof that a credit has been issued to the cardholder, or supplying any documentation related to this transaction along with an explanation as to why the credit was not issued.
MasterCard
4837 – No Cardholder Authorization – This chargeback occurs when a customer does not recognize the transaction and is stating that they did not authorize the charge to their credit card. This chargeback may be reversed if the Merchant is 3D secure or if you are delivering goods to he Cardholder and you have a signature that he has received them.
4841 – Cancelled Recurring Transaction – This chargeback occurs when a customer states they have cancelled the recurring services and, therefore, should not have been charged for this transaction. This chargeback may be reversed by supplying evidence of credit issued, or evidence containing the cardholder signature with the correct cancellation date. This chargeback can be avoided by promptly removing the billing cycles from customers who cancel your services.
4853 – Cardholder Dispute – Defective/Not as Described – This chargeback occurs when a customer claims the service or merchandise they received does not conform to the description they were given. This chargeback may be reversed by supplying proof that the cardholder received the goods or services which fit the description at the time of the purchase, proof that the deficiency that led to this dispute has been corrected, a statement that cardholder neither returned or attempted to return merchandise, or evidence that a credit was issued. This chargeback can be avoided by insuring the customer clearly understands what they are purchasing and is aware of any applicable return or refund policies.
4855 – Non-Receipt of Merchandise – This chargeback occurs when a customer claims they have paid for items that were to be delivered from your establishment but have not yet been received. This chargeback may be reversed by supplying proof that the customer has received the expected merchandise or evidence that a credit was issued. This chargeback can be avoided by waiting to process the charge to the customer’s credit card until the merchandise has been shipped.