What Are Chargeback Reason Codes?

What Are Chargeback Reason Codes?

When you’re looking through your point of sale system, you will find that every card will have its own chargeback reason code and its own names for codes.

However, they’ll all more or less cover the same concerns. If you’re looking for a handy resource for chargeback reason codes, the information we’ve provided below should help you to find what you’re looking for.

However, because codes vary from one card to another, you may need to rely on customer support or the documentation attached to the card or your POS system in order to make sure that you’ve put the code incorrectly.

Chargeback Reason Code

Chargeback Reason Code: What Do They Mean?

General List Of Reason Codes

  • The item requested was illegible or was missing. This could mean that the documentation that was provided for the item was illegible. It could also mean that the merchant did not provide the documentation that was required for the transaction.
  • Invalid or incomplete documentation received. This usually means that the merchant failed to provide all necessary documentation. The documentation itself may be incomplete, or a whole item of documentation could be missing.
  • Installment billing dispute or cancellation of the recurring transaction. This usually occurs when a cardholder wants to end a subscription but winds up being charged anyway. It can also happen when a merchant processes a transaction after a card’s account has been closed, or the transaction wound up costing more than a predetermined cost. It can also point to a premature charge.
  • Defective merchandise, or merchandise not as described. If a product showed up with a crack in it, or if the product was described incorrectly by the merchant (in the eShop, etc.), you’ll get this error. It can also point to a merchant selling counterfeit or subpar products, which can lead to some serious legal issues down the line, so this is definitely an issue worth investigating when it does come up.
  • Fraudulent processing or fraudulent multiple transactions. This is a code that you get when a merchant tries to process transactions fraudulently or fails to void multiple transactions. Again, this is an issue that can get you into trouble, so it’s worth addressing immediately.
  • Declined authorization or authorization related chargeback. This is a code you get when a transaction is put through after authorization is declined. This usually involves a merchant circumventing a declined authorization by swiping or forcing the transaction. You’d be surprised how often this can happen by accident.
  • Expired card. This one is easy to guess: A transaction went through with an expired card.
  • Late presentment. This one is a little less self-explanatory, but it means that the transaction was not processed in a timely fashion. For instance, the account was closed between initial contact and final process.
  • Cardholder does not recognize the transaction. This could mean that the cardholder doesn’t remember the transaction or that it was made without their knowledge. This could point to a stolen card.
  • Incorrect currency or incorrect transaction code. This points to a merchant who issued a credit but posted it as a sale, didn’t allow the cardholder to make a purchase because they were trying to make it in the wrong currency, or didn’t notify the customer of a conversion of currency.
  • Fraud. Fraud can be a fairly broad term, but here it will usually be categorized into “Card-present” and “No cardholder authorization.” This means that the merchant made the transaction but did not make an imprint of the card, or that the merchant did not document that the transaction was made over the phone or otherwise, with no card being physically present.
  • Duplicate process. This is one of the most common mistakes, involving a merchant ringing up the same order twice for a single transaction. This can happen when a cashier, for instance, makes a mistake at the register, running the order up two or more times.
  • Credit was not processed. This means that the merchant did not credit the account following a return. This happens a lot when a merchant does not know how to run the return policy. Some POS systems make it easier to make this mistake than others.
  • Paid through other means. This means that the customer paid by check or cash or with another card. This can happen when a customer runs their card through, then for some reason changes their mind on how to pay, but the transaction goes through on the card anyway.
  • Questionable activity on merchant’s part. This means that the merchant may or may not have done anything that was immediately apparent to be in error, but somehow went against the card’s policies. At times the transaction may simply be allowed with an exception to the ruling, but you can’t count on it.
  • Cardholder dispute. A lot of cardholder disputes will fall into other chargeback reasons on this list, but when it just comes up as “cardholder dispute,” it simply means that the cardholder has disputed the charge for one reason or another. They could be confused about the charge, or someone else could have been using their card without permission, or they might have changed their mind but not been able to cancel the order in time. It could be any number of things not already covered by some other item on the list.

VISA/MasterCard

N/A 4802 Requested or required item illegible or missing
  • The merchant failed to provide necessary documentation.
  • The documentation provided was illegible.
N/A 4803 Documentation received was invalid or incomplete
  • The merchant didn’t provide all the necessary documentation.
30 4855 Services not provided or merchandise not received Merchandise or services were not received or not received by the agreed upon delivery date.
  • The merchant didn’t provide the services or failed to send the products.
  • The merchant billed the cardholder before sending the products.
  • The merchant didn’t send the items by the agreed up delivery date.
  • The merchant didn’t make products available for pickup.
41 4841/4850 Cancelled recurring transaction/Installment billing dispute A recurring transaction was processed after the cardholder requested termination, the account had been closed, the charge exceeded the predetermined amount, or the merchant failed to notify the cardholder of the upcoming charge.
  • The cardholder requested the transactions be terminated but was charged anyway.
  • The merchant processed a transaction for a card that had been closed.
  • The transaction exceeded the predetermined dollar amount and the merchant failed to notify the customer (in writing) 10 days before the charge.
  • The merchant prematurely billed an installment payment.
53 4853 Not as described or defective merchandise The merchandise was: damaged or defective upon its arrival, not the same as shown (online) or described (telephone), unsuitable for the intended purpose.
  • The merchant sent the wrong item.
  • The item was damaged during shipping.
  • The merchant inaccurately described the products or services.
  • The merchant didn’t perform the services as described.
  • The merchant did not accept a product return (or accepted it and failed to credit the account).
  • The merchant sold counterfeit products.
  • The quality of goods or services wasn’t adequate.
57 4840 Fraudulent multiple transactions/Fraudulent processing of transactions The cardholder has made a purchase with the merchant in the past, but this particular transaction wasn’t authorized (the cardholder was in possession of the card at the time).

**card-present transactions only

  • The merchant didn’t void multiple transactions.
  • The merchant tried to fraudulently process transactions.
62 4870/4871 Counterfeit transaction/Chip liability shift/Chip/PIN liability shiftThe cardholder did not participate in the transaction (a fraudster made a duplicate or counterfeit copy of the card).

**card-present transactions only

  • The merchant did not compare the first four embossed digits to the printed digits.
  • The merchant received authorization without providing required data.
  • The use of an EMV chip card resulted in a fraudulent transaction at a non-hybrid terminal.
  • The use of an EMV chip card resulted in a fraudulent transaction at a hybrid terminal (with or without a PIN pad).
71 4808 Declined authorization/ Authorization-related chargeback A transaction was processed after the authorization was declined.

**card-present transactions only

  • The merchant circumvented a declined authorization by forcing the posting, re-swiping until authorization was provided in error, or using an alternative authorization method.
72 4808 No authorization/ Authorization-related chargebackAuthorization was not obtained or obtained using invalid/incorrect information.

**card-present transactions only

  • The merchant didn’t obtain authorization, obtained authorization after the transaction date, or included the tip in the authorization amount.
73 4835 Expired cards A transaction was processed without authorization on an expired card.
  • The merchant didn’t receive authorization for a transaction on an expired card.
74 4842 Late Presentment The merchant didn’t process the transaction in a timely fashion.
  • The transaction wasn’t processed in a timely fashion and the account has since been closed or it was posted after 180 days of the original transaction date.
75 4863 Transaction not recognized The cardholder doesn’t recognize or remember the transaction.
  • The cardholder did not recognize the merchant’s name or billing information on the credit card statement.
  • The information listed on the cardholder’s statement was incorrect.
76 4846 Incorrect currency or transaction codeThe merchant failed to provide adequate currency information or properly process a credit.
  • The merchant issued a credit but it was posted as a sale.
  • The merchant didn’t allow the cardholder to make the purchase in the merchant’s local currency.
  • The merchant didn’t deposit the receipt in the country where the purchase was made.
  • The customer wasn’t notified of a currency conversion.
77 4808 Non-matching account number/Authorization related chargeback The account number used does not match any on file.
  • The merchant manually keyed the account number incorrectly or incorrectly documented the account number during a telephone or mail order.
80 4831 Incorrect transaction amount or account number/Transaction amount differs The card was not charged for the correct amount.
  • The merchant made an error when calculating the transaction amount.
  • The merchant altered the amount after the transaction was completed without the cardholder’s permission.
  • The merchant increased the transaction amount without the cardholder’s permission.
81 4837 Fraud (card-present)/No cardholder authorization The merchant processed a transaction without the cardholder’s consent or it was charged to a fictitious account.

**card-present transactions only

  • The merchant manually processed the transaction but failed to make an imprint of the card.
  • The merchant didn’t properly document that the transaction was a mail, telephone, or internet order.
82 4834 Duplicate processing a single transaction was processed more than one time.

**card-present transactions only

  • The merchant submitted a single batch of transactions multiple times.
  • The merchant deposited both copies of the sales receipt (merchant and sales copy).
  • The merchant created two sales receipts for a single transaction.
  • The merchant deposited a receipt with more than one acquirer.
  • The merchant processed a single transaction multiple times.
83 4837 Fraud (card-not-present)/No cardholder authorization The cardholder did not authorize the transaction.
  • The transaction was placed by someone who had fraudulently obtained the account information.
  • The cardholder didn’t recognize the transaction (billing descriptor) on the credit card statement.
  • A family member used the account without the primary cardholder’s knowledge.
85 4860 Credit not processed merchant failed to credit the cardholder’s account after a return was made.
  • The merchant didn’t issue the cardholder’s credit or didn’t issue it in time for the credit to appear on the statement.
  • The merchant didn’t share the return policy with the cardholder at the time of purchase.
86 4831 Paid by other means/ Transaction amount differs cardholder paid for the transaction in question with cash, check or other cards.

**card-present transactions only

  • After initiating a credit card transaction, the cardholder switched to a different payment method and the merchant accidentally processed both forms of payment.
N/A 4849 Questionable merchant activity merchant processed a transaction that was in violation of MasterCard rules.
  • The transaction violates rules set forth in a MasterCard Global Security Bulletin.
N/A 4854 Cardholder dispute not elsewhere classified cardholder has made an unsuccessful good-faith effort to resolve a dispute with the merchant.
  • The transaction dispute reflects a truth-in-lending law claim authorized against issuers or creditors.

Friendly Fraud

What’s Friendly Fraud?

Friendly Fraud is kind of a funny term in finances. There are essentially three types of problem with transactions, on the part of the merchant. These are merchant error, criminal fraud, and of course friendly fraud.

Criminal fraud generally means that a card was stolen or something like that. Friendly fraud refers to the customer committing a form of fraud by inaccurately reporting a legitimate charge to their card as fraud. Essentially it’s a form of shoplifting. Friendly fraud can be committed by accident due to confusion on the part of the customer or a miscommunication, but it’s just about impossible to determine why someone has reported a legit charge as fraudulent to their bank. In any event, there is specific chargeback reason codes that apply to this category of error.

  • Services not provided/merchandise not received. Oftentimes this comes down to buyer remorse. It can also mean that the buyer didn’t qualify for a return (or just didn’t want to return the product). They could also have misunderstood something about the shipping process and hit the button to finalize the purchase by accident, so they assumed that reporting a fraud would be easier than going through whatever process you have in place to address the issue (having this happen to you a few times is a lesson on the importance of good customer service, of course).
  • Canceled recurring transaction or installment billing dispute. This will generally happen when the customer does not know how to withdraw permission to cancel a membership. Or, they might not want to pay a cancellation fee. Again, this can be a lesson in customer service. If you charge your customers to stop using your service, they’re going to find a workaround for it. Likewise, you need to make it easy to cancel a subscription. If you try to lock them in with confusing, labyrinthine rules and regulations, your assumption is that they’ll think “Well whatever, it’s just ten dollars a month.” In reality, they’re going to go to their bank or their card company and report a fraud to get out of having to pay you another dime.
  • Transaction not recognized. This points to the cardholder denying that they ever made the purchase. If you can prove that they made the purchase then this can be a pretty clear-cut instance of deliberate fraud.

In many instances, one could argue that the customer was sort of pushed into committing friendly fraud. A lot of companies try to make it difficult for customers to make returns or cancel a subscription. They have dozens of people you need to call, forms to fill out and so on just to stop being charged every month for a service they’re no longer using, or to return a defective item. You can’t stop all instances of friendly fraud by improving your approach to customer service, but you can stop a lot of them.

The truth is that reporting a fraud that never happened isn’t the first choice for most customers. They’d like it if they could just put the thing back in the box and send it back to you, or if they could click a single button to cancel their membership. Many customers only attempt friendly fraud because the company has made it so that committing a crime is easier than getting a fair shake from the company.

You can save yourself a lot of headaches by avoiding these sneaky practices. Treat the customer like you actually value them. Let them leave when they want to. Don’t strongarm them. You’ll still get people trying to rip you off now and then, but it’ll be the crooks doing it, not the people who support you and pay your bills.

Codes Associated With Friendly Fraud

VISA/MasterCard
30 4855 Services not provided or merchandise not received Merchandise or services were not received or not received by the agreed upon delivery date.
  • The cardholder experienced buyer’s remorse and regretted the purchase.
  • The cardholder didn’t want to perform (or didn’t qualify for) a return or exchange in accordance with the merchant’s policy.
  • The cardholder didn’t understand the shipping process and expected delivery prematurely.
41 4841/4850 Cancelled recurring transaction/Installment billing dispute A recurring transaction was processed after the cardholder requested termination, the account had been closed, the charge exceeded the predetermined amount, or the merchant failed to notify the cardholder of the upcoming charge.
  • The cardholder failed to withdraw permission to charge the account or cancel a membership fee but didn’t want to pay.
  • The cardholder denies receiving notification of a billing change.
  • The cardholder intentionally canceled a card account to avoid payments.
53 4853 Not as described or defective merchandise The merchandise was: damaged or defective upon its arrival, not the same as shown (online) or described (telephone), unsuitable for the intended purpose.
  • The cardholder experienced buyer’s remorse and regretted the purchase.
  • The cardholder didn’t want to perform (or didn’t qualify for) a return or exchange in accordance with the merchant’s policy.
75 4863 Transaction not recognized The cardholder doesn’t recognize or remember the transaction.
  • The merchant’s name (billing descriptor) was incorrect or unrecognizable.
  • The cardholder didn’t remember making the purchase.
83 4837 Fraud (card-not-present)/No cardholder authorization The cardholder did not authorize the transaction.
  • The cardholder experienced buyer’s remorse and regretted the purchase.
  • The cardholder didn’t want to perform (or didn’t qualify for) a return or exchange in accordance with the merchant’s policy.
  • The cardholder didn’t know someone else with access to the card (child, spouse) had made the purchase.

What Points To Criminal Fraud?

Chargeback codes that point to deliberate criminal fraud can include the following:

  • Counterfeit transaction. A counterfeit transaction often means that someone made a duplicate of a card. What it usually means is that the cardholder simply was not present. This can happen if the merchant doesn’t take the time to compare the four embossed digits to the printed digits on the card, the merchant received authorization without getting all the required data, an EMV chip card was used to cheat a non-hybrid terminal, or an EMV card was used to trick a hybrid terminal. Of course, counterfeit transactions can take place through no fault on the part of the merchant at all, but there are usually some signs that will help you to spot a fake card at the register.
  • Fraud, card-present or no authorization from the cardholder. This can be difficult to tell apart from friendly fraud. Oftentimes it comes down to whether or not there is any proof that the cardholder was actually present. Checking security footage before moving forward with a charge of fraud should be considered.

This guide should serve as something of a glossary to help you to define key phrases in your chargeback codes but know that it’s only a rough guide. Each card and each POS system will have its own way of labeling and identifying these codes, and of course, they will all feature different numerical inputs to access each code. In any event, if this list proves nothing else, it shows that there’s quite a lot that can go wrong with a credit card or debit card transaction.

We’ve had these cards in our wallets for decades, but they’re still easy to fudge, to cheat and to fake.

VISA/MasterCard
62 4870/4871 Counterfeit transaction/Chip liability shift/Chip/PIN liability shiftThe cardholder did not participate in the transaction (a fraudster made a duplicate or counterfeit copy of the card).

**card-present transactions only

  • The merchant did not compare the first four embossed digits to the printed digits.
  • The merchant received authorization without providing required data.
  • The use of an EMV chip card resulted in a fraudulent transaction at a non-hybrid terminal.
  • The use of an EMV chip card resulted in a fraudulent transaction at a hybrid terminal (with or without a PIN pad).
81 4837 Fraud (card-present)/No cardholder authorization The merchant processed a transaction without the cardholder’s consent or it was charged to a fictitious account.

**card-present transactions only

  • The merchant processed a transaction instigated by someone other than the cardholder.
83 4837 Fraud (card-not-present)/No cardholder authorization The cardholder did not authorize the transaction.

 

Take your time to verify each transaction. Hiring another cashier to ease the workload and keep the lines moving might save you a lot of money on chargebacks later on.

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