Chargeback Case Studies

• Time limit - 120 days from Central Processing Date
• An issuer must obtain a copy of the sales draft if the merchant type is not identified as a mail order/telephone/e-commerce order merchant
• An issuer must supply a cardholder letter denying participation and/or authorization
• This chargeback can be reversed with a proof of an Address Verification Service (AVS) inquiry with a positive match and documentation showing goods were shipped to the AVS matched address along with cardholder signed proof of delivery
• For Visa USA, an acquirer may represent with proof of an AVS response of U, showing that address verification was unavailable at the time of the transaction
• If a cardholder continues to dispute the transaction and states they did not receive or benefit from goods or services, the issuer may continue the dispute
• This is a Visa only reason code

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Supply signed proof of delivery to the AVS matched address
• Supply an order invoice or details of merchandise that was shipped
• If the transaction is service related, provide proof that services were provided
• Provide any other information that may refute this chargeback

CASE STUDY
A chargeback was initiated for "Fraudulent Transaction - Card Absent Environment" with a cardholder letter stating the transaction was not authorized. The merchant supplied signed proof of delivery to the AVS matched address and proof the package was signed for by the cardholder. The merchant's acquirer re-presented with the merchant's information. The issuer issued a Pre-Arbitration case with an updated letter from the cardholder stating they had reviewed the information provided and signature on the proof of delivery was not theirs.

CAN THE ACQUIRER CONTINUE TO REFUTE THIS CASE?
No. The cardholder has reviewed the merchant's information and continues to dispute as fraud. The acquirer does not have any further recourse on this case.

• Time limit - 120 days from input date
• An issuer must provide a cardholder letter stating that the transaction was not authorized
• An issuer may chargeback for non-counterfeit transactions occurring at a card-activated terminal
• The chargeback may be reversed with a signature and an imprint/magnetic swipe of the card
• For Mail Order/ Telephone Order transactions, a chargeback can be reversed with a sales draft, proof of positive Address Verification Service (AVS) match and signed proof of delivery to AVS matched address
• This is a MasterCard only reason code

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Supply a signed, imprinted/swiped copy of the sales draft
• For shipped merchandise, provide an invoice and signed proof of delivery to the AVS matched address
• Please be aware that any information sent to us may be provided to the cardholder's bank and possibly to the cardholder for review
• Provide any other information that may refute this chargeback

Case Study
A merchant received a chargeback for Fraudulent Transaction - No Cardholder Authorization and a request to provide the signed and imprinted or magnetic swipe read sales draft. The Merchant complied and when retrieving the necessary information, discovered that the signature on the receipt reads Mickey Mouse. The merchant was concerned and wondered if Mickey Mouse really visited his store. In any case, the draft was signed and he supplied it to his processing bank for reversal.

Is this sufficient to reverse the chargeback?
Yes. The merchant supplied a signed and imprinted / magnetic swiped read sales draft. As long as the merchant has a signature, the draft is considered to be valid.

• Time limit - 120 days from input date
• An issuer must certify an attempt to assist the cardholder in identifying the transaction using the information in authorization and settlement records
• The chargeback can be reversed by supplying information that is sufficient to assist the cardholder in recognizing the transaction
• The dispute may be continued if no documentation is received by the issuer, or the information/documentation received does not provide more value than what is already present in the authorization/settlement records
• The dispute may be continued with a new reason code in response to information/documentation supplied with the re-presentment

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Provide any information to assist the cardholder in identifying this sale or any other information that may refute this chargeback
• Provide a sales draft with the transaction detail
• Provide any available delivery information

CASE STUDY
The cardholder contacted their card issuer stating that they did not recognize the transaction. A good faith effort was made to assist the cardholder in identifying the transaction, but the cardholder still could not identify the transaction. A chargeback was issued for "Cardholder Does Not Recognize Transaction." The merchant supplied a rebuttal stating this was an internet order and no receipt is available.

HAS THE MERCHANT SUPPLIED SUFFICIENT INFORMATION TO REPRESENT?
No. The merchant must supply an invoice detailing what was purchased and proof of delivery. The information must contain enough detail about the transaction to assist the cardholder in identifying if that is there transaction.

• Time limit- 120 days from input date
• An issuer must chargeback the second transaction while providing the reference number of the first
• If a second acquirer processed one of the transactions, the issuer no longer is required to obtain a copy of the sales draft, however must provide the other Acquirer's Reference Number
• The chargeback can be reversed if the merchant can provide proof that there were two separate transactions
• Transaction amounts do not necessarily need to be the exact same amount, however should be similar

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Supply a legible copy of the sales draft for each transaction
• Provide any other information that will prove multiple transactions are valid
• Please be aware that any information sent to us may be provided to the cardholder's bank and possibly to the cardholder

CASE STUDY
Karen, planning a short get-away with new hubby Anthony, made a hotel reservation over the phone at a posh resort during the Memorial Day weekend. When she received her credit card statement after their stay, she noticed that she had not only been charged on the day she made the reservation, but also on the day they checked out. The merchant received a Chargeback Sales Draft Request for the two transactions. The merchant supplied the draft for the initial transaction and explained that the cardholder was charged in advance because the reservation was for a holiday weekend.

IS THIS ENOUGH TO REPRESENT THIS CHARGEBACK?
No. The information provided would satisfy the first charge to the cardholder's account. An explanation of the second charge on the day of checkout was not provided. A merchant must provide a sales draft and explanation for all transactions involved with this reason code.

• Time limit - 120 days from input date or from the date the cardholder returned merchandise
• Documentation must be provided by the issuer stating that the goods were returned or services were cancelled
• Issuer must supply a credit voucher or refund acknowledgement as supporting documentation or the date merchandise was returned if no written acknowledgement is available
• If a credit voucher or acknowledgement is available, the issuer must wait 30 days from the credit date for the credit to process before initiating a chargeback
• The chargeback can be reversed with proof that the credit was processed
• The chargeback can be reversed if the merchant has not received the returned merchandise

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Supply proof that credit has been issued. If credit was issued by another acquirer, supply the Acquirer's Reference Data and date of the credit
• If credit was not issued, provide an explanation as to why no credit is due to the cardholder
• Provide a written response if the goods were not returned to you
• If the return was not accepted by you, provide an explanation and also proof that the cardholder was aware of the return policy

CASE STUDY
Kenneth, the accounting manager at Merchandise For You, Inc., received a chargeback notification for Credit Not Processed along with a letter from the cardholder stating they had returned merchandise and were given a credit receipt (which was included with their dispute letter). Kenneth checked Merchandise For You, Inc.'s records and found their copy of the credit receipt. He provided a rebuttal letter to his bank stating that their records show that credit had been issued for this transaction. The acquiring bank checked their records and found the credit in their records.

IS THIS SUFFICIENT INFORMATION FOR THE ACQUIRER TO REPRESENT?

Yes. The merchant records show a credit and a credit receipt, the acquirer also shows the credit transaction was processed.

• Time limit - 120 calendar day timeframe is calculated from either the Central Site processing date of the presented transaction or the latest anticipated delivery date.
• An issuer must provide documentation stating that the merchandise was not received. This can either be a cardholder letter or a form filled out by the issuing bank on behalf of the cardholder
• The cardholder letter must also state the expected delivery date as conveyed by the merchant.
• Issuer must wait until the specified delivery date of the merchandise has passed before issuing a chargeback.
• An issuer may charge back the transaction before the specified delivery date if the merchant will not provide the goods because it is no longer in service.
• MasterCard reason code only

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Supply signed proof that the merchandise was received by the cardholder
• Provide statement regarding effort to remedy with cardholder if applicable
• Supply any other information that may refute this chargeback
• Please be aware that any information sent to us may be provided to the cardholder's bank and possibly to the cardholder

CASE STUDY
The merchant received a chargeback for "Non-Receipt of Merchandise." The cardholder declared they were to have a table delivered two weeks prior and still hadn't received it. Attempts to contact the merchant had been unsuccessful. The merchant replied to the chargeback with a rebuttal stating the table was picked up from his store and the customer would need to take up the dispute with the delivery service. He also provided an invoice signed by the cardholder.

IS THIS SUFFICIENT INFORMATION TO REVERSE THE CHARGEBACK?
No. The cardholder did not receive their merchandise. The merchant would have to disclose who was responsible for hiring and paying the delivery company. If the cardholder hired the delivery company the chargeback would be deemed invalid. If the merchant was responsible for delivery, the chargeback would be valid as the merchant could not prove the cardholder received the table.

• Time limit - 120 days from input date or from the return date
• The merchandise must be shipped for this reason code to be valid
• The issuer must supply a cardholder letter indicating that the merchandise received was broken or otherwise unsuitable for the purpose sold
• The chargeback is invalid if initiated prior to 30 days of the return or attempted return of merchandise
• The chargeback can be reversed with proof that the merchandise was not defective
• The chargeback can be reversed with proof that credit was issued to the cardholder's account upon receipt of returned merchandise, prior to the chargeback cycle
• MasterCard only

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Provide a written rebuttal that addresses all of the cardholder's issues. Any other documentation that will support your rebuttal must be included in the information you send with your reversal request
• Supply any documentation with a detailed description of the merchandise, services and/or policies
• Supply any other documentation that may refute this chargeback
• Please be aware that any information sent to us may be provided to the cardholder's bank and possibly to the cardholder

CASE STUDY
A cardholder purchased a cell phone from a merchant by phone, and returned the item ten days later stating that it was defective. The merchant contacted the cardholder and informed them that a credit could not be issued as the item had clearly been used. The cardholder called their issuing bank and disputed the transaction. The merchant received a Chargeback Adjustment Advice for Defective Merchandise. The merchant supplied sales draft information, a copy of a fax stating "No refunds" signed by the cardholder, a written rebuttal explaining that they cannot refund opened or used items and a document from the manufacturer refusing the return from the merchant as the telephone showed signs of water damage a condition indicating the damage did not occur in the manufacturing or shipping cycle.

IS THIS SUFFICIENT INFORMATION TO REPRESENT THIS CHARGEBACK?
Yes. The merchant has provided sufficient information to indicate that the item was shipped in working condition and all policies on returns would stand. Had the item been damaged prior to or during shipping, the merchant would be responsible.

• Time limit - 120 calendar days from input date.
• The cardholder or issuer must provide a written statement indicating that the cardholder withdrew permission to charge their account. The documentation must state that the card acceptor received notification of the cancellation.
• For repetitive billing, an original cardholder letter may be used for subsequent future chargebacks
• If a cardholder statement is not provided, the issuer may supply certification that the account is closed and further installments should be stopped.
• The chargeback can be represented if the transactions are for installment rather than new product or service provided for each new transaction
• Any documentation that supports the merchant's position must be provided with their rebuttal

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Documentation to prove that the transaction was not a recurring transaction
• Invalid chargeback
• Proof the cardholder was using services after specified cancellation date.
• Proof the merchant issued credit
• Supply a copy of your cancellation policy or any other information that may refute this chargeback

CASE STUDY
A merchant received a chargeback for Cancelled Recurring Transaction. The cardholder stated they faxed the merchant a written notice and also called to cancel within the required time frame stated on their contract. The cardholder provided their fax confirmation sheet to prove the written cancellation was received at the merchant's fax number, and a phone log showing the merchant's phone number on the date they stated they canceled. Yet, the merchant was continuing to bill his account.

DOES THE ACQUIRER HAVE REPRESENTMENT RIGHTS WITH THE AVAILABLE INFORMATION?
No, if the merchant was continuing to bill the cardholder after the cancellation date and cannot provide proof the cardholder was still using his service, the acquirer would not have represent rights on this case.

• Time limit - 120 days from input date or from the date of expected services
• An issuer can chargeback if it can supply documentation stating that the cardholder did not receive services
• An issuer can chargeback if it can provide proof that the cardholder paid for the services using another payment method
• The cardholder must make an attempt to resolve the dispute with the merchant
• The chargeback can be represented to the issuer if a merchant can supply proof that the services were rendered in agreement with the purchase
• The chargeback can be represented to the issuer if the merchant can provide an explanation that substantiates the validity of the transaction

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Supply proof that the services requested were provided
• Provide a written rebuttal that addresses each of the cardholder's issues. Any other documentation that will support your rebuttal should be included in the information you send with your reversal request
• Please be aware that any information sent to us may be provided to the cardholder's bank and possibly to the cardholder

CASE STUDY
A cardholder requested a chargeback for "Merchandise Not Received." In the cardholder's dispute letter they state that the merchandise was to be delivered by the merchant in two weeks. They had not received their merchandise from the merchant and wanted to cancel the order. The merchant responded to the chargeback stating they did attempt to deliver the merchandise on two separate occasions; however the cardholder was not at home on either attempt. The merchant supplied copies of the delivery attempts that were left at the door and copies of a certified letter that was sent to cardholder notifying them to call to make new delivery arrangements.

IS THIS SUFFICIENT INFORMATION TO REPRESENT THIS CHARGEBACK?
Yes. The merchant has provided proof they were willing and able to provide services. The chargeback would be considered invalid.

• Time limit - 120 days from input date or from the date of return or cancellation
• An issuer must supply documentation stating precisely how the goods or services did not match the merchant's description, and verify that the cardholder attempted to resolve the dispute with the merchant
• The issuer must supply a cardholder letter indicating that the merchandise received was broken or otherwise unsuitable for the purpose sold
• This reason code may be used for both retail and Card-Not-Present transactions
• The chargeback can be represented to the issuer with a written rebuttal from the merchant that completely addresses all of the cardholder's issues
• The merchant rebuttal must state whether or not merchandise has been returned
• Any documentation that supports the merchant's position must be provided with their rebuttal

MERCHANT ACTION NECESSARY TO REMEDY CHARGEBACK

• Provide a written rebuttal that addresses all of the cardholder's issues. Any other documentation that will support your rebuttal must be included in the information you send with your reversal request
• Supply any documentation with a detailed description of the merchandise, services and/or policies
• Supply any other documentation that may refute this chargeback
• Please be aware that any information sent to us may be provided to the cardholder's bank and possibly to the cardholder

CASE STUDY
A cardholder purchased a sofa and loveseat December 30, 2005. On March 24, 2006 her card issuing bank issued a chargeback for "Defective/Not as Described Merchandise" with a dispute letter from the cardholder stating the sofa and loveseat were falling apart.
The merchant provided a rebuttal stating the cardholder purchased the sofa and loveseat 3 months ago and had not heard from the cardholder since the furniture had been delivered. According to the delivery record all merchandise was delivered in good condition. The merchant could not understand how the cardholder could dispute this charge after 3 months of use and then state it's defective.

CAN THIS CHARGEBACK BE DEFENDED?
Yes. The chargeback would be considered invalid as this reason code can only be used if merchandise was received defective or not as described.