There are five different reason categories that chargebacks can fall into:
1. Point-of-Sale Processing Errors
2. Customer Dispute
4. Potential Fraud
We're going to cover three reason categories that most commonly apply to online merchants: Point-of-Sale Errors, Customer Dispute, and Potential Fraud. Within each category will be one or more common reasons for chargebacks. In parenthesis will be the chargeback code assigned to them by Visa and MasterCard. This is commonly used when notifying a merchant of a chargeback and has been included for your reference.
Incorrect Account Number (36) - The card-issuing bank identified the account number on the original transaction receipt as being different from the account number in the record deposited for payment (e.g. the merchant made a data entry error (keyed in the wrong account number for that particular transaction)). Remedy: Issue a credit back to the customer's credit card. Re-ring the original sale with the correct credit card number if possible. Further contact with the customer may be necessary to attain corrected credit card information.
Duplicate Processing (82) - The card-issuing bank received the same transaction more than once for posting to the customer's account. (e.g. The customer was charged twice for the same transaction). Remedy: Issue a credit back to the customer's credit card.
Customer Claims Services Not Performed (30) - The card-issuing bank received a written complaint from a customer stating that a promised service was billed but never performed. Remedy: If the service was performed, send a copy of an invoice or contract signed by the customer and other evidence that the service was performed to the processing bank. If the service hasn't been performed because it was set to happen a specified date which has not passed, send a copy of the contract specifying that information to the processing bank.
Canceled Recurring Transaction (41) - The card-issuing bank received a claim by a customer that the merchant had been notified to cancel the recurring transaction and has since billed the customer, or the transaction amount exceeded the pre-authorized dollar amount range, or the merchant was to notify the customer prior to processing each recurring transaction and had not done so. Remedy: Issue a credit back to the customer's credit card.
Merchandise/Service Not as Described (53) - The card-issuing bank received a written claim that the goods or services were not the same as shown and described on the documentation presented to the customer at the time of the transaction (on the website) and the customer attempted to return the merchandise or to cancel the services. Or if services had already been rendered, customer attempted to resolve the dispute with the merchant. Remedy: If the customer has not returned the merchandise, notify your processing bank. The customer must attempt to return the merchandise before attempting a chargeback. If they have already returned the merchandise, or this is a service, issue a credit back to the customer's credit card.
Defective Merchandise (56) - The card-issuing bank received a written claim from a customer that merchandise received was damaged, defective, or unsuitable for the purpose sold, and the customer attempted to return the defective merchandise. Remedy: If the customer has not returned the merchandise, notify your processing bank. The customer must attempt to return the merchandise before attempting a chargeback. If the merchandise was returned, but is not defective, notify your processing bank. If they have already returned the merchandise, and it is defective, issue a credit back to the customer's credit card.
Customer Claims Merchandise Not Received (90) - The card-issuing bank received a written claim from a customer that merchandise ordered was not received or that the customer canceled the order as the result of not receiving the merchandise by the expected delivery date. Remedy: If the merchandise was delivered, send all evidence of the delivery to your processing bank. If the chargeback is attempted less then 30 days from the date of sale, send a copy of the transaction to the processing bank showing the 30 days has not yet passed since the sale was performed. Also be sure to state the expected delivery date. You are allowed a fair amount of time to deliver your product.
Fraudulent Card-Not-Present Transactions (61) - The card-issuing bank received a written complaint from a customer stating that he/she neither authorized nor participated in a transaction appearing on his/her billing statement. Remedy: If you obtained authorization approval, received an exact match to the AVS request (e.g., a match on the customer's street number and ZIP code), the merchandise was delivered to the AVS address, and you have proof of delivery, provide this information to your processing bank.