Understanding Chargeback Reason Codes

Every chargeback occurs for a reason, but sometimes it’s hard to figure out what that reason is. To make sure that your business runs smoothly, you should understand the reasons behind chargebacks and know how to fix the problem right away.

Credit card companies such as MasterCard and Visa use reason codes to display the reason for a chargeback. The codes are two-digit numbers for Visa and four-digit numbers for MasterCard. Chargebacks can be categorized into three leading causes: friendly fraud, criminal fraud, and merchant error.

Chargebacks Caused by Friendly Fraud

Image via Flickr by Sean MacEntee

These are the chargebacks that result from a customer rejecting a credit card charge. In some cases, it’s due to an honest mistake, but in other situations, the customer is trying to take advantage of the merchant. The following are the reason codes for friendly fraud:

• 30 (Visa)/4855 (MasterCard): The customer complains that the items weren’t received by the expected delivery date.
• 41/4841 or 4850: The account was closed before the transaction took place, or the charge was higher than the predetermined amount.
• 53/4853: The items received were defective, or the cardholder mistakenly recognizes them as defective.
• 75/4863: The cardholder doesn’t remember making the purchase.
• 83/4837: The transaction wasn’t authorized by the cardholder.

Chargebacks Caused by Criminal Fraud

Every merchant at some point will experience fraud. It’s important to recognize fraudulent activity so that you can prevent it. These are the codes associated with criminal fraud:

• 62 (Visa)/4870 or 4871 (MasterCard): The fraudster used a counterfeit card.
• 81 or 83/ 4837: The fraudster used a card without the cardholder’s consent or with card details that were stolen.

Chargebacks Caused by Merchant Error

This might come as a surprise, but most chargebacks are due to a merchant’s mistake in the transaction process. Chargebacks that fall into this category can be easily prevented. Here are the codes associated with merchant error chargebacks:

• 30 (Visa)/4855 (MasterCard): The items weren’t received by the expected date.
• 86/4831: The customer changed his or her mind and paid in cash when the transaction had already gone through, so the customer was charged double.
• 73/4835: The card was expired.
• 53/4853: The items received were defective.
• 57/4840: The customer authorized a single transaction but not a recurring payment.
• 80/4831: The customer was charged the incorrect price.
• 74/4842: The transaction wasn’t processed within 180 days of the original purchase date.
• 76/4846: The transaction was conducted in a wrong currency.
• 82/4834: A single transaction was processed multiple times.
• 77/4808: The account number is incorrect.
• 85/4860: The merchant didn’t credit the customer after a return was processed.
• 71 or 72/4808: The merchant processed the transaction even if the customer declined the authorization.
• inapplicable/4849: The deal violates MasterCard rules.

Every credit card company should have a list of chargeback codes on its main website. It’s important to understand the causes behind chargebacks so that you can prevent them from happening in the future. Too many chargebacks might cause your merchant account provider to terminate your account. If certain situations are difficult for you to prevent, a possible solution is to open a high-risk merchant account that will cover the expenses associated with chargebacks.