CHARGEBACK

Minimize Costs: Card Acceptance Basics > Chargeback

A cardholder or card issuer can place a dispute on a transaction, resulting in a chargeback. Reasons include: investigation of a fraud case, dispute over merchandise quality, failure to receive merchandise or improper pricing of merchandising. The merchant's account is debited and the merchant must provide proof that the transaction is valid and satisfactory to the rules/regulations of Visa/MasterCard to get money back. This page includes important information about chargebacks and retrievals.

What is a chargeback?

A chargeback is a transaction disputed by the cardholder or card issuer. There are many reasons for chargebacks, but the most common are returned merchandise, terminated services, disputes, errors, or fraud. Merchants must be able to provide proof that the disputed transaction is valid and in accordance with Visa/MasterCard regulations or risk having their account debited for the disputed amount.

In what situations could chargebacks occur?

There are several situations in which chargebacks may occur. The most common cardholder-initiated disputes include:

• Failure to respond to a retrieval request or failure to provide a legible, complete, or proper copy of a transaction receipt in response to a retrieval request
• Unauthorized use of a card as alleged by the cardholder
• Dispute by the cardholder over the quality of goods or services
• If you fail to provide goods or services
• The transaction receipt does not bear the cardholder’s signature
• The transaction receipt represents a transaction for which authorization was initially declined and was subsequently obtained by means of multiple authorization attempts or other means not permitted
• The transaction receipt fails to comply with the terms and conditions of the agreement or fails to comply with the card rules
• The transaction evidenced by a transaction receipt or any other credit extended in respect thereof includes a cash disbursement made by you
• The transaction receipt refers to a card which has expired
• Copies of the transaction receipt have been deposited by you more than once or member or servicer has credited the account more than once with the same transaction receipt
• If you have processed a transaction for goods sold or services performed (or alleged to have been sold or performed) by parties other than yourself
• An electronic commerce transaction is or is claimed by the cardholder to be unauthorized except where you provide the servicer with the appropriate cardholder authentication verification value which matches that passed to merchant by the card issuer for such electronic commerce transaction.

What does a chargeback mean to me?

For your business, a chargeback translates into extra processing time and cost, a narrower profit margin for the sale, and possibly a loss of revenue. It is important to carefully track and manage the chargebacks that you receive, take steps to avoid future chargebacks, and know your representment rights. In addition, you should also take measures to recover losses from customers who are financially liable for transactions that were charged back to your business.

Where can I find the status of my chargebacks?

If you are an Elavon merchant, you may elect to receive chargeback notices and retrieval requests via U.S. mail, Autofax or online at MerchantConnect.com.

Online, the status of your most recent chargebacks can be found using our online reporting tool, MerchantConnect. For an even more streamlined way to manage chargebacks and retrievals, consider Online Case Management (OCM), a new electronic workflow solution offered through MerchantConnect Premium. OCM allows you to receive, view, respond to and manage your chargeback and retrieval activity. With OCM, you can track the lifecycle of all your chargebacks and retrievals -- from the initial request to the closure. OCM also provides extensive reporting on your activity at any of your locations.

With the Auto Fax program, you can quickly and conveniently be notified via fax of any chargebacks or retrievals posted to your account within 24 hours of it being generated. The Auto Fax program gives you more time to respond to your chargeback and retrieval requests. In addition, you will receive a reminder notice in the event you forgot to respond to the notice. All you need to enroll in the Auto Fax program is a dedicated fax line. To enroll, simply contact USBSI Customer Services at (888)468-1155. To make other updates or change the way you receive a retrieval request or chargeback notification, contact Merchant Services or the Chargeback Department at the toll-free telephone number listed on your notice.

How do I avoid chargebacks?

While it may not be possible to eliminate chargebacks entirely, you can reduce their occurrence by resolving issues and disputes directly with the cardholder and following the proper authorization and processing procedures. Because chargebacks can be costly, you should make every effort to prevent them. Chargeback fees can be minimized by following best practices at the point of sale. Generally, you should remember to:

• Avoid duplicate processing of a transaction.
• Work with the cardholder to resolve disputes regarding the quality of merchandise or services rendered.
• Refuse to process a transaction when you receive a declined code during authorization.
• Call for Voice Authorization, if needed.
• Call for a Code 10 authorization if you are still suspicious of the cardholder, card, or transaction after receiving an approval code.
• Include a description of the goods or services on the transaction receipt.
• Deliver merchandise or services before charging the card.
• Obtain an authorization code.
• Include the CVV2/CVC2/CID and AVS codes for Card-Not-Present transactions, if applicable.
• Submit transaction receipts on the same day transactions are authorized.
• Make sure an imprint appears on a manual transaction receipt or that the relevant transaction information appears on the credit card terminal-generated transaction receipt.
• Never accept expired cards or cards having effective dates prior to the date of the transaction.
• Make sure the signature on the transaction receipt matches the signature on the back of the card.
• Obtain a signature from the cardholder when merchandise is delivered.
• Be cautious of shipments to an address other than the cardholder’s billing address.

More Information

• Avoiding Chargebacks - Ten ways to reduce the hassle and expense of chargebacks
• Chargeback FAQs - Frequently asked questions about chargebacks