Reason Code Boot Camp

Chargeback's new Disputer tool for fighting chargebacks is very different from what we're using now.

Everything it does is centered around the reason code the customer picked for why they're charging a dispute back to the merchant. The reason code determines which evidence the banks and card networks want to see.

This brief course will give you the information you need to know about how Disputer uses reason codes and how you as a Chargeback Analyst can select the best evidence to fight that chargeback. 

Understanding Reason Codes

What are reason codes?

Reason codes are codes made up of numbers and/or letters given in a chargeback notification to explain the cause for the dispute.

Reason codes are created by the major card networks: American Express, Discover, Mastercard, and Visa. Some payment processors have their own categorization of reason codes. However, the disputes themselves are still categorized by the cardholder's bank based on the network (Amex, Discover, MC, Visa).

Why are reason codes important?

They provide understanding into why a chargeback occurred and, most importantly, detail what specific evidence can be provided by a merchant who wants to challenge the dispute.

As such, responses are most powerful when the compelling evidence provided matches the instructions given by the card network for the specific reason code.

This is an important point - and one that will change how we work as we move to Disputer. As Analysts we've haven't worked much with how reason codes effect evidence - DocGen just puts evidence on every dispute, one-size-fits-all, no matter what the reason code.

Why are reason codes important?

  • Because they determine which card network the document is sent to.
  • Because responses are most powerful when the compelling evidence is provided as directed.
  • Because they determine the which processor the document is sent to.
  • They aren't.

What types of reason codes are there?

Visa and Mastercard have organized their reason codes into four categories. While American Express and Discover each use additional categories to help categorize their reason codes, customer dispute categorization is moving towards the four category standard.

The four categories are: Authorizations, Consumer Disputes, Fraud, and Processing Errors.

Authorization and Processing Errors

Two categories we don't see very often are Authorization and Processing Errors. These are related to credit card processing rules, for example, an Authorization reason code would be used if the merchant was required to obtain an authorization before processing a transaction but didn't. A Processing Error code would be used if a transaction was processed twice, or if the customer believes that a charge was processed when it was supposed to be a credit. 

You can read more about these categories on our website (https://chargeback.com/chargeback-reason-codes/). We won't go into greater detail about these categories here since we don't see them often. 

Fraud and Consumer Disputes

Fraud

Fraud is a category we see a lot of. These reason codes are related to a transaction in which the cardholder believes their card was used without their permission.

Consumer Disputes

Consumer Disputes reason codes are related to an unhappy customer - the reasons for these disputes are varied and can include situations like a product not being received, or when a customer cancelled recurring billing but the product was billed again anyway.

A merchant is required to submit a charge within 30 days of swiping your card and getting an authorization. A chargeback comes in because the merchant submitted a charge 32 days after the authorization. Which category does this belong in?

  • Authorization
  • Fraud
  • Consumer Disputes
  • Processing Errors

A chargeback comes with a cardholder's claim that the goods they bought were of poor quality. Which category does this belong in?

  • Processing Errors
  • Consumer Disputes
  • Authorization
  • Fraud

Great job!

Alright! You're getting the picture. Let's move on to the next section.

The relationship between reason codes and evidence.

Reason codes determine the evidence

As you learned before, the card networks created reason codes to help classify disputes.

And the reason code determines what the dispute response should include

It's that simple. 

How Disputer uses reason codes

Disputer was built to WIN CHARGEBACKS.

The best chargeback responses are tailored to give the banks, processors and card networks exactly what they need to see - evidence that whatever the the cardholder claimed was incorrect. And there's different evidence for every reason code.

Disputer does more than that, though, it also tailors every chargeback response to the type of product ordered and other things the client's business does. This is what makes Disputer such a powerful tool.

How does Disputer give our clients the best chance of winning their disputes?

  • It tailors responses to their customers.
  • It tailors responses to processors.
  • It tailors responses to exactly what banks, processors and card networks want to see based on reason codes and business types.

What makes for good evidence?

What makes for good evidence?

So let's talk about the nitty gritty of what makes for good evidence - what you're going to need to know to fight disputes in Disputer.

Getting the right evidence is a bit of an art form, and will be different for every client. You'll start by thinking through the reason code (although Disputer does this as well and only asks for evidence that is relevant to the reason code given), and you'll finish by thinking through what's available for each client. 

What makes for good evidence?

So let's start with reason code categories.

Authorization and Processing Errors: if the reason code is related to a problem with the authorization or transaction processing, we'll need proof that the authorization or transaction was correct (but since we rarely see these, we won't worry about this for now).

Fraud: if the reason code is related to fraud, we'll need evidence that the customer actually did order the product. The address match and CVV code are key pieces of evidence here, since they are theoretically things only the customer knows. If a product was ordered online, the IP address is a further key piece of evidence if we can prove that the order was placed from near the customer's home.

Further pieces of evidence that show that a transaction wasn't fraudulent are if we can show that that customer has a history of transactions with the client (that they haven't disputed), or if the purchase was made from within a customer's secured account on the client's website (like a user account).


What makes for good evidence?

Consumer Disputes: What makes good evidence for consumer disputes depends on the specific reason code, and you'll be trying to respond to the specific code used.

Did the customer claim the product wasn't as described? You'll provide documentation proving the quality of the goods and/or documentation to prove that the cardholder did not attempt to return the merchandise for a refund. If the purchase was refunded, you'll give evidence of that.

The customer doesn't recognize the transaction? You'll provide a copy of the transaction receipt and/or a detailed description of the goods or services purchased. If applicable, also include additional information or transaction data if you've got it, to help the customer remember. 

The claim is that the recurring transaction was cancelled before a specific transaction happened? You'll provide evidence of when a customer cancelled (if it was after the disputed transaction) or that the customer didn't cancel at all. 

What makes for good evidence?

It's a lot to know...

...but don't worry, Disputer will suggest which evidence you need, the types of evidence we have often remain the same for our clients' various disputes, and you'll get used to this new part of your job. 

You get a dispute with AMEX reason code A02: No Valid Authorization. The charge submitted by the merchant did not receive a valid authorization approval; either it was declined or the card was expired. What type of evidence do you need?

  • Terms and conditions showing how a customer can cancel their subscription
  • Proof that the customer agreed to recurring billing
  • Proof of valid authorization
  • Proof that the customer personally placed the order

You get a dispute with Visa reason code 41: Cancelled recurring transaction. The customer cancelled a subscription but was charged anyway. What kind of evidence do you need?

  • Proof of valid authorization
  • Terms and conditions showing how a customer can cancel their subscription and proof that they cancelled after the transaction date
  • Proof that the customer personally placed the order
  • Proof that the transaction was processed correctly

You get a dispute with Mastercard reason code 4837: No cardholder authorization. The cardholder claims they didn't agree to the purchase. What type of evidence do you need?

  • Proof that the customer personally placed the order such as AVS, CVV, IP address, etc.
  • Terms and conditions showing how a customer can cancel their subscription
  • Proof that the customer agreed to recurring billing
  • Proof that the transaction was processed correctly

Make use of our reason code resources

Nice work! We have a little present for you before you go:

Chargeback has an extensive reason code encyclopedia that you can use while you're working transactions to help you sort through what you need - bookmark this page and make good use of it! The encyclopedia can be found here: 

https://chargeback.com/chargeback-reason-codes/

If you click into individual reason codes from this page, you'll find a description of the reason code, further information about what banks, processors and card networks want, and how to win any chargeback with that reason code, specifying which evidence you need. 

You did it!

This completes our Reason Code Boot Camp

This information will help you as you learn to WIN CHARGEBACKS using Disputer. 

Thanks for participating!