The process of managing chargebacks can be complicated, and when dealing with a dispute, it’s easy to feel like you’re on your own. This guide distills the merchant dispute user guide and dispute reference guide provided by American Express in one convenient place, so you can spend less time worrying about chargebacks and more time focusing on your business.
You’ll learn why handling chargebacks with Amex is different, what the process involves, and how to handle fees, time frames, fees, and tools to prevent future disputes.
Related: Chargeback Fraud 101: What Businesses Need to Know.
What Differentiates American Express Chargebacks?
Unlike claims filed through Visa or Mastercard, which involve both the issuing bank and a card network, American Express operates as its own issuing bank. American Express may even act occasionally as an acquirer, which is the intermediary between merchants and card payment networks.
As such, Amex can issue branded cards to consumers directly without relying on third-parties. In the event of a chargeback, this means that all stakeholders will have to deal with American Express either acting as the issuer or card network.
Related: Issuer vs Acquirer vs Card Network: What’s the Difference?
Amex Chargeback Process Flow
Cardholders, who are called Cardmembers at Amex, initiate a chargeback when they disagree with a charge on their account.
The most common reasons for disputes are:
- Cardmember doesn't recall purchase
- Billing error
- Canceled or not received product/service
- Returns
The dispute process is as follows:
- Cardmember questions a charge: Amex tries to resolve the case in-housesome text
- The dispute is dismissed if the original charge appears valid
- The chargeback will be filed if the claim seems legitimate
- The merchant receives an inquiry if additional information is needed
- Dispute: Amex contacts merchant via email, and merchant can review case information online
- Merchant responds: some text
- There are four possible responses:some text
- Do nothing: automatically authorizes the chargeback
- Issue a partial credit: substantiate the partial refund amount
- Issue a full credit/refund: provide evidence that the credit was issued
- Validate the original transaction: provide sufficient evidence
- Chargeback: If no reply is received within 20 days, or insufficient supporting documents are provided, chargeback occurs. Cardmember is credited, Merchant Account is debited and notified.
- Case resolved: Sufficient supporting documents will result in the case being resolved, credit being issued, and no further action required.
- There are four possible responses:some text
While the deliberation is considered final, appealing may be allowed in certain circumstances. Unlike other networks, Amex policy does not establish clear guidelines for arbitration.
Also note that American Express may escalate all disputes to the chargeback stage without input if the merchant’s chargeback ratio is too high.
Related: How Does the Bank (Credit Card) Dispute Process Work?
Chargeback Time Frame
Cardmembers have 120 days from the transaction date to file a chargeback dispute.
Merchants have 20 days from the Central Site Business Date to respond.
Once the chargeback request and supporting documents are received, American Express will suspend the disputed transaction on the Cardmember’s account.
Disputes normally take between 6 to 8 weeks to process investigations with merchants.
Whether the time frame may be extended remains at Amex's sole discretion.
Chargeback Reason Codes
American Express chargeback reason codes help merchants, cardholders, and banks understand why a transaction is being disputed. A chargeback reason code is a numerical or alphanumeric code that identifies the specific reason for a chargeback.
There are a limited number of accepted reasons for disputes to be filed. Card networks use reason codes to simplify explaining why chargebacks happened.
If a Cardmember chargeback matches any of the reason codes, the onus lies on the merchant to disprove the claim. Merchants can dispute a chargeback if they believe it was issued in error or if they have evidence that contradicts the reason for the chargeback. The process involves submitting evidence to American Express for review.
Preventing Chargebacks
Best Practices
- Post clear and visible cancellation, return and refund policies prior to the checkout process
- Make sure customer service contact information is easy to find and access
- Always ask for Card Identification Number (four-digit security code on the card face) for card-not-present transactions
- Use Automated Address Verification service (the American Express version of AVS) to validate Cardmember information
- Process credits immediately when necessary, and notify Cardmembers of refund statuses, since they are better than chargebacks
Related: Chargeback Prevention Guide
Additional Amex Tools
- SafeKey: 3D Secure technology to authenticate online transactions without compromising user experience
- Token Services: create secure payment method using tokenization to replace card account numbers for online and mobile transaction
- Accertify: suite of comprehensive fraud prevention and Chargeback management solutions
- InAuth: mobile device authentication to deal with fraud across all digital channels
- Verify-It: verify billing name, address, and phone verification through an online platform
Looking Forward
American Express’s chargeback fees and timeframes are generally difficult to pin down. Your best bet is to refer to your Merchant Agreement to find this information.
You likely have questions about this article or perhaps other chargeback matters.
Visit ChargebackStop.com/contact-us for answers and solutions. Our customer service is here to help at no cost to you.
Once there, you can also sign up for a free demo of our service. ChargebackStop can eliminate up to 99% of chargebacks.
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FAQ
When do chargebacks commonly occur?
Disputes commonly occur when card members think they were charged twice, disagree with the amount, never received the product(s) or received defective item(s), or do not recognize the charge on their billing statement. In cases such as these, users can request a chargeback from their card issuer, which in the case of Amex is also acting as the issuing bank..
Related: What is a Chargeback and How Is It Avoided?
What is the chargeback time limit for American Express?
The chargeback time limit is 120 days from the date of the original transaction for cardholders. The chargeback time limit is 20 days for merchants to respond to chargebacks.
What is the chargeback ratio?
A chargeback ratio is the number of Amex chargeback disputes filed as a proportion of all Amex transactions in a given timeframe.
What happens if a merchant exceeds the response time for a chargeback?
If a merchant fails to respond within the specified timeframe, they may lose the right to dispute the chargeback, resulting in an automatic chargeback against their account.