Introduction

When faced with a chargeback, one of the most confounding elements is the vague reason code attached to it. But decoding these codes is key to resolving disputes. Let’s examine what chargeback reason codes mean and how merchants can leverage them.

Demystifying Reason Codes

Chargeback reason codes are codes issued by the card networks to classify the rationale for a customer dispute or refund request. Common codes include:

• Transaction Not Recognized - Cardholder doesn’t recall or recognize the charge.
• Fraudulent Transaction - Report of unauthorized card use.
• Credit Not Processed - Refund was not applied to account.
• Defective/Not as Described - Issues with product condition or accuracy.
• Processing Errors - Duplicate or incorrect transaction amounts.
• Non-Receipt of Goods or Services - Purchase never received.

While general, these codes indicate the core dispute category, a vital starting point.

Optimizing Use of Codes

Armed with the reason code, merchants can:

• Identify the required response - Documentation proving legitimacy, delivery, refund issuance, etc.
• Assess validity - Surface potential “friendly fraud” cases hiding behind codes.
• Improve operations - Pinpoint flaws in fulfillment, customer service, or quality control.
• Update staff and customer guidance - Clarify policies around refunds, delivery proof, etc.
• Inform representment strategy - Focus arguments on overcoming the cardholder’s stated reason.

Reason codes create a roadmap to resolving chargeback mysteries. Their clues unlock effective responses.

The Bottom Line

Reason codes lay the groundwork for chargeback defense by summarizing grounds for dispute. Decoding these shorthand signals helps merchants gather facts, unearth oversights, and argue the truth. Codes provide the “why” behind the chargeback story.

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