13.2, 4841, C28, 7030, 12.6.1, 4752, 13.3….Did you know that there are over 150 different chargeback reason codes? Our expert Chargeback Analysts are proficient in creating responses for each and every one of them! Let’s discuss a few of the most common chargebacks received, and how ClubReady fights them.
13.2 Collaboration Flow - Consumer - Cancelled Recurring Transaction
The cardholder opens a dispute with their bank, claiming that they have previously cancelled their membership but are still being billed. The Issuer questionnaire will ask the cardholder the date of cancellation, if they have attempted to contact the Merchant directly, and method of this contact. The cardholder gives their answers, but is not required to provide proof that any of these events occurred. Because of this, it can be extremely difficult for the Issuer to believe the Merchant over their cardholder. We must prove that the cardholder’s answers are invalid, but they do not. Yes, that does sound extremely unfair!
Under three conditions we are able to challenge these disputes.
#1. The charge was not for a recurring transaction, but instead a part of a set payment schedule during an initial term (3-month term, PIFs).
#2. The cardholder continued to use services after the payment in dispute.
#3. A cancellation form was signed by the cardholder
In each of these scenarios, signed proof that the cardholder agreed to the cancellation policy prior to the time of sale is required. Once it is determined which condition the situation best suits, the crafting of the rebuttal begins.
Each chargeback is unique, prompting a new defense statement for each response. Here is an example of a response with specific chargeback language used in the industry. In this scenario, the charge was the 2nd scheduled payment in a 3-month term membership.
Re: Dispute Case #12345678910
Upon thorough review of the transaction details and customer records, this chargeback is contested on the following grounds:
1. Contractual Agreement: The transaction in question corresponds to a non-recurring installment payment as per the signed contract between XXX and the cardholder, Susan Smith. The cardholder agreed to a three-month installment membership, as outlined in the contract terms they willingly accepted at the time of membership purchase. According to the terms of the contract, page X, section X.X, the membership cannot be cancelled during the three-month installment period unless specific conditions, such as relocation, permanent disability, or payment of an early termination fee are met. The cardholder is not eligible for cancellation, as none of these conditions have been satisfied.
2. Payment Authorization: The transaction was authorized using valid payment credentials associated with the cardholder's account. As per our standard procedures, all transactions undergo rigorous verification processes to ensure legitimacy and compliance with our terms of service. The cardholder's installment payment was processed in accordance with the agreed-upon terms outlined in the contract.
3. Non-Recurring Nature of Transaction: It's crucial to emphasize that the transaction in question is not a recurring subscription but rather an installment payment for the specified membership duration. The cardholder explicitly agreed to the terms of the three-month installment membership, which does not permit cancellation during the installment period except under the circumstances stipulated in the contract.
4. Clear Contractual Obligations: The terms and conditions of the membership contract were presented to the cardholder before they agreed to proceed with the transaction. The contract clearly outlines the payment schedule, installment duration, and conditions for cancellation, ensuring transparency and mutual understanding between both parties.
Based on the signed agreement containing the cardholder's explicit acceptance of the terms, we firmly believe that the chargeback initiated by the cardholder is unjustified. We are requesting full reinstatement of funds to our account.
10.4 Allocation Flow - Fraud - Card Absent Environment
In reason code 10.4, the cardholder does not believe the transaction was authorized. Disputes of this nature are often found to be true fraud, friendly fraud, or Merchant error. True fraud scenarios occur when the member is using someone else’s card. This could be a lost/stolen card, or using a family member’s without their knowledge. Friendly fraud transpires when the cardholder knowingly made the purchase, and is now disputing to receive their money back under false claims. Merchant error can occur if the incorrect payment method was placed on file.
To defend 10.4 disputes, we start by collecting a few critical pieces of information.
- A signed agreement; authorizing the payment in dispute
- CVV2 approval response
- Documentation of an approval response if there is a CVV2 mismatch
- Evidence of the cardholder’s identity matching the requested AVS validation
Next, we must provide compelling evidence to satisfy Visa’s requirements
- Two historical footprints. These are undisputed transactions 120-365 days from the original purchase date.
- Customer Data Validation
- Address
- Email Address
- IP address
- Account ID
10.4 Response Example
I am writing to address the chargeback associated with reason code 10.4 on transaction 102345678, in the amount of $199.00. After a thorough review, I have compiled evidence demonstrating the legitimacy of this transaction. Please find below the pertinent information and documentation supporting our case.
Transaction Information:
• Transaction Date:
• Transaction Amount:
• Cardholder Name:
• Merchant Name:
• Merchant ID:
• Transaction ID:
Supporting Evidence:
1. Signed Agreement: Attached is a copy of the signed agreement between the cardholder and The Merchant. This document clearly exhibits the cardholder’s consent and authorization for this transaction.
2. Visa CE 3.0 Compliance: The Merchant adhered to Visa’s Card-Not-Present transaction guidelines under CE 3.0, ensuring the transaction's security and authenticity.
Our compliance includes:
• Tokenization: Card details were tokenized to enhance data security.
• Multi-Factor Authentication: The cardholder’s identity was confirmed through MFA protocols.
• Cardholder Communication: We have attached copies of email exchanges and customer service interactions that show the cardholder’s involvement and satisfaction with the transaction.
3. CVV2 Verification: The transaction included the CVV2 code, which was correctly entered and validated at the time of the transaction. This indicates that the cardholder had the physical card in their possession when the transaction was processed
4. AVS Match: The billing address provided by the cardholder was verified through AVS, resulting in a match. The AVS response code was “X”, confirming the address accuracy.
Based on the documentation provided, it is clear that this was a legitimate, authorized transaction. Therefore, we request that you review the attached evidence and reverse the chargeback.
We are committed to resolving this matter and are available to provide any additional information if needed. Thank you for your prompt attention to this issue.
Best Regards,
Sadie Anderson
Sr. Manager, Financial Recovery
Sanderson@ClubReady.com
ClubReady
14515 N Outer 40 Rd #300, Chesterfield, MO 63017
13.1 - "Cardholder Claims Merchandise/Services Not Received."
Scenarios where this chargeback is often seen:
- Delay in facility openings, resulting in non-use of pre-sale memberships
- Expiration of session credits
- Non-use of multiple session credits issued
The Thought Process –
When evaluating a dispute, we need to determine a few details to better understand what led to the chargeback, and how to respond. We are rarely provided with a reason as to why the customer has initiated this claim; so, we must use account context clues to create a picture of what more than likely happened.
- Did the customer receive the correct amount of session credits, as designated by their agreement?
- Has the customer participated in any sessions?
- Have the sessions expired or have been lost due to x,y,z?
- Does the Merchant-Customer communication indicate there was unsatisfaction in the services received?
13.1 Response Example
We are writing in response to the chargeback initiated by the cardholder, John Robert, regarding the transaction referenced above. The reason cited for the chargeback is Reason Code 13.1 - "Cardholder Claims Merchandise/Services Not Received."
Upon investigation of the transaction in question, we have found substantial evidence to refute the cardholder's claim. Firstly, the cardholder has signed an agreement with our establishment, explicitly acknowledging the terms and conditions of our services, including session attendances. We have attached a copy of this signed agreement for your reference.
Additionally, we maintain a comprehensive recorded log of attendance for all our current and former members. The cardholder in question was in use of the Merchant services by completing a session on the specified date of the transaction, as evidenced by our meticulous records. We have enclosed a copy of the attendance log, highlighting the cardholder's attendance on the date in question.
Considering the signed agreement and the recorded attendance log, it is evident that the cardholder did indeed receive the services that were purchased. As such, we respectfully request that you overturn the chargeback and reinstate the funds to our account. Payment is due to the Merchant for services rendered.
We appreciate your prompt attention to this matter.
Thank you for your cooperation.