What are some of the specific causes of chargebacks?

Chargebacks are initiated for a variety of reasons – both fraudulent and non-fraudulent. By understanding the root cause of chargebacks, merchants can strategically refine policies and approaches to reduce chargeback activity.

Below are the top causes of chargebacks including the reason codes established by leading credit card companies:

  • Customer Dissatisfaction: Cardholder did not receive the items/service purchased, the products/services were not as described and/or product(s) was damaged or otherwise defective. [MasterCard Reason Codes 4853, 4855, 4859; Visa Reason Codes 30, 53; Discover Reason Code 4553, 4755]
  • Fraud: Cardholder did not authorize transactions; fabricated or expired credit card number used for purchase, charges were made with a stolen card, or the merchant is “high risk” [MasterCard Reason Codes 4837, 4840; Visa Reason Codes 57, 83; Discover Reason Code 4594]
  • Cancellations/Returns: Cardholder returned merchandise, but merchant did not process credit properly [MasterCard Reason Codes 4841, 4853; Visa Reason Codes 41, 53, 85; Discover Reason Code 4553, 4756]
  • Lack of Clear/Responsive Communication: Transaction and/or merchant labeled in an unclear or unexpected fashion on the cardholder’s billing statement. In addition, merchant failed to respond to a cardholder’s request to retrieve information [MasterCard Reason Codes 4802, 4803, 4863; Visa Reason Codes 60, 79; Discover Reason Code 4502, 4555]
  • Authorization Errors: Valid authorization was never obtained; merchant did not follow proper authorization procedures [MasterCard Reason Codes 4807, 4808, 4835; Visa Reason Codes 70, 71, 72, 73, 77; Discover Reason Code 4752, 4753, 4754]
  • Processing Errors: Transaction was billed incorrectly or there was an error during initial processing [MasterCard Reason Codes 4804, 4831, 4834, 4842, 4846, 4847, 4850, 4854; Visa Reason Codes 74, 76, 78, 80, 86, 96; Discover Reason Code 4534, 4550, 4586]