The following article outlines specific Dispute types that a Merchant can expect to encounter when handling incoming disputes.
Dispute Types
There are three major dispute types with various scenarios and handling steps:
Dispute Type
Description
Dispute Type
Description
Fraud Disputes
Disputes arising from fraudulent Merchant activity.
Authorization Disputes
Disputes arising from transactions being completed without full, proper authorization.
Processing Error
Disputes arising from payment submission errors by the Merchant.
Customer Dispute
Disputes arising from customer complaints.
See individual handling steps and background information for Dispute Type scenarios below.
Fraud Dispute Scenarios
Fraud disputes occur when the Cardholder claims their payment information was fraudulently used by another individual to purchase goods/services from the Merchant. Although fraud disputes are far more common in e-commerce (card not present) scenarios, they can also occur in card-present environments e.g. when EMV-chip verification is not implemented.
The following Fraud Disputes are common Disputes a Merchant might encounter:
Why did I get this notification?
A Cardholder is claiming that they did not authorize or participate in a transaction that the merchant processed. The Cardholder's bank determined all of the following things occurred: The transaction was completed with a counterfeit card in a card-present environment, The card is a chip card, and Either of these things occurred:
The transaction did not take place on a chip-reading device.
The transaction was chip-initiated and, if the transaction was authorized online, the merchant's card processor did not transmit the full chip data to Visa in the authorization request.
What caused the dispute?
The Cardholder has a chip card, but the transaction did not take place at a chip terminal or was not chip read.
Scenario Response Options
Scenario
Response
Scenario
Response
The transaction took place at a chip terminal.
Provide documentation to support that the transaction was chip read and evidence that the full chip data was transmitted.
Merchant agrees the transaction did not take place at a chip terminal.
Accept Liability for the dispute.
Merchant has already processed a credit or reversal for the transaction?
Provide documentation of the credit or reversal; include the amount and the date it was processed.Â
The Cardholder no longer disputes the transaction.
Provide a letter or email from the Cardholder stating that they no longer dispute the transaction.
Future Mitigation
To avoid this type of dispute scenario in the future:
Make sure the merchant's terminal is EMV-compliant and the correct Cardholder Verification Method (CVM) was obtained. For example: signature, PIN, etc.
Obtain an imprint (either electronic or manual) for every card present transaction.
Train merchant staff on the proper procedures for handling terminal issues.
Why did I get this notification?
The Cardholder's bank received a call from their Cardholder who insisted that they did not authorize or participate in a transaction that the merchant processed. The Cardholder's bank determined all of the following occurred:
The transaction was completed in a card-present environment with a card that was reported lost or stolen, the transaction qualifies for the EMV liability shift, the card is a PIN-preferring chip card, and one of these actions transpired:
The transaction did not take place on a chip-reading device.
A chip-initiated transaction took place at a chip-reading device that was not EMV PIN-compliant.
The transaction was chip-initiated and, if the transaction was authorized online, the merchant's card processor did not transmit the full chip data to Visa in the authorization request.
What caused the dispute?
The most common cause of this dispute is that a PIN-preferring chip card was used either at a non-EMV terminal or a chip transaction was initiated without full chip data.
Scenario Response Options
Scenario
Response
Scenario
Response
The transaction took place at an EMV PIN-compliant terminal.
Provide documentation to support that the transaction took place at an EMV PIN-compliant term
Merchant agrees the transaction was not completed at an EMV PIN-compliant terminal.
Accept Liability for the dispute.
Merchant has already processed a credit or reversal for the transaction?
Provide documentation of the credit or reversal; include the amount and the date it was processed.
The Cardholder no longer disputes the transaction
Provide a letter or email from the Cardholder stating that they no longer dispute the transaction.
Future Mitigation
To avoid this type of dispute scenario in the future:
Make sure the merchant's terminal is EMV-compliant and the correct Cardholder Verification Method (CVM) was obtained. For example: signature, PIN, etc.
Obtain an imprint (either electronic or manual) for every card present transaction.
Train merchant staff on the proper procedures for handling terminal issues.
Why did I get this notification?
A Cardholder is claiming that they did not authorize or participate in a key-entered or unattended transaction conducted in a card-present environment. The transaction was completed in a card-present environment with a card that was reported lost or stolen.
What caused the dispute?
The most common causes of this type of dispute are that merchant:
Did not ensure that the card was either swiped or that the chip was read.
Did not make a manual imprint of the card account information on the transaction receipt for a key-entered transaction.
Completed a card-absent transaction, but did not identify the transaction as an internet or mail order/ phone order.
Scenario Response Options
Scenario
Response
Scenario
Response
The card was chip-read or swiped and the transaction was authorized at the point of sale?
Provide a copy of the authorization record as proof that the card's magnetic stripe or chip was read.
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A manual imprint was obtained at the time of sale. (Does not apply to the Europe region)
Provide a copy of the manual imprint.
Merchant agrees the transaction was not chip-read, swiped, or manually imprinted.
Accept Liability for the dispute.
Merchant has already processed a credit or reversal for the transaction?
Provide documentation of the credit or reversal; include the amount and the date it was processed.
The Cardholder no longer disputes the transaction.
Provide a letter or email from the Cardholder stating that they no longer dispute the transaction.
Future Mitigation
To avoid this type of dispute scenario in the future:
Make sure all card-present transactions are either chip-read or magnetic stripe-read.
If merchants are unable to swipe or read the chip, make a manual imprint of the card.
Why did I get this notification?
The Cardholder's bank has filed a dispute stating that their Cardholder did not authorize or participate in a transaction conducted in a card-absent environment (i.e., internet, mail order, phone order, etc.).
What caused the dispute?
The most common causes of this type of dispute are that merchant:
Processed a card-absent transaction from a person who was fraudulently using an account number.
Cardholders had their account number taken by fraudulent means.
Due to an unclear or confusing merchant name, the Cardholder believes the transaction to be fraudulent.
Scenario Response Options
Scenario
Response
Scenario
Response
The transaction was verified using AVS, CVV2, and other tools?
Provide a copy of the authorization record as proof.
Merchants have already processed a credit or reversal for the transaction?
Provide documentation of the credit or reversal; include the amount and the date it was processed.
The Cardholder no longer disputes the transaction.
Provide a letter or email from the Cardholder stating that they no longer dispute the transaction.
Future Mitigation
To avoid this type of dispute scenario in the future:
For card-not-present transactions, consider using all available Visa tools such as Verified by Visa, CVV2, and the Address Verification Service (AVS) to help reduce fraud. Contact merchant card processors for more information on these important risk-management tools.
Always request authorization for mail orders, telephone orders, internet, and recurring transactions, regardless of the dollar amount.
Always make sure the Merchant properly identifies card present and card absent transactions.
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Authorization Dispute Scenarios
Authorization disputes occur when a Merchant submits a payment with an invalid or expired authorization code. For example, if a Merchant authorized their customer's card without fully completing the transaction, and then captured the payment - with a now-expired authorization code - at a later date, this may result in an authorization dispute.
The following Authorization Disputes are common Disputes a Merchant might encounter:
Why did I get this notification?
Merchant processed a transaction where Merchant received No Authorization, Decline, late usage of an Authorization, or a Pickup response, but merchant completed the transaction anyway.
What caused the dispute?
The most common causes for this type of dispute are the merchant did not obtain any authorization, late Authorization settlement of an authorization, or insufficient authorization to cover the amount of the transaction.
Scenario Response Options
Scenario
Response
Scenario
Response
Merchant obtained authorization?
Provide a copy of the authorization record as proof.
Merchants have already processed a credit or reversal for the transaction?
Provide documentation of the credit or reversal; include the amount and the date it was processed.
The Cardholder no longer disputes the transaction.
Provide a letter or email from the Cardholder stating that they no longer dispute the transaction.
Future Mitigation
To avoid this type of dispute scenario in the future:
Always authorize every transaction by the Cardbrand Rules.
Train staff on the proper procedures for handling terminal issues.
Keep records of transactions.
Processing Error Disputes
Processing errors generally indicate a payment submission error by the Merchant resulting in the Cardholder initiating a dispute. For example, this can include the Merchant submitting incorrect data or using the wrong payment method other than the one the Cardholder intended for them to use, etc.
Customer Dispute Scenarios
This category of dispute includes complaints by the Cardholder about the goods/services they purchased from the Merchant. Common customer complaints include goods/services not received, merchandise was defective or not as described, refund not processed etc.
The following Customer Disputes are common Disputes a Merchant might encounter:
Major Card Brand Chargeback Codes
Each card brand has a specific set of chargeback codes that accompany different dispute-type scenarios. See the content below for each card brand to apply to the handling steps above:
Visa Chargeback Codes
Visa has four dispute categories: Fraud, Authorization, Processing Error, and Customer Dispute:
MasterCard Chargeback Codes
MasterCard has four dispute categories: Fraud, Authorization, Processing Error, and Cardholder Dispute:
American Express (AMEX) Chargeback Codes
AMEX has four dispute categories: Fraud, Authorization, Processing Error, and Cardholder Dispute:
Discover Chargeback Codes
Discover has five dispute categories: Fraud, Authorization, Processing Error, Cardholder Dispute, and Not Classified: