A new update to Visa’s Chargeback reason code 83 adds more options for online sellers to dispute said related chargebacks, and help reduce friendly fraud.
For those unfamiliar with the concept, Friendly Fraud is when a cardholder claims fraudulent activity when a transaction was processed legitimately. “Cardholder does not recognize transaction” and “Cardholder did not authorize transaction” are frequent sub-reasons when friendly fraud related chargebacks happen.
Preventing friendly fraud is extremely difficult being the transactions were processed legitimately, and has many merchants spending immense amounts of time and money on trying to dispute and prevent such incidents from occurring. Visa has tweaked its CNP fraud reason code, reason code 83, to give merchants the chance of successfully disputing friendly fraudulent chargebacks.
Reason Code 83: Fraud-Card Absent Environment: The card issuer received:
- A complaint from a cardholder in regard to a card-absent transaction, claiming that he or she did not authorize or participate in the transaction.
*Definition of reason code 83 according to Visa’s Chargeback Management Guidelines.
- A card-absent transaction charged to a fictitious account number for which authorization approval was not obtained.
Visa has revised what it considers “compelling evidence” for disputing reason 83 chargebacks. As we mentioned numerous times, documentation is a critical part of disputing CNP chargebacks. In addition to more evidence, added chargeback reason codes and a requirement that issuers attempt to contact the cardholder when a merchant provides compelling evidence were also added.
The changes to the reason code give acquirers and merchants additional changes to resolve a dispute. This also should increase merchant-customer communication, to help resolve an issue outside of chargebacks and disputes. Additionally, the option to add more evidence will provide issuers with more clarity on when a dispute should go to pre-arbitration as opposed to arbitration (2nd chargeback).
The new “Compelling Evidence” rule change does not put a stop to friendly fraud chargebacks, but it does bring important changes for both issuers and merchants. Merchants are advised to provide information to help prove the cardholder received goods or services, or participated in or benefited from the transaction. On the other end, issuers must initiate pre-arbitration before filing for arbitration, giving merchants the chance to accept liability before incurring a pricey arbitration process.
All in all, it is refreshing to see changes in the chargeback and dispute processes which benefit the merchant, as most parties involved usually lean towards the cardholder’s side.
