MOST COMMON CAUSES OF DISCOVER REASON CODE AA

Description

Issuer receives a complaint from the credit cardholder that the charge on his billing statement is not recognized. In other words, the customer is not aware of the particular transaction or the information on the statement does not belong to him, not correct or not recognizable. This chargeback reason code is applicable to card present as well as card-not-present orders.

Most Common Causes

• If the cardholder’s billing statement is incorrect, i.e. the merchant store name or location is not recognizable or not matching to the information cardholder provided earlier to the merchant.
• If the buyer has forgotten the particular order.
• The customer is looking for a refund but he or she doesn’t want to go through the regular process.
• The cardholder does not recognize the billing descriptor. 
  
  
  
  

If someone else like family member used the card and cardholder is not aware of the transaction.

Evidence Required

• The cardholder has provided documentation and information that would help in recognizing the transaction. For example Purchasing slip, Proof of Delivery or Delivery Note, Detail of trade or service purchased.
• An important factor while accepting cards. Ensure the name of the merchant, city, and state is correct in the records. Also, mentioning “doing Business as” DBA is critical.

Prevention

• If the billing descriptor is set, then the chances are that the merchant won’t face such problem. In case merchant notices that disputes are increasing day by day, then it is better to check transaction procedures and contact processor so that the merchant account reflects the information that the card holder will recognize.
• There should be a toll-free customer service number in the billing description. Ensure that the provided billing description is accurate and recognizable to the cardholder.
• Contact information should be mentioned clearly. This is the best way to communicate between the merchant and the cardholder. When cardholder does not recognize provided information or finds it difficult to reach the merchant, chances of dispute rises.
• A website is the best channel of communication between the cardholder and the merchant. The cardholder can easily contact the merchant through the contact information provided on the website and the merchant too can offer quick and effective customer support and resolve the issue.
• Providing full contact information i.e. company name, complete mailing address, email address, and customer service phone number is an essential key to fewer chargebacks.
• Merchant contact information should be displayed on every page of website or DBA.
• Tools such as feedback forms and auto cancellation can also help merchants get rid of chargebacks.

Common Examples

• Linda is fond of shopping. She was browsing through a number of online clothing store one day and spontaneously decides to buy few things from a store. Few days later she checks her account and finds out an un-recognizable charge. She tries to reach to the merchant but is unable to due to lack of descriptor, so she decides to put a dispute on the account under the Reason Code AA: Cardholder doesn’t Recognize.

• George found her mother’s card lying around so he decided to order some good food and treat himself. His mom later finds out an unknown charge on her account and calls her bank. She explains to her bank that she doesn’t recognize the charge and also insists that she never leaves her card unattended. Having heard from her, the bank decides to put a chargeback on the merchant under the Reason Code AA: Cardholder doesn’t Recognize.

WHAT IS THE DIFFERENCE BETWEEN A CHARGEBACK AND REFUND?

What are Refunds and Chargebacks?

People often get confused and assume both the terms as interchangeable but that’s not true. Refund and chargeback are two different terms.

Refund: Depending upon the company’s return policy, it is basically returning the full or partial amount that was spent by the customer to purchase the product or service from the merchant. The product purchased by the customer is returned back to the merchant.

Chargebacks: Instead of going to the merchant, if the customer chooses to go to the issuing bank directly and files a complaint about the fraud or unsatisfactory purchase, it is called a chargeback. Along with the cost of the product, the merchant is also charged with a chargeback fee, and the merchant also loses the product.

Benefits of Refunds over Chargebacks

Whether a refund or a chargeback, in both the cases the merchant loses money. Although refunds are unwanted and disagreeable (sometimes), a good return policy can help the merchant in many ways, such as:

• Attracting more customers and increasing the customer’s loyalty.
• Increasing the brand trust
• Returning the product to the merchant, physically
• Reducing time of the refund process
• Maintaining low chargeback ratio

Drawbacks of Chargebacks

Chargeback is a type of refund where you lose more than what you might have earned.

• Along with the refund amount that goes to the customer, the merchant is also charged a chargeback fee. So the merchant loses more in chargeback as compared to a refund.
• The physical product is not returned to the merchant.
• Chargeback rating will increase, which will hamper company’s image.
• In some cases, payment processor will close merchant account and freeze funds.
• Disputing a chargeback is a time-consuming process.

Can Refunds Prevent Chargebacks?

Yes, to some extent, refunds can prevent chargebacks. It is advisable to provide good refund policy to save time, as chargeback might take months to materialize and you might lose a lot of time and resources in fighting the chargeback. To fight chargeback, the merchant also needs to provide enough evidence within a certain time limit. A lot of documents, analytical reports and strategies are required. To avoid such mess, it is better to refund the amount than dealing with chargebacks.

How to Avoid Chargebacks?

1. Keep a track of transactions for any suspicious activity

• Large orders
• Odd contact information
• Multiple orders placed on the same credit card

2. Contact and confirm orders

3. If the customer asks for a refund due to a valid reason, it is better to issue the amount to protect brand image as well as the prospective customer.

4. Explain customer about security protocol involved, while refunding the charge.

5. Stay within the reach of the customer to avoid chargebacks.

If you are looking for a solution to keep track of all the business transactions, Chargeback expertz can provide you assistance with real-time alerts and analytical tools that can help you monitor any fraudulent activity, and reduce chargebacks. Give us call on +1(855) 465-4723 for a free trial, today.

LET'S DISCUSS ON DELIVERY CONFIRMATION AND CHARGEBACKS

It should not come as a shock if a merchant receives a chargeback after the product is delivered. At the time of delivering the product to the customer, signature confirmation is necessary as it can save merchant from chargebacks (when the chargeback is based on the reason code: goods/services not received). It can be used as a part of chargeback prevention solution and representment strategy. But if it is so helpful then why are merchants completely ignoring it?

Delivery Confirmation

There are multiple methods to ensure that the product reached on the address provided by the customer. There are methods that provide the merchant with detailed information about the delivery (when, where and how). This type of information is quite relevant from the perspective of chargebacks but unfortunately is not used by all the merchants.

Let us discuss a few methods; how they vary from one another and which ones severely affect the chargeback management.

1. Confirmation of the Delivery: This is a most basic method used by merchants, which facilitates the merchant to know the status of delivery but does not assure that the package was handed over to the customer or was just dropped at the door. This method comes with certain disadvantages like:

• Doesn’t guarantee that the product is delivered to the right person, who ordered the product and paid for it.
• Does not prohibit re-routing of the package.
• Does not verify delivery address.

2. Tracking of the Delivery: Some of the shipping companies use tracking techniques via which a package can be tracked by the customer as well as the merchant with the use of a tracking number provided by the shipping companies. Especially, if the package is scanned at the shipping locale or in the post office, the shipment number goes into the system and can be tracked. Pros and cons of this system are:

• Assurance of successful delivery without guarantee of the package being handed over to correct person.
• With the use of tracking number, the merchant can track the progress of delivery.
• Tracking number can help the merchant in identifying the problem.
• The Customer can track the location of the package.
• Track of delivery date (when the package will arrive)
• Helps in reducing chargebacks by providing more credible evidence.

3. Signature Confirmation: In this method, actual signature of the receiver is required at the time of delivery. This signature can be physical (on paper) or electronic. This method helps the merchant to fight against friendly frauds. If due to any reason, delivery was not successful, the customer will be notified and asked to collect the package from the carrier location/office. Optional variation in this method are :

• Direct Signature Required
• Adult Signature Confirmation

4. Direct Delivery: In this method, the package cannot be delivered to any alternative address without merchant’s permission. There is no requirement of recipient signature. This method helps the merchant to avoid fraud and chargeback by not letting them re-directing the address.

Limitation of delivery confirmation

• Intentional or unintentional mistakes made by carrier personnel
• Forged signature of the cardholder
• Case manager might not consider the confirmation receipt as adequate evidence.

UNDERSTAND CHARGEBACK CYCLE IF YOU WANT TO PREVENT CHARGEBACK.

Chargeback is one of the worst words for merchants today. While they are a huge pain, chargebacks are a part of any business that accepts debit and credit cards. Originally chargebacks were used to protect consumers from charges made fraudulently, along with keeping merchants accountable and honest. However, today chargebacks are used by many more people and can feel like a vendetta.

What is Debit Card Chargeback?

Like a credit card chargeback, a chargeback from a debit card is a reversal of the transferred funds. A chargeback requires the consumer to directly contact their bank. Their bank then contacts your bank, and the money is returned to the consumer.

The Chargeback Cycle

To start a chargeback a customer has to go their bank, and file their dispute against any transaction that is false or they were not provided service for. Their bank or the issuing bank will issue them a temporary credit for the amount of the transactions.

You can fight chargebacks. However, as originally chargebacks were designed to protect consumers, you will need to provide proof that you are in the right. The problem is even if you win all the cases of chargebacks, having too many will harm your business’s reputation. This causes your account to be frozen, or your whole account to be terminated. There can also be criminal charges and investigations done. Along with those, there are also huge chargeback fees that are debited from your account if you lose the fight or choose not to fight chargebacks. The best thing that a business can do is to avoid chargebacks in the first place.

To fight a chargeback, a business’s needs to fill out paperwork and provide proof of the transaction to the issuing bank. The issuing bank will contact the credit card company, for more information about the transaction. After the issuing bank has all the information about the transaction, they look all the documentation and make a decision. This could take just a few days to a few months depending on the credit card company, as some have delays in their sending of information. If the chargeback is found to be wrongful, the money is given back to the business, and the temporary credit is taking away from the customers. If the document is rejected, the temporary credit turns into permanent funds.

Avoiding Chargebacks

The simplest solution to not having chargebacks is to not accept debit and credit cards. However, in today’s modern world you have to accept debit and credit cards. At the same time, there are some things that you can do to limit the amount of chargebacks you receive.

The first is to have a refund policy that is easy to understand. Unhappy customers just want their money back. Having a refund policy makes it easy to do this. Chargebacks take time, and most consumers would prefer just walk in and get their money.

Lastly, you should have clear records of everything. There are bad people who file chargebacks to get free things. Having and keeping all the records, you can fight chargebacks and prove that they got the item. Your receipts need be legible and complete.  

Good Customer Service Helps to Avoid Chargebacks

Chargebacksprimarily occur for three reasons:

    • Item Not Received. The cardholder placed an order, paid for a service or product, but claims to have not received the order or service.
    • Significantly Not As Described. The cardholder claims that the product or service received was sub-standard, compared to the merchant’s description.
    • Unauthorized Transaction. The cardholder claims that a transaction is fraudulent or was processed without the cardholder’sconsent.

In all three scenarios the cardholder has a legitimate right to file a chargeback and receive a refund of the transaction amount.

Good Customer Service and less costly solution.
 
As a merchant you want to maintain a good customer relationship toavoid the inconvenience and costs associated with chargebacks. Here are a few suggestions:

    • Customer Service Contact Information. Ensure that your website makes it easy for customers to find your contact information. Using an email contact formis a great idea. The easier it is for a customer to contact you directly the less likely they are to call their bank or credit card company first and file a chargeback.
    • Order Confirmations. Send a confirmation email as soon as an order is received, and make sure to include your contact information. Or call the customer to confirm the order before dispatching.
    • Customer Inquiries. Respond quickly to all customer inquiries. No one likes waiting unnecessarily for a reply.
    • Dispute Resolution. Have company policies in place to resolve common customer complaints. A well-trained customer service team is a must.
    • Return Policy. Make your return policy easy to find online and word it in a way customers can easily understand. Not everyone understands legalese

Preventing Disputes from Turning into Avoid  Chargebacks

    • Item not Received Dispute. Keep a record of the shipping address provided by the customer during the order process. Purchase shipping insurance to cover any damagedor lost orders. Use a shipping method that allows online tracking of packages and delivery confirmations which will give youand the customer proof that an order was sent on time and to the correct location. If an Item is not available or was damaged or lost while in the process of being delivered, inform the customer that you are regretfully cancelling the order and give them a timeframein which to expect a refund. Then process the refund as quickly as possible.

    • Significantly Not As Described Dispute. Product and service descriptions should be accurate, with nothing kept hidden from the customer. Include such things as “no color choice” or “product may appear slightly different than the picture.”
    • Unauthorized Transaction Dispute. There are situations when a charge is clearly fraudulent, and then there are times when a transaction may only appear to be fraudulent to the cardholder. In the second instance, the cardholdermay have just forgotten about a purchase, may not recognize the company name, or has forgotten special circumstances that permitted the charge. The only way to resolve these kinds of disputes is through direct contact with the cardholder.

Dealing with customer service and chargeback issues can be overwhelming and takes away time from other business activities.Contracting out customer service functions and chargeback management is always an option and can prove to be a more efficient and less costly solution.

How to Preserve Your Business From Chargeback

How to Prevent Chargebacks are something every merchant should be prepared for. Online Fraud detection lead to Fraud Prevention. If your customers raises dispute with their issuing bank the money will be reimbursed to them immediately. Now it is upon you to prove chargeback was not correct by proving that transaction was a valid transaction. You can never stop your customer to stop raising disputes but there exist chargeback prevention system to reduce such kind of disputes. Chargeback prevention is something that is critical from the business point of view.

Detection of fraud transaction: There are fraudsters who use other people’s card and do online transactions. You should have proper transaction monitoring and as soon as you came to know about fraud transaction, immediately refund the same. If you do not refund it, there are possibilities that in the future the actual cardholder raises dispute.

Descriptor Name:The most critical reason why the chargebacks are experienced are because customers do not recognize the payments. Your descriptor name is what appears on customer’s bank statements. It should not be different from your business name or your legal name. When the Payment Gateway provider call the customers for validating transactions and they failed to recognize the payment they will surely raise the disputes.

Get it in writing. Entrepreneur Glenn David has never lost a chargeback request with his Skokie, Illinois, party services company, Glenn David Productions. He says one of the most important things he's done to protect himself is to require customers to sign a contract that spells out the specific services his company will provide. He gives them lots of options they can return the signed contract via fax or email, or sign it electronically online or with a fingerprint via a smartphone application. The key is to get the customer's authorization in writing.

Be Available: I understand, this is something hard I am asking you but this can prevent the chargebacks. Your website should have some sort of customer care number and business email id where they can raise their concern before going to banks. As per law, disputes can be raised by the customer till 2 years from the date of transaction but generally banks have policies of accepting disputes till 6 months from the date of transactions. You can hold the customer if their queries are properly addressed.

Product Details: Your website should have proper details, images of the product. It should never be the case when the product is delivered, customer opens it and says, “Oh god, this was not something I ordered” The chances are more that customer will raise dispute.

Deliver product in time: Don’t hold your customer money for long. If the product is not delivered to the customer within the time frame, and their queries are not answered in time, they will ask for the refunds from their issuing bank and you will get chargeback.

Offer Refunds: I know this is something that is tough but you have too. Chargeback is something that was created to safeguard customers. In case something wrong has happened. Initiate refund and prevent chargebacks.

HOW CAN CHARGEBACK ALERTS HELP TO HIGH RISK MERCHANT

Chargeback Alerts

When a customer contacts issuing bank to file a chargeback, issuing bank enquires about it and determines whether the complaint is genuine. If it is, then the card network is notified of the dispute. Here, at this point, the chargeback alert system receives the notification of the incoming chargeback before it is submitted to the card network. Chargeback expertz has been and is still working with a large network of issuers that allow us to intercept chargebacks from almost every financial institution.

How Can Chargeback Alerts Help?

If the notification related to chargeback is generated on time, merchant gets the time to prepare a plan of action in order to respond to the incoming chargeback. This plan of action can be:

    • Full or Partial Refund: Being one of the most common response for chargeback alerts, merchant can effectively stop the chargebacks by setting up rules to automatically generate refund to the customer.

    •  Blacklisting the Customer: It is a harsh step to blacklist a customer but sometimes become necessary as a respond to chargeback alerts. If a customer is doing friendly fraud, it is fine to block the customer permanently. Blacklisting works as asafeguard against problematic customers.
     
    • Cancelling Services: Chargeback gives opportunity to the merchant to cancel the services for a particular customer the moment the transaction is disputed, especially if your business uses recurring and subscription billing.
     
    • Cancelling Shipments: If the shipment is still in fulfillment, through Chargeback alerts, merchant can cancel it before it is sent to the customer, which might stop the chargeback.
     
    • Rerouting Shipments: If the chargeback is received after the product is shipped, merchant can still reroute the shipment and can get delivered it to the warehouse. This method is as effective as cancelling the shipment.
     
    • Accepting Chargeback: If the merchant chooses not to respond to the chargeback, it proceeds to the card network, as it would do normally. This will affect the chargeback ratio of the business and but the merchant can still dispute it.

Who Can Avail Chargeback Alerts

All the merchants, irrespective of industry type, are benefitted by chargeback alerts. But high-risk merchants or merchants dealing with large volume of chargebacks are benefitted the most.

    • High-risk merchants: High- risk merchants are the ones who operate business dealsthat involve high level of fraudulent activities. Issuers and card networks consider high-risk merchant as liability and a financial risk. There are number of factors that defines a business as high-risk and these are:

Chargeback history of the merchant
Irregular and high ticket sale
Part of industry whom reputed banks do not support
Highly regulating industry

    • High chargeback ratio merchants: Traditionally, the businesses do not appear as high-risk, but a high chargeback ratio puts them at risk and thus they fall in high-risk category. Few industries that fallunder such category are:

• Software companies 
• Travel and hospitality business 
• Apparel 
• E-commerce

Why Use Chargeback Alerts 

• Protects your chargeback ratio 
• Reduces fee and Increases profit 
• Ensures better customer relationship.

How Chargeback Security Alert Can Help Your Business to Improve Case Resolution

Alerts are important when you are running a business. They inform the business about recent activities so that we can solve problems before they get bigger. Alerts from Banks can help businesses to solve various issues. Many small businesses, local governments, and universities have been targeted by hackers. Millions of dollars from banks have been stolen just because there weren’t alerts to inform merchants about online merchant activities. A dedicated

Chargeback Security Alert System can reduce the chances of fraud and help businesses to improve case resolutions.

Alerts for High Risk Business

It is important that you know what is going in your business. Chargeback Alert System provides real-time alerts that are directed to you via email or text so that you are always aware of various activities. Once you signed into the business account alerts, you will be able to receive transaction histories, chargebacks, processing statements, daily deposits, and many more things. You can also sort details to get a better view of your business.

You can get transaction details, and get alerts when the balance reaches the certain limit. Many payment gateway companies offer customizable and convenient account alerts to keep you well informed, especially when specific activities have been noted in your account. There are different types of alerts, you can choose which ones you want to receive via email and text messages. These alerts can help you prevent overdrafts, you will know when is the right time to move funds, and confirm transfers. There are many types of alerts that issuing banks provide such as current balance, no funds available, the account balance is less than a certain limit, and more. This is on the business banking end and is completely separate.

All you need to do is sign up with Chargeback Security that gives you alerts on the computer and mobile phone 24/7/365. There are many chargeback prevention alert especially for small businesses, many banks offer customized fraud alerts to help business resolve cases.

Chargeback Security has partnered with many agencies, financial institutions and businesses to make a Solid, Secure and Simple Chargeback Prevention Alerts System. You can even read more about it on our website under the “Notification” Tab, Link: www.chargebackexpertz.com/notification

Type of alerts that can help improve case resolution

● Account Alerts: There is a wide range of alerts in this category that can help businesses to manage their money and keep the business safe from frauds.

● Consumer Alerts: The System works with Better Business Bureau, Attorney General’s Office, Rip Off Reports and similar Consumer Agencies and resolve all refutes between the consumers and the Merchant.

● Fraud Alerts: The descriptor of the merchant account and its variations are scrubbed in the database every day against the chargeback database of the issuing banks, financial institution and/or partners.

●Non-Fraud Alerts: Reasons like Cancelled Recurring, Credit Not Processed, Defective Goods/Services, Services/Goods Not Provided and many such Visa and Mastercard Chargeback Reason Codes are scrubbed against this alert category. Scrubbing and Working are similar to as of Fraud Alerts.

● Security Alerts: It is an extra layer of protection having all the required security. Merchants can set a dollar limit for various transactions, including debit card activity, Settlement withdrawals, velocity checks, IP Addresses, and money transfers. You will be contacted when transactions exceed the specific criteria you have set.

● Daily Alerts: It is a great way to keep track your business. All the account activities and transactions will be personalized according to your needs. Merchants can set thresholds and they will be notified via the method that they prefer.

● Retrieval and Sales Draft Alerts: Chargeback Security works with the ISO / Processing Company and even the Acquiring banks to receive and resolve such Complaints and Alerts.

● Action Alerts: It is when your business account or balance goes down or high refunds or chargebacks is detected. Merchants can login in the system and/or call and email Chargeback Security anytime. It is one of the fast, easy and fee-free way to keep the business safe.

How to Win Chargeback - A Detailed Look

Having to deal with chargebacks on your credit card may result in a time-consuming activity, especially for those who have online businesses. A lot of merchants face the risk of having their accounts terminated by their back if they frequently experience chargebacks. As a result, merchants can incur more cost compared to losing sales, which may eventually end up in the overall business loss. For this, chargeback prevention alert is very important.

Some Important Things to Remember

Merchants can and try to win a reversal so as to save the worth of the entire transaction. However, there is no single proven chargeback management process that can be used for winning. For this, make sure whether or not you would like to fight chargebacks is very important and often entails certain things for consideration.

For one, dispute management of a chargeback is a time-consuming, tedious, and oftentimes labor-intensive process. If the overall cost of the claim investigation and chargeback fees is bigger compared to the transaction amount, it may turn out to be less expensive not to dispute the chargeback/s at all.

Documentation is Important

Among the most important information pieces that merchants can present during a dispute is one which offers the explanation as to why the claim is unwarranted. This includes sending a confirmation e-mail right after completing each and every purchase which includes transaction details, automated invoice, terms of purchase, shipping information, how to reach out to customer service, as well as how to return an item. After shipping the item, the merchant needs to send another email which contains the delivery and tracking details as much as possible.

A very important part of a chargeback defense is full documentation. Clearly established terms and conditions which explain how the business is operated, and the expectations set to the customers should be presented. Online merchants should always implement a fraud management system and chargeback prevention system, including information on how replacements, returns as well as cancellations of orders are handled, posting all of this information on the websites. As part of this process, merchants may require customers to check out a box or click an icon to acknowledge to the terms and conditions after reading them. If you have signed authorization from a customer when they have made the transaction than it can most helpful paper you can present against the chargeback. You can prove that customer did authorize this transaction and the purchase before it occurred.

Understanding about Different Dispute Reasons

Every chargeback come up with a specific reason and a reason code that depends on the customer’s claim. You should have a proper understanding of the various reasons of disputes. It can help you lead the chargeback case with proper documentation. Different card brads use their different terms and reason codes to determine the reason for a customer’s claim. Providing accurate response to them will help you to win the chargeback. It requires you can also contact Chargeback Experts to help you to understand reasons for chargebacks.

Seeking Help

Another very important option is working together with a chargeback management company, who can send you the professional assistance of a chargeback expert. Take note that this is a very important investment on your end. However, with a chargeback analyst on your side, you can expect a better return since you can have the opportunity to address the dispute in a legal way, hopefully winning it in the end.