Dispute Best Practices
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Technical Document Dispute Best Practices A Merchant’s User Guide to Help Manage Disputes* June 2021 *For Global Disputes, excluding PaySecure Back-End Merchants. Fiserv Confidential Dispute Best Practices Table of Contents Dispute Best Practices Dispute Best Practices Guide Overview ���������������������������������������������������������������������� 3 Authorization Overview ������������������������������������������������������������������������������������ 4 Transaction Overview �������������������������������������������������������������������������������������� 5 Retrieval Overview ����������������������������������������������������������������������������������������� 6 Chargeback Overview �������������������������������������������������������������������������������������� 9 Fraud – Card-Not-Present (CNP) ���������������������������������������������������������������������������� 11 Compelling Evidence Overview ���������������������������������������������������������������������������� 13 Fraud – Card-Present (CP) ���������������������������������������������������������������������������������� 14 No Valid Authorization ������������������������������������������������������������������������������������� 16 Credit Not Processed ������������������������������������������������������������������������������������� 18 Services/Merchandise Defective or Not as Described ��������������������������������������������������������� 20 Services Not Provided; Merchandise Not Received ����������������������������������������������������������� 22 No-Shows ����������������������������������������������������������������������������������������������� 25 Canceled Recurring Transaction ����������������������������������������������������������������������������� 26 Duplicate Processing ������������������������������������������������������������������������������������� 28 Data Entry Error ������������������������������������������������������������������������������������������ 30 Late Presentment ���������������������������������������������������������������������������������������� 32 Paid by Other Means ������������������������������������������������������������������������������������� 33 Exception Overview �������������������������������������������������������������������������������������� 34 Exceptions Chart ����������������������������������������������������������������������������������������� 35 Industry-Specific Merchants ������������������������������������������������������������������������������� 36 Appendix ������������������������������������������������������������������������������������������ 41 2 | Fiserv Confidential Dispute Best Practices Dispute Best Practices Guide Overview The Dispute Best Practices Guide explains the numerous aspects of transaction and dispute processing. This guide will provide you and your staff with educational guidance as it relates to dispute processing and suggest ways for you to help prevent financial chargebacks and liability. This guide includes: An overview of authorization and transaction An overview of exception disputes processing An overview of industry-specific merchant An overview of retrievals and chargebacks Response Templates Reason code guidelines for all credit and debit networks The following card networks are covered in the reason code guidelines: Credit Networks Debit Networks American Express® Accel Maestro Discover ® ACS* EBT NYCE Mastercard® AFFN* PULSE Visa® ATH* SHAZAM CU24* STAR eFunds* EBT STAR* Signature Debit SMS Jeanie* Vital* Interlink PayPal Debit Network *These networks do not have specific reason codes assigned to dispute; however, any retrieval that is received without a reason code will be assigned a default code of 1. Any chargeback that is received without a reason code will be assigned a default code of 53. This guide is provided as a courtesy and is to be used for general information purposes only. This guide has been assembled from materials supplied by the networks; therefore, Fiserv is not responsible for any inaccurate or incomplete information. Furthermore, the matters contained herein are subject to change; individual circumstances may vary; and these procedures may be amended or supplemented by the networks. This document is not intended to be a complete listing of all applicable guidelines and/or procedures.* Information in this guide does not alter or amend any existing contractual obligations between Fiserv and its clients. All chargebacks should be reviewed and presented as individual cases. Although the reason codes may be the same, supporting documentation required to remedy individual chargeback scenarios may vary. You should always refer to the relevant network rules and procedures when handling matters addressed in this manual. *For a full listing of Dispute Reason Codes and descriptions, access your Dispute Manager Welcome Screen. 3 | Fiserv Confidential Dispute Best Practices Authorization Overview Each time that one of your customers makes a purchase using a credit card or a debit card, you must obtain an authorization code. When an authorization request is sent to Merchant Services, the merchant will receive one of the following responses: Approved – Transaction is approved by the bank/company that governs the payment card. You will receive a 6-digit approval code so you can continue with the sale. Declined – Transaction is not approved by the bank/company that governs the payment card. The transaction should not be completed so you should request another form of payment. The Bank May Grant One of the Following Types of Authorizations: Partial Authorization – A partial authorization may be granted when the Customer’s account is in good standing but does not have enough credit or available funds for the full amount of the purchase. When partial authorizations are received, you may process the transaction for the amount that was authorized and request another form of payment for the difference. If the transaction is processed for the full amount, a chargeback may be received for the amount that was not authorized. Preauthorization – A preauthorization verifies if the card is valid, if the account is active and if the account has enough credit or available funds to cover the cost of the service or merchandise. The preauthorization process will set aside funds for a specific timeframe which may vary depending on the bank or company. 4 | Fiserv Confidential Dispute Best Practices Transaction Overview A transaction is an act between a customer and a merchant that results in an exchange of funds for goods or services. Transaction Process Flow Customer presents The merchant requests card at point-of-sale an authorization code from the network The network checks the customer’s account for a valid card number and sufficient funds A decline message is sent Does the merchant No back to the merchant; receive valid please request another authorization? form of payment Yes An approved message is sent to the merchant Did you know? Networks recommend retaining transaction documentation for the following timeframes: The merchant provides Discover – 3 years; Amex – 2 goods and/or services years; Visa – 13 months; Mastercard – 13 months; All Networks – 7 years for Healthcare industry merchants. The merchant batches sales at end of day The acquirer funds the merchant Simultaneously, the issuing bank debits the customer’s account and sends funding to the acquirer Obtaining Customer Signatures The introduction of EMV* (Chip) technology has caused the signature requirement to outlive its purpose. Therefore, the networks are eliminating the requirement. As a result of the elimination of the requirement, you may choose not to obtain a signature on electronically captured receipts for transactions at the POS, unless required by state law. You are, however, able to continue to collect signatures to ensure the Customer’s acceptance of terms, conditions, policies or agreement to the quality of goods or services. If you choose not to collect signatures, refund policies must still be printed on the transaction receipt to ensure customers are aware of the refund guidelines. 5 | Fiserv Confidential Dispute Best Practices Retrieval Overview A retrieval, also referred to as an inquiry, is a request for transaction documentation. A retrieval received from a network does not mean that your account will be debited; however, if a retrieval request is not fulfilled properly, the request could result in a non-representable chargeback. Your account may be debited, if you receive a non-representable chargeback. The Customer’s bank submits a retrieval request to satisfy a Customer’s need or to support a chargeback right. Each retrieval request includes a reason code explaining why the request was initiated. The following chart lists retrieval reason codes: Retrieval Process Flow Customer or Request is transmitted customer’s bank initiates through network channels retrieval request Merchant Services receives the retrieval request and enriches it with transaction data Is Merchant No Merchant Services sends Services able to complete a request to merchant substitute draft? Merchant fulfills Ye s the request Merchant Services fulfills request to network Fulfillment of a Retrieval Request: Respond to the request for transaction documentation Ensure that each response includes the original notification, as well as the retrieval case number prior to the due date so that Merchant Services can fulfill the request in a timely manner Ensure the case number