Handling Specific Dispute Types

  • Published on May 13, 2025
  • 13 minute(s) read
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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:

  • 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.

EMV Counterfeit Fraud

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

  • 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.

  • 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:

  1. Make sure the merchant's terminal is EMV-compliant and the correct Cardholder Verification Method (CVM) was obtained. For example: signature, PIN, etc.

  2. Obtain an imprint (either electronic or manual) for every card present transaction.

  3. Train merchant staff on the proper procedures for handling terminal issues.

EMV Non-Counterfeit Fraud

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

  • 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:

  1. Make sure the merchant's terminal is EMV-compliant and the correct Cardholder Verification Method (CVM) was obtained. For example: signature, PIN, etc.

  2. Obtain an imprint (either electronic or manual) for every card present transaction.

  3. Train merchant staff on the proper procedures for handling terminal issues.

Other Fraud Card Present Environment / Condition

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

  • 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.

  • 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:

  1. Make sure all card-present transactions are either chip-read or magnetic stripe-read.

  2. If merchants are unable to swipe or read the chip, make a manual imprint of the card.

Other Fraud Card-Not-Present Environment / Condition

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

  • 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:

  1. 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.

  2. Always request authorization for mail orders, telephone orders, internet, and recurring transactions, regardless of the dollar amount.

  3. Always make sure the Merchant properly identifies card present and card absent transactions.

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:

General Authorization Dispute

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

  • 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.

Merchant Processing Error

Why did I get this notification?

The Cardholder disputes transaction or payment details.

What caused the dispute?

  • The Cardholder claims the transaction was sent with an incorrect transaction code. i.e. a sale that should have been a refund.

  • Cardholder claims they were charged in an incorrect currency amount or did not agree with Dynamic Currency Conversion (DCC).

  • The Cardholder claims it was charged to an incorrect account number.

  • The Cardholder claims they were charged an incorrect amount.

  • The Cardholder claims they were charged multiple times.

  • Cardholder claims they paid by other means. i.e. check or cash.

Scenario Response Options

  • The transaction was properly processed according merchant's systems or the terminal?: Provide a copy of the authorization record or records and any additional transaction documentation.

  • The transaction was processed incorrectly?: 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:

  1. Always authorize every transaction by the Cardbrand Rules.

  2. The recommendation is that all transactions be chip-read.

  3. Train staff on the proper procedures for handling terminal issues.

  4. Keep records of transactions especially when circumstances such as different currency rates are involved.

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:

Product or Service Quality

Why did I get this notification?

The Cardholder disputes details regarding services rendered or the quality of the goods.

What caused the dispute?

  • Cardholder claims the merchandise or services were not received.

  • Cardholder claims that merchandise or services were defective/unsatisfactory quality.

  • Cardholder claims they received counterfeit merchandise.

Scenario Response Options

  • Cardholder claims the merchandise or services were not received: Provide a copy of the authorization record or records and any additional transaction documentation such as proof of services or delivery.

  • The specified delivery date has not yet passed: Provide documentation to support the expected delivery date or provide documentation to support that you were able to provide merchandise or service and that the Cardholder canceled before the delivery date.

  • Cardholder claims that merchandise or services were defective/unsatisfactory quality: Provide specific information (invoice, contract, etc.) to refute the Cardholder's claims. Quality disputes are where the customer does not agree with the condition of merchandise or service received (e.g., a car repair situation or the quality of a hotel room). There may be instances where you will need to obtain a neutral third-party opinion to help corroborate your claim against the Cardholder. Provide as much specific information and documentation as possible to refute the Cardholder's claims. It is recommended that you address each point that the Cardholder has made. Evidence of repairing or replacing the issue.

  • 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:

  1. Always authorize every transaction by the Cardbrand Rules.

  2. The recommendation is that all transactions be chip-read.

  3. Train staff on the proper procedures for handling terminal issues.

  4. Keep records of transactions including proof of delivery, and documentation/confirmation of satisfactory completion.

  5. Evidence that the same device and Card used in the disputed Transaction were used in any previous Transaction that was not disputed.

Payment Issue

Why did I get this notification?

The Cardholder disputes details regarding payments made or refunds not issued for a product or service.

What caused the dispute?

  • Cardholder claims they were charged for a subscription, service, or good that was already canceled.

  • Cardholder claims they have not received Cash, Gift Card, or other Transaction Value.

Scenario Response Options

  • Code 10.1: EMV Liability Shift Counterfeit Fraud.

  • Code 10.2: EMV Liability Shift Non-Counterfeit Fraud.

  • Code 10.3: Other Fraud: Card-Present Environment / Condition.

  • Code 10.4: Other Fraud: Card-absent Environment / Condition.

  • Code 10.5: Visa Fraud Monitoring Program.

  • Code 11.1: Card Recovery Bulletin.

  • Code 11.2: Declined Authorization.

  • Code 11.3: No Authorization.

  • Code 12.1: Late Presentment.

  • Code 12.2: Incorrect Transaction Code.

  • Code 12.3: Incorrect Currency.

  • Code 12.4: Incorrect Account Number.

  • Code 12.5: Incorrect Amount.

  • Code 12.6: Duplicate Processing / Paid by Other Means.

  • Code 12.7: Invalid Data.

  • Code 13.1: Merchandise / Services Not Received.

  • Code 13.2: Canceled Recurring Transaction.

  • Code 13.3: Not as Described or Defective Merchandise / Services.

  • Code 13.4: Counterfeit Merchandise.

  • Code 13.5: Misrepresentation.

  • Code 13.6: Credit Not Processed.

  • Code 13.7: Canceled Merchandise / Services.

  • Code 13.8: Original Credit Transaction Not Accepted.

  • Code 13.9: Non-receipt of Cash or Load Transaction Value.

Future Mitigation

To avoid this type of dispute scenario in the future:

  1. Always authorize every transaction by the Cardbrand Rules.

  2. The recommendation is that all transactions be chip-read.

  3. Train staff on the proper procedures for handling terminal issues.

  4. Keep records of transactions including proof of delivery, and documentation/confirmation of satisfactory completion.

  5. Evidence that the same device and Card used in the disputed Transaction were used in any previous Transaction that was not disputed.

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:

Fraud

  • 10.1: EMV Liability Shift Counterfeit Fraud.

  • 10.2: EMV Liability Shift Non-Counterfeit Fraud.

  • 10.3: Other Fraud: Card-Present Environment / Condition.

  • 10.4: Other Fraud: Card-absent Environment / Condition.

  • 10.5: Visa Fraud Monitoring Program.

Authorization

  • 11.1: Card Recovery Bulletin.

  • 11.2: Declined Authorization.

  • 11.3: No Authorization.

Processing Error

  • 12.1: Late Presentment.

  • 12.2: Incorrect Transaction Code.

  • 12.3: Incorrect Currency.

  • 12.4: Incorrect Account Number.

  • 12.5: Incorrect Amount.

  • 12.6: Duplicate Processing / Paid by Other Means.

  • 12.7: Invalid Data.

Customer Dispute

  • 13.1: Merchandise / Services Not Received.

  • 13.2: Canceled Recurring Transaction.

  • 13.3: Not as Described or Defective Merchandise / Services.

  • 13.4: Counterfeit Merchandise.

  • 13.5: Misrepresentation.

  • 13.6: Credit Not Processed.

  • 13.7: Canceled Merchandise / Services.

  • 13.8: Original Credit Transaction Not Accepted.

  • 13.9: Non-receipt of Cash or Load Transaction Value.

MasterCard Chargeback Codes

MasterCard has four dispute categories: Fraud, Authorization, Processing Error, and Cardholder Dispute:

Fraud

  • 4837: No Cardholder Authorization.

  • 4840: Fraudulent Processing of Transactions.

  • 4849: Questionable Merchant Activity.

  • 4863: Cardholder Does Not Recognize / Potential Fraud.

  • 4870: Chip Liability Shift.

  • 4871: Chip / PIN Liability Shift--Lost / Stolen / Never Received Issue (NRI) Fraud.

Authorization

  • 4807: Warning Bulletin File.

  • 4808: Authorization-Related Chargeback.

  • 4812: Account Number Not on File.

Processing Error

  • 4831: Transaction Amount Differs.

  • 4834: Point of Interaction Error.

  • 4842: Late Presentment.

  • 4846: Incorrect Currency Code.

Cardholder Dispute

  • 4841: Canceled Recurring or Digital Goods Transactions.

  • 4853: Cardholder Dispute.

  • 4854: Cardholder Dispute - Not Elsewhere Classified.

  • 4855: Goods or Services Not Provided.

  • 4859: No Show / Addendum / ATM Dispute.

  • 4860: Credit Not Processed.

American Express (AMEX) Chargeback Codes

AMEX has four dispute categories: Fraud, Authorization, Processing Error, and Cardholder Dispute:

Fraud

  • FR2: Fraud Full Recourse Program.

  • FR4: Immediate Chargeback Program.

  • FR6: Partial Immediate Chargeback Program.

  • F10: Missing Imprint.

  • F14: Missing Signature.

  • F24: No Cardmember Authorization.

  • F29: Card Not Present.

  • F30: EMV Counterfeit.

  • F31: EMV List / Stolen / Non-received Inquiry / Miscellaneous.

  • R03: Insufficient Reply.

  • R13: No reply.

  • M01: Chargeback Authorization.

Authorization

  • A01: Charge amount exceeds the authorization amount.

  • A02: No valid authorization.

  • A08: Authorization approval expired.

Processing Error

  • P01: Unassigned Card Number.

  • P03: Credit Processed as Charge.

  • P04: Charge Processed as Credit.

  • P05: Incorrect Charge Amount.

  • P07: Late Submission.

  • P08: Duplicate Charge.

  • P22: Non-Matching Card Number.

  • P23: Currency Discrepancy.

Cardholder Dispute

  • C02: Credit not processed.

  • C04: Goods/services returned or refused.

  • C05: Goods/services canceled.

  • C08: Goods / Services Not Received or Only Partially Received.

  • C14: Paid by Other Means.

  • C18: "No Show" or Car Deposit Canceled.

  • C28: Canceled Recurring Billing.

  • C31: Goods / Services Not as Described.

  • C32: Goods / Services Damaged or Defective.

  • M10: Vehicle Rental - Capital Damages.

  • M49: Vehicle Rental - Theft or Loss of Use.

Discover Chargeback Codes

Discover has five dispute categories: Fraud, Authorization, Processing Error, Cardholder Dispute, and Not Classified:

Fraud

  • UA01: Fraud / Card Present Environment.

  • UA02: Fraud / Card-Not-Present Environment.

  • UA05: Fraud / Counterfeit Chip Transaction.

  • UA06: Fraud / Chip-and-Pin Transaction.

  • UA10: Request Transaction Receipt (swiped card transactions).

  • UA11: Cardholder claims fraud (swiped transaction, no signature).

Authorization

  • AT: Authorization Non-compliance.

  • DA: Declined Authorization.

  • EX: Expired Card.

  • NA: No Authorization.

Processing Errors

  • IN: Invalid Card Number.

  • LP: Late Presentment.

Cardholder Dispute

  • AA: Cardholder Does Not Recognize.

  • AP: Canceled Recurring Transaction.

  • AW: Altered Amount.

  • CD: Credit Posted as Card Sale.

  • DP: Duplicate Processing.

  • IC: Illegible Sales Data.

  • NF: Non-receipt of Cash from ATM.

  • PM: Paid by Other Means.

  • RG: Non-Receipt of Goods or Services.

  • RM: Quality Discrepancy.

  • RN2: Credit Not Received.

Not Classified

  • NC: Not Classified