Merchants who receive a chargeback for a transaction placed with an American Express card may encounter reason code A08, which indicates an improperly authorized transaction that the cardholder does not believe they should be responsible for paying. The actual underlying cause of this chargeback is often merchant error or friendly fraud. Merchants who believe they have received an invalid chargeback under reason code A08 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is American Express Chargeback Reason Code A08?
American Express chargeback reason code A08 falls under the “Authorization” category. The shorthand description is “Authorization Approval Expired.” This means that while the merchant did seek and receive a valid authorization approval message for the transaction, they completed processing the transaction after the authorization had expired.
Valid authorizations place funds “on hold” until the transaction can be completed. The exact duration of a valid authorization will vary depending on the Merchant Category Code and other circumstances—some merchants may have good reasons to need long authorization holds.
Time limits ranging from one to thirty days are not uncommon, but merchants need to know the specific timeframes that apply to them.
What Scenarios Might Lead to This Chargeback?
The typical scenario for this chargeback is simply that a merchant obtained authorization for a transaction but did not finish processing it until after the authorization had expired. This might occur due to unforeseen delays or errors. Sometimes merchants take a card as payment but promise not to charge it until service is complete or the order has shipped. If this takes a long time, there may be temptation to just push the charge through instead of contacting the customer and giving them a chance to rethink their purchase and back out of it. This is a bad idea, because if the authorization has expired the customer has a valid reason to request a chargeback—and a chargeback is always worse for a merchant than a lost sale.
Friendly fraudsters may try to obtain a chargeback with this reason code when they receive a delayed charge, gambling on the hope that the bank will take them at their word and the merchant won’t bother fighting it.
What are the Important Timeframes?
The acquirer and/or merchant have 20 days to respond to this chargeback after it is filed. No special timeframes apply to the cardholder.
How Can Merchants Fight this Chargeback Code?
Merchants can fight this chargeback if the cardholder’s claims are false and the transaction was processed within the window of time during which the authorization was valid. Your chargeback response must include at least one of the following elements:
- If you processed the transaction correctly within the allowable timeframe, provide proof of the valid authorization approval.
- If you have already processed a refund for the transaction in question, provide documentation that proves you have credited the cardholder’s account.
How Can Merchants Prevent this Chargeback Code?
The best practice is to charge cards immediately after authorization approval has been received. If this is not always possible or feasible for your business, it is important to know exactly what your authorization timeframes are and track them carefully. Never take the risk of processing a transaction after its authorization has expired, even for your most loyal customers. It may be better to plan on offering a prompt refund if you’re worried about delays or other issues impacting fulfillment, rather than delaying an authorized charge. Follow the guidelines below to protect yourself from disputes and chargebacks related to this reason code:
- Make sure to send completed transactions to your payment processor within the timeframe specified in your merchant agreement.
- A good practice is to submit transactions on the day of sale, or as soon as possible.
- If delays are inevitable and you have exceeded the allowable timeframe, reach out to the customer so you can obtain a new authorization approval.
About American Express Chargeback Reason Codes
Reason codes are alphanumeric codes that provide the justification for granting a chargeback. Pursuant to the Fair Credit Billing Act of 1974, cardholders have the right to dispute unauthorized or erroneous charges and issuing banks must reverse a disputed transaction of the cardholder’s claim is valid.
When a cardholder contacts their issuing bank to dispute a transaction and receive a chargeback, the dispute is assigned a reason code that most closely matches the substance of the cardholder’s claims. The reason code provides the merchant and other stakeholders in the dispute with a concise explanation for why a chargeback has been granted.
Each card network—Visa, Mastercard, American Express, and Discover—defines and maintains their own unique set of reason codes, which are applied to disputes by the banks that issue credit and debit cards under their brands.
As both a card network and an issuer, American Express specifies 34 reason codes under the categories of Fraud, Authorization, Processing Errors, Card Member Disputes, and Inquiry/Miscellaneous. Each American Express reason code consists of one or more letters, indicating the category, and a number that identifies the specific dispute reason.
Understanding chargeback reason codes is one of the most essential parts of effective chargeback management. Identifying the chargeback reason code and the evidence required to fight it is the first step in chargeback representment, and analyzing your chargeback reason codes can provide you with insights into what types of disputes are causing you the most trouble. With this information, you can determine the root causes of your chargebacks and take action to prevent them from reoccurring.