American Express Chargeback Reason Code FR4: Inquiry/Miscellaneous

chargeback reason code fr4Merchants who receive a chargeback for a transaction placed with an American Express card may encounter reason code FR4, which indicates a disputed transaction that the cardholder does not believe they should be responsible for paying. The actual underlying cause of this chargeback may be true fraud, friendly fraud, or merchant error. Merchants who believe they have received an invalid chargeback under reason code FR4 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is American Express Chargeback Reason Code FR4?

American Express chargeback reason code FR4 falls under the “Inquiry/Miscellaneous” category. The shorthand description is “Immediate Chargeback Program.” This reason code is used when a cardholder disputes a transaction, and the merchant is currently enrolled in the American Express Immediate Chargeback Program.

American Express has several levels of fraud and chargeback monitoring programs for merchants with fraud or dispute activity that reaches certain thresholds.

One of the most significant consequences of these programs is that once a merchant is in one, they won’t be given any leeway when a dispute is raised. Instead, American Express will bypass the merchant inquiry step they might otherwise take and proceed directly to a special chargeback with a reason code related to the monitoring program the merchant is enrolled in.

In this case, the Immediate Chargeback Program is for merchants who have received an excessive number of chargebacks.

What Scenarios Might Lead to This Chargeback?

The root causes behind the disputes that lead to this chargeback can be anything—true fraud, friendly fraud, or merchant error. No matter what it is, the fact that the merchant is in the Immediate Chargeback Program means that this will be the reason code given.

Normally, American Express would send an inquiry to the merchant to review any details or relevant documents the merchant might have pertaining to the cardholder’s claims. If, after hearing out the merchant, they decided to proceed with the chargeback, they would assign it an appropriate reason code.

In this case, where the merchant has already been placed in the Immediate Chargeback Program, American Express skips the inquiry and assigns this special chargeback reason code.

Get the guide, Chargebacks 101: Understanding Chargebacks & Their Root Causes

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?

When a merchant receives one of these chargebacks, it is because they have let a chargeback problem grow out of control for so long that American Express will no longer give them any benefit of the doubt, but will instead automatically elevate any cardholder dispute to chargeback status. At this point, the merchant’s efforts must be focused on proactive dispute prevention so they can bring their chargeback ratio back down and get themselves removed from the monitoring program.

On the rare occasion that a merchant receives this chargeback in error, it can be fought by sending one of the following items as evidence:

  • Proof that you had not been placed in the Immediate Chargeback Program at the time of the chargeback.
  • Proof that a credit which directly offsets the disputed charge has already been processed.

How Can Merchants Prevent this Chargeback Code?

This monitoring program is all about a merchant’s chargeback ratio—the number of chargebacks they receive in a month relative to their total number of transactions.

To prevent further chargebacks and get out of the program, the merchant must employ a comprehensive and effective chargeback prevention strategy.

This can be accomplished by studying the root causes behind your chargebacks and making operational changes that minimize the likelihood of their recurrence. Many merchants will find it helpful to retain the services of a chargeback management firm at this juncture. These recommended practices can also help:

  • Issue credits and refunds within 7 calendar days.
  • Make sure your refund and cancellation policies clearly state a timeframe for when customer can expect refunds to be issued.

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.