Merchants who receive a chargeback for a transaction placed with an American Express card may encounter reason code M10, which indicates a disputed transaction that the cardholder does not believe they should be responsible for paying. The actual underlying cause of this chargeback is usually either friendly fraud or merchant error. Merchants who believe they have received an invalid chargeback under reason code M10 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is American Express Chargeback Reason Code M10?
American Express chargeback reason code M10 falls under the “Inquiry/Miscellaneous” category. The shorthand description is “Vehicle Rental – Capital Damages.” This chargeback comes into play when a cardholder is charged for damages to a rented vehicle. They can file for this chargeback if the total damages charged exceeds 110% of the amount stipulated in the rental agreement, or if the merchant made an error in calculating the total.
It is not unusual to see this chargeback filed when the cardholder misunderstands their liability for capital damages, or when they disagree with the charges for some other reason.
What Scenarios Might Lead to This Chargeback?
When an individual rents a vehicle from a car rental agency, the agreement they sign will usually contain provisions under which the renter will agree to pay a certain portion of any damages that are sustained by the vehicle while it is in their possession, unless they pay for additional—and optional—insurance coverage.
Estimates for the cost of capital damages to a vehicle can vary considerably depending on many factors. Many people have had the experience of receiving starkly different repair estimates at two different body shops. For this reason, it is not uncommon for cardholders to object to the capital damages charges that result when they get in an accident with a rented vehicle.
This chargeback may be valid if the merchant’s charge exceeds the amount that the customer agreed to pay when they first rented the vehicle and signed a rental agreement. Or, if the customer can show that the merchant did not calculate the charges correctly. Mere disagreement, however, is not sufficient grounds for this chargeback to stand. If the customer failed to read or understand the terms of their rental agreement, or if they are objecting to a reasonable charge that is within the limits spelled out in the agreement, the chargeback may be invalid and could be considered friendly fraud.
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 and beat this chargeback if they can prove that the capital damages charge was valid and within the limits that the customer agreed to pay in the event of an accident. For the best chance of winning this chargeback, submit one or more of the following pieces of evidence:
- Proof that the cardholder agreed to, and signed, an acknowledgement of responsibility for capital damages and that the charge did not exceed 110% of the agreed-upon amount.
- Proof that a credit which directly offsets the disputed charge amount has already been processed.
How Can Merchants Prevent this Chargeback Code?
Customers who decline damage insurance at the time they are renting a vehicle should be carefully informed of the extent of their liability in the event that an accident that causes capital damages.
Merchants should obtain reasonable repair estimates when calculating these charges and ensure that the total charge is within the limit that the customer agreed to pay.
These tips can also help you avoid chargebacks related to capital damages:
- Keep records that the cardholder agreed to and signed an acknowledgment of responsibility for capital damages.
- Make sure total charges do not exceed 110% of the agreed-upon amount.
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.