Merchants who receive a chargeback for a transaction placed with an American Express card may encounter reason code M49, 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 M49 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is American Express Chargeback Reason Code M49?
American Express chargeback reason code M49 falls under the “Inquiry/Miscellaneous” category. The shorthand description is “Vehicle Rental – Theft or Loss of Use.” American Express offers certain protections to its card members, among which is financial coverage in the event that a vehicle they rented is stolen or rendered unusable. However, some rental agencies may be unaware of this coverage and the fact that American Express may reimburse them directly, and so they may bill the customer for costs covered by American Express. In this eventuality, the customer may request and receive a chargeback.
Depending on the card, American Express may cover up to $75,000 of the value of a rented vehicle that suffers theft or loss of usability.
This chargeback reason code exists to protect renters who receive additional charges for covered costs.
What Scenarios Might Lead to This Chargeback?
The valid use case for this chargeback would be when a rented vehicle is stolen or otherwise made unavailable for use, causing the rental merchant to incur costs. The merchant bills the customer directly for these costs despite the fact that the customer is an American Express card member and the costs will be covered. The customer would then be able to dispute these charges and get their money back.
This chargeback can occur as friendly fraud when unrelated charges are misidentified as covered costs and the cardholder disputes them.
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 may be able to fight this chargeback if it was filed for the wrong reasons—for instance, if the charges were for other costs that the renter agreed to pay which were not covered or reimbursed by American Express. For the best odds of winning this chargeback, submit the following evidence:
- Proof that the charge was valid, and not for theft, loss of use, or other fees related to the theft or loss of use of the rental vehicle.
- Proof that a credit which directly offsets the disputed charge has already been processed.
How Can Merchants Prevent this Chargeback Code?
One of American Express’s selling points over the years has been the features and conveniences it extends to travelers. Merchants in the car rental business should be aware of the specific benefits American Express extends toward card members who are renting vehicles, and should take care to follow any recommended procedures and, if necessary, contact American Express directly if they are unsure how their theft and loss of use coverage works.
While it is understandable that rental merchants would want to recover the costs of an inoperable, lost, or stolen vehicle right away, rushing to place an inappropriate charge that will ultimately be subject to a chargeback is counterproductive.
These tips can help you avoid chargebacks that might result from these situations:
- Maintain records that prove any charges incurred at the same time as a theft or loss of use incident were valid and not directly related to said incident.
- Do not charge covered customers separate fees for such an incident—these would be covered under American Express’s policy and would not be considered valid charges.
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.