Discover Chargeback Reason Code DC: Dispute Compliance

Table of Contents

1. What is Discover chargeback reason code DC?
2. What causes code DC chargebacks?
3. What's the time limit to respond to code DC chargebacks?
4. How can merchants fight code DC chargebacks?
5. How can merchants prevent code DC chargebacks?
6. About Discover chargeback reason codes

Merchants who receive a chargeback for a transaction placed with a Discover card may encounter reason code DC, 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 usually merchant error. Merchants who believe they have received an invalid chargeback under reason code DC may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Discover chargeback reason code DC?

Discover chargeback reason code DC falls under the “Dispute Compliance” category. The shorthand description is “Dispute Compliance.” This is a reason code that Discover may invoke when they find that the merchant is not complying with the applicable Operating Regulations pertaining to a particular transaction.

All merchants who accept Discover card transactions must comply with the Operating Regulations put forth to govern transaction processing, card-not-present handling requirements, rules for specific merchant category codes, cash advances, settlement, confidentiality, fees, fraud prevention, and of course, cardholder disputes.

This reason code serves as a catch-all for chargebacks where Discover believes the merchant failed to comply with the applicable regulations.

Typically this reason code is used for chargebacks initiated by Discover rather than the cardholder.

What causes code DC chargebacks?

Code DC chargebacks are caused by the merchant failing to comply with some aspect of Discover's rules. The most common error is failing to respond to a retrieval request.

In their Operating Regulations manual, Discover states that any card transaction that does not comply with the obligations imposed on the merchant per the Program Documents may be disputed by Discover and charged back to the merchant.

When a problematic transaction is discovered, either by a cardholder complaining to customer service or by Discover conducting an internal audit, they will send a retrieval request to the merchant. Discover refers to these requests as “Dispute Notices.”

Merchants who fail to respond to a Dispute Notice or who otherwise violate the rules laid out in the Operating Regulations may receive a reason code DC chargeback.

What's the time limit to respond to code DC chargebacks?

The acquirer or merchant has 30 days to respond to a chargeback filed under reason code DC.

How can merchants fight code DC chargebacks?

Since code DC chargebacks are based on a violation of Discover's rules rather than a claim by a cardholder, merchants usually won't be able to fight them successfully. The only exception is when there's been an error and the merchant didn't violate any rules.

How can merchants prevent code DC chargebacks?

Merchants can prevent code DC chargebacks by ensuring that they have a thorough understanding of Discover's rules and respond promptly to any Dispute Notice they receive.

It is extremely important to respond to Dispute Notices and all other types of retrieval requests promptly and with all the relevant requested information and documents. A retrieval request is often a chance to avoid a chargeback by answering the issuer’s questions and providing contextual information that shows why the transaction was valid and should not be charged back to the cardholder.

Dispute Notices come with a deadline, and it's always best to reply well before that date. The more time the issuer has to review your evidence and consider your perspective, the better chance you’ll have of them deciding the dispute in your favor and allowing you to keep your revenue.

These tips can help you avoid Dispute Compliance chargebacks:

• Keep accurate and legible transaction records in case you ever need them as evidence in a dispute.
• Preserve copies of customer correspondence for the same reason.
• Read Dispute Notices carefully and provide the information and documents requested in a timely manner.
• Follow all the rules and regulations specified in your agreement with the card network.
• Pay attention to new regulations and card network mandates as they are released, and update your processes to stay in compliance with any new or modified rules.

About Discover 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 if 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, Discover specifies 26 reason codes under the categories of Fraud, Not Classified, Authorization, Expired, Processing Errors, Services, and Dispute Compliance. Most of Discover’s reason codes are a two-letter abbreviation of the dispute description.

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.

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