Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4807, 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 may be true fraud, friendly fraud, or merchant error. Merchants who believe they have received an invalid chargeback under reason code 4807 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Mastercard Chargeback Reason Code 4807?
Mastercard chargeback reason code 4807 falls under the “Authorization” category. The shorthand description is “Warning Bulletin File.” This is now an obsolete reason code, but merchants may still see it in use at times. It was used to cover various authorization-related issues, such as:
- The merchant did not obtain authorization approval for the transaction.
- The merchant sent in an authorization approval request after a card-present transaction was already processed.
- The merchant submitted a transaction after one or more “decline” authorization responses were sent.
- The issuing bank was not able to verify that authorization approval was granted at the time the transaction was processed.
Currently, Mastercard is in the process of updating their chargeback regulations and reason codes. Issuers are still allowed to use reason code 4807, but this code will soon be retired. Issuers have been instructed to use reason code 4808 instead.
What Scenarios Might Lead to This Chargeback?
In theory, merchants should not be seeing chargebacks bearing this reason code anymore. However, issuing banks are still permitted to use it. The usual cause of this chargeback would have been issues having to do with authorization.
Merchants should always request authorization approval prior to submitting a transaction. If a “decline” or some other ambiguous response is sent, the merchant should ask for an alternate form of payment instead of forcing the transaction through. While most payment systems are designed to stop merchants from running unauthorized transactions, there are ways to bypass these protections. When this happens, the issuer and cardholder have clear grounds to file a chargeback and the merchant has few valid defenses.
Sometimes, emergency situations may impel a merchant to disregard their proper authorization protocols, or the cardholder may plead with the merchant to make an exception because they have no other form of payments.
Merchants may have to rely on their own judgment on how to handle these situations, but they should know that they are leaving themselves vulnerable to fraudulent chargebacks when they make these exceptions.
What are the Important Timeframes?
Mastercard recommends that its cardholders file this dispute within 45 calendar days of placing the transaction. The acquirer and/or merchant have 45 calendar days to respond to this chargeback after it is filed.
How Can Merchants Fight this Chargeback Code?
Merchants can fight this chargeback if it is based on false or inaccurate information. While the reason code has been retired, chargebacks submitted under it are still valid and must be fought with relevant and compelling evidence. Your chargeback response should include one or more of the following items:
- Documentation that proves that the cardholder knowingly authorized the transaction.
- Evidence showing that the chargeback does not comply with Mastercard’s rules and is therefore invalid.
- If you have already processed a refund for the transaction in question, provide documentation that proves you have credited the cardholder’s account.
- If you have resolved the issue directly with the cardholder, provide proof, such as written correspondence, that proves they no longer wish to dispute the charge.
How Can Merchants Prevent this Chargeback Code?
Issuing banks aren’t supposed to use this code any more, but if you see a chargeback show up with this reason code, it means that a chargeback was filed on the premise that some authorization-related error or violation occurred.
Merchants should review the information for Mastercard chargeback reason code 4808 for prevention advice, as this is the reason code that is intended to replace 4807.
In the meantime, the following best practices can help you avoid this kind of chargeback:
- Always obtain authorization approval for every transaction you process.
- Always use EMV-enabled payment terminals.
- Do not force unauthorized transactions to go through.
About Mastercard 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.
Mastercard specifies 21 reason codes under the categories of Fraud, Authorization, Point-of-Interaction Error, and Cardholder Disputes. Mastercard uses a four-digit numbering scheme for its chargeback reason codes.
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.