MasterCard Chargeback Reason Code 4812: Authorization

chargeback reason code 4812Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4812, which indicates an improperly authorized transaction that the issuer 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 4812 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Mastercard Chargeback Reason Code 4812?

Mastercard chargeback reason code 4812 falls under the “Authorization” category. The shorthand description is “Account Number Not On File.” This is now an obsolete reason code, but merchants may still see it in use at times. It was used to cover unusual situations in which a transaction was processed against an account number that did not exist or was no longer on file and active with Mastercard.

Currently, Mastercard is in the process of updating their chargeback regulations and reason codes.

Issuers are still allowed to use reason code 4812, but this code will soon be retired.

Issuers have been instructed to use reason code 4808 instead, on the grounds that any transaction submitted against a non-existent or invalid account number cannot possibly have been authorized. The reason code used for authorization-related chargebacks would therefore be the appropriate reason code for these erroneous transactions.

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 a transaction that made it all the way to the issuing bank despite not involving a valid Mastercard account number.

It is unusual to see a transaction that involved an invalid card number, as the authorization approval step will provide a clear and immediate warning that the transaction cannot go through. However, there are ways to bypass authorization, which means that this error can occur under certain circumstances. Some examples would include:

  • The merchant manually keyed in the transaction details and forced submission without authorization.
  • The merchant processed a transaction against an expired or closed account.
  • A fraudster or prankster deliberately entered a fake credit card number at checkout, and the merchant’s payment processing system did not catch the error.
  • A software glitch or network issues corrupted the transaction data and caused an invalid number to be submitted.

Because all of these errors can be traced back to not following proper authorization protocols, Mastercard is now handling these scenarios as authorization-related chargebacks.

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

What are the Important Timeframes?

Mastercard recommends that its cardholders file their 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 the following:

  • Proof that the account number shown on the transaction receipt is correct and matches a current and valid card number assigned to the cardholder.

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 an unauthorized transaction was somehow processed against an account number that is no longer on file, or never existed in the first place. 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 4812.

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.