MasterCard Chargeback Reason Code 4841: Cardholder Disputes

chargeback reason code 4841Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4841, 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 4841 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Mastercard Chargeback Reason Code 4841?

Mastercard chargeback reason code 4841 falls under the “Cardholder Disputes” category. The shorthand description is “Canceled Recurring or Digital Goods Transactions.” This is now an obsolete reason code, but merchants may still see it in use at times. It was used to cover disputes related to recurring billings or digital goods.

The typical claim under this reason code would be that the merchant charged the cardholder after their subscription was canceled, or without their prior consent.

Currently, Mastercard is in the process of updating their chargeback regulations and reason codes. Issuers are still allowed to use reason code 4841, but this code will soon be retired.

Issuers have been instructed to use reason code 4853 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 related to subscription services, recurring billing transactions, or digital goods purchases.

Merchant error often leads to these chargebacks. This can happen when a customer sends in a cancellation request via email or an online form and the merchant does not process the cancellation before charging the cardholder for their next scheduled payment. This chargeback is also appropriate when the merchant raises the amount of a recurring payment without obtaining approval from the cardholder beforehand.

Friendly fraud, however, is behind a lot of these chargebacks.

All too often, cardholders who have a hard time finding cancellation links or getting ahold of customer service will simply dispute the transactions instead of trying to figure things out with the merchant.

Cardholders who cancel too late to avoid the final charge will often dispute it, believing that they are entitled to a refund because they received no benefit—even though the charge was legitimate according to their agreement with the merchant.

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

What are the Important Timeframes?

Mastercard recommends that its cardholders file their dispute within 120 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:

  • Proof that the transaction was not a recurring transaction.
  • Proof that the cardholder did not cancel according to the terms of the agreement they entered into.
  • Proof that the cardholder is still using the goods or services paid for by the disputed transaction.
  • 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 because of a complaint regarding a recurring billing or digital goods purchase.

The following best practices can help you avoid this kind of chargeback: 

  • Make sure the cardholder reads and signs an agreement to abide by your terms of service before processing their transaction.
  • Provide the cardholder with an easy and accessible way to cancel their subscription online.

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.