Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4849, 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 fraud or merchant error. Merchants who believe they have received an invalid chargeback under reason code 4849 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Mastercard Chargeback Reason Code 4849?
Mastercard chargeback reason code 4849 falls under the “Fraud” category. The shorthand description is “Questionable Merchant Activity.” This reason code typically means that a merchant has processed a transaction in violation of the Mastercard rules.
Most reputable merchants will only have to deal with chargebacks that result from friendly fraud, third-party fraud, or their own errors, but Mastercard does specify some reason codes that apply to fraudulent merchant activities.
What Scenarios Might Lead to This Chargeback?
Few things do more to undermine consumer confidence in online transactions and ecommerce than fraudulent merchants who process unauthorized charges against the payment credentials voluntarily submitted by their customers. Mastercard has instituted programs designed to identify and stop these bad actors, such as the Global Merchant Audit Program (GMAP) and the Questionable Merchant Audit Program (QMAP).
Another problematic scenario is when merchants and cardholders collude to defraud issuing banks. One way fraudsters do this is by applying for a card with a high credit limit, which they then spend in full with a colluding merchant. The merchant and the fraudster split the proceeds, and the fraudster abandons the account and never pays the issuer back. Similar schemes may also be carried out using stolen payment cards.
GMAP and QMAP place merchants suspected of engaging in such activities under heightened scrutiny and allow issuers to recover funds lost to this type of fraud. The acquiring banks used by these merchants may be subject to additional chargeback liability.
Mastercard sends out bulletins that identify the merchants subject to these programs, along with the applicable timeframes. Chargeback reason code 4849 applies to transactions that are listed in Mastercard Announcements under GMAP. This chargeback may also be filed against acquiring banks who process a transaction for a merchant that turns out to be listed in a Mastercard Global Security Bulletin for violating their restrictions under GMAP or QMAP.
This chargeback may also apply to transactions that violate any of Mastercard’s rules, or were placed by merchants who are on other Mastercard security lists.
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 the basis for it is incorrect. Your chargeback response should include the following:
- Proof that you are not listed in a GMAP Merchant Announcement.
- Proof that the transaction did not occur within the relevant timeframe.
- 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.
How Can Merchants Prevent this Chargeback Code?
Merchants in good standing with Mastercard, who follow the rules and obtain proper authorization before processing transactions, should have little to fear from chargebacks that relate specifically to merchant fraud.
If you find yourself receiving chargebacks like this and you don’t understand why, that may indicate a need to review your business operations, transaction processing procedures, and staff training to determine where things are going wrong.
Follow these tips to avoid this kind of chargeback:
- Always follow the applicable rules and regulations for Mastercard transactions.
- Keep complete, accurate, and legible transaction records.
- Check your transactions against the Mastercard Global Security Bulletin list before finalizing them.
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.