MasterCard Chargeback Reason Code 4854: Cardholder Disputes

chargeback reason code 4854Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4854, which indicates a disputed 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 4854 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Mastercard Chargeback Reason Code 4854?

Mastercard chargeback reason code 4854 falls under the “Cardholder Disputes” category. The shorthand description is “Cardholder Dispute—Not Elsewhere Classified (US Region Only).” The use of this reason code means that the cardholder is having some kind of dispute with the merchant, and has made a good-faith attempt to resolve it directly with them, but remains unsatisfied with the solutions the merchant is offering, or is being stonewalled or ignored by the merchant.

The specific details of the dispute are less relevant in this case than the fact that the merchant has not resolved them to the cardholder’s satisfaction.

The details may come into play if the chargeback is contested or taken to arbitration, but the cardholder’s claims of a lack of merchant response suffice to provide a basis for this chargeback.

What Scenarios Might Lead to This Chargeback?

Usually, when a customer contacts the merchant to resolve a problem that they are having with the goods or services they purchased, it’s a positive development: an opportunity to provide excellent customer service, offer a refund or some other remedy, and make the customer happy enough to give the merchant a second chance on future purchases.

Sometimes, however, this is not possible. The cardholder’s demands may be unreasonable and the merchant stands their ground on principle, or miscommunications and errors occur and the merchant drops the ball on resolving the issue in a timely manner. In these scenarios, the cardholder can demand a chargeback, and the burden of proof is on the merchant to show why they should not have to give the cardholder’s money back.

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, or 60 calendar days from the date the merchant was made aware of the cardholder’s complaint. 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 cardholder’s claims are false. Your chargeback response should include one of the following elements:

  • 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? 

In most cases, merchants should look at this chargeback as evidence that a breakdown in customer service occurred. There is rarely any good reason to let a dispute with a customer drag on long enough for this chargeback reason to be activated. It’s almost always faster, cheaper, and safer to resolve the issue by refunding the customer’s money.

In situations where this is not feasible because the disputed goods were of great value and would represent a significant loss of revenue, the best thing you can do is document your communications and actions very carefully and in great detail, and hope it suffices as compelling evidence to see you through the representment and arbitration processes.

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

  • Provide excellent, attentive, and empathetic customer service.
  • Provide quick and informative responses to all customer inquiries.
  • Whenever possible, provide a refund if the customer is asking for one.
  • Resolve customer complaints as quickly as you can, or at least no more than 60 calendar days from when they are brought to your attention.

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.