MasterCard Chargeback Reason Code 4860: Cardholder Disputes

chargeback reason code 4860Merchants who receive a chargeback for a transaction placed with a Mastercard card may encounter reason code 4860, 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 4860 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Mastercard Chargeback Reason Code 4860?

Mastercard chargeback reason code 4860 falls under the “Cardholder Disputes” category. The shorthand description is “Credit Not Processed.” This is now an obsolete reason code, but merchants may still see it in use at times. It was used to cover situations where merchant told the cardholder that they were going to be receiving a refund, but the cardholder never received a credit back to their account.

Currently, Mastercard is in the process of updating their chargeback regulations and reason codes. Issuers are still allowed to use reason code 4860, 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 that a customer returned a product or brought some other complaint to a merchant, was promised that a refund would be forthcoming, and after a reasonable amount of time had passed, they still had not received a credit.

Miscommunications, merchant error, unresponsive customer service, and friendly fraud are all potential causes for this type of chargeback. Cardholders generally entitled to a refund when they return a product, refuse delivery, receive a nonfunctional or damaged product, or experience some other issue which qualifies them for a refund under the merchant’s sales policy. It’s always in the best interests of the merchant to provide a timely refund under such circumstances, as this can help to avoid disputes and chargebacks and refunds are always a cheaper and better option than dealing with a chargeback.

When a cardholder is told they will be receiving a refund, and enough time elapses without the credit being processed, they are entitled to file for a chargeback.

However, it is not uncommon for customers to overlook a posted credit, which may result in a friendly fraud chargeback being filed in error. Some customers may engage in friendly fraud on purpose, asking their issuers for this chargeback when they were never promised a refund at all.

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 the cardholder’s claims are false, meaning that no credit was due or the credit has already been processed.

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 you have already issued the credit to which the cardholder was entitled.
  • Evidence that the cardholder has not attempted to return the merchandise.
  • Evidence that the cardholder’s claim to a refund is not allowed under your sales policies or any terms of agreement that they signed.

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 the cardholder did not receive credit for a refund that was promised to them.

The following tips can help you avoid this kind of chargeback:

  • Post your return and refund policies where customers will see them, and make them easy to follow and understand.
  • Accept returns and issue refunds promptly.

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.