Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 12.5, which indicates an improperly processed 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 12.5 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 12.5?
Visa chargeback reason code 12.5 falls under the “Processing Errors” category. The shorthand description is “Incorrect Amount.” When this reason code is invoked, it means that the cardholder is claiming that the amount of the disputed transaction is incorrect. This might indicate that the merchant manually keyed in the wrong amount, or that that the transaction amount was changed during processing without the cardholder’s knowledge or consent.
The amount of a sales transaction is usually a simple and straightforward thing to calculate and communicate to the cardholder. You have a listed price, sales tax, and possibly shipping and handling charges, and your cash register or checkout page should prominently display the grand total before the cardholder is asked to furnish payment.
But there are times when fees and other expenses may come into play after this point, when merchant’s don’t provide clear communication about these add-on charges and get the cardholder’s consent to pay them, it can result in hard feelings, disputes, and chargebacks.
What Scenarios Might Lead to This Chargeback?
At times, you will see friendly fraud chargebacks with this reason code because the cardholder wasn’t paying close attention to taxes, fees, and other add-on charges. While they may have agreed in the moment to pay the final bill, when they see the charge on their bank statement, it wasn’t what they were expecting so they blame the merchant and dispute the transaction.
Some cardholders may have a complaint about the merchant or their purchase and decide to “retroactively” revoke their consent and dispute the transaction based on the amount being too high. This is not a valid reason for a chargeback, and would also be considered friendly fraud.
However, it’s also not uncommon for this to be a legitimate chargeback due to merchant error, especially when transactions are keyed in by hand and numbers are transposed or misread.
What are the Important Timeframes?
For this dispute, Visa requires that its cardholders file their claim within 120 calendar days of placing the transaction. The acquirer and/or merchant have 20 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 or more of the following items:
- Documentation that proves that the cardholder agreed to pay the full amount of the posted 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?
Clear communications and careful payment processing habits are the best defenses against this chargeback. There really is no good reason to be cagey about the total amount you’re going to charge a cardholder for their purchase, so make sure they can’t miss the final price tag when it’s time to pay up—especially if additional charges have to be factored in. It’s also important to proceed with extreme caution whenever manual keying is on the table.
The following tips can help you avoid this kind of chargeback:
- Never change the amount of a transaction in the middle of processing unless you have obtained the cardholder’s consent to do so.
- Proceed with caution when entering handwritten transaction details. Contact the cardholder or other informed parties for confirmation, if possible.
- Always process cards using the magnetic stripe or EMV chip—manual keying should only be used in an emergency.
About Visa 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.
Visa specifies 46 reason codes under the categories of Fraud, Authorization, Point-of-Interaction Error, Consumer Disputes, and Processing Errors. Visa uses a numeric 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.