Merchants who receive a chargeback for a transaction placed with a Visa card may encounter reason code 85, 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 either friendly fraud or merchant error. Merchants who believe they have received an invalid chargeback under reason code 85 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is Visa Chargeback Reason Code 85?
Visa chargeback reason code 85 falls under the “Consumer Disputes” category. The shorthand description is “Credit Not Processed.” This reason code indicates that the cardholder had reason to believe they were going to receive a refund, but no credit to their account has yet been processed.
Various factors may determine whether the cardholder is entitled to a refund per the rules for this chargeback. The chargeback applies to the following scenarios when the merchant fails to disclose a limited return or cancellation policy, or discloses it but does not follow their own policy:
- The cardholder received a credit or voided transaction receipt, but no refund has been processed.
- The cardholder returned merchandise or cancelled services (including timeshare rentals and guaranteed reservations), but no refund has been processed.
In Visa’s Europe Region, this chargeback will apply when the returned merchandise or cancelled services ae part of an off-premises distance selling contract as established in the EU Directive, where a 14-day cancellation period is mandated.
This chargeback will also apply when an Original Credit Transaction was not accepted because the cardholder refused the Original Credit Transaction, or Original Credit Transactions are prohibited by the laws or regulations in the cardholder’s region.
What Scenarios Might Lead to This Chargeback?
When this chargeback is the result of merchant error, it is usually because the merchant simply forgot or neglected to process a credit transaction that was promised to a customer. It may also occur when the merchant refuses to grant a refund in defiance of their own policies.
This chargeback can also result from friendly fraud.
Sometimes customers will mistakenly believe they are entitled to a refund, but in fact they are not because they did not follow the correct return or cancellation policies. Other cardholders may deliberately make false claims about being entitled to a refund to trick their issuer into granting them an unwarranted chargeback.
What are the Important Timeframes?
For most disputes, Visa recommends 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 the following:
- A transaction receipt or other documents showing that the merchant fully and properly disclosed their return policy to the cardholder at the time of sale, and that per your policy they are not entitled to a credit or refund.
- Proof that the cardholder agreed to your terms of sale and did not return merchandise or cancel services in accordance with the agreed-upon terms.
- If you have already processed a refund or in-store credit for the transaction in question, provide documentation that proves you have credited the cardholder’s account.
How Can Merchants Prevent this Chargeback Code?
Good communication goes a long way toward preventing chargebacks of this nature. Your return and refund policies should be easy to understand and clearly conveyed to your customers.
When you agree to grant a refund to a customer because of a product return or some other customer service issue, be transparent and accurate about when they can expect to see a credit to their account, and follow through on your assurances.
The following best practices can help you avoid this kind of chargeback:
- Process all credit vouchers promptly, ideally so that the credit will appear on the cardholder’s next monthly statement.
- Disclose your refund policies on your sales drafts or receipts. If possible, print them prominently near the line where the cardholder places their signature.
- Make sure your cancellation, returns, and refund policies are easy to find and comprehend.
- Stick to the promises you make to provide refunds and credits, especially if a specific timeframe is mentioned.
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.