Decoding Mastercard Chargeback Reason Code 4863

No merchant wants to deal with chargebacks, but unfortunately, these can be inevitable, particularly for fraud related chargebacks like the reason code 4863. This type of chargeback comes from a cardholder contacting their issuer to report an unrecognized transaction, often with little evidence supporting this claim.

This reason code pertains to card-not-present (CNP) transactions, which makes it even more daunting for straightforward merchants. In 2022, CNP fraud accounted for $8.75 billion in payment fraud losses, and it’s on track to reach $10.16 billion this year. Such high numbers make card issuers more sympathetic to cardholder’s fraud claims, even with minimal corroborating evidence.

To be clear, some of these claims are legitimate and indicate true fraud, either by the merchant or a third party. However, it could also be a case of intentional or unintentional friendly fraud. Under these circumstances, merchants must understand how to dispute and prevent this chargeback in their business transactions. Let’s explore the reason code 4863 in detail.

Reason Code 4863: Cardholder Does Not Recognize – Potential Fraud

The reason code 4863 is classified under Mastercard’s Fraud Chargeback category and indicates that a cardholder does not recognize a card-not-present transaction and suspects it to be fraudulent. More often than not, these transactions involve online purchases where merchants don’t physically handle the buyer’s card before processing payments.

When cardholders suspect a fraudulent CNP transaction, they can complain to the issuer, potentially leading to this chargeback if the claim appears valid. However, it’s not always justified, and merchants have the opportunity to dispute them, typically within 45 days after the claim was made.

Possible Causes for a 4863 Chargeback

The prevalent cause of a 4863 chargeback stems from cardholders falling victim to fraud. Typically, cardholders realize they’ve been defrauded when they review their monthly bank statement and notice unfamiliar transactions. When the issuer’s attention is drawn to these charges, they will file a 4863 chargeback against the merchant.

Aside from true fraud, there’s also a possibility that cardholders may fail to recognize a legitimate transaction on their account statement. This scenario is called friendly fraud and mostly occurs when customers forget they made a purchase or any other legitimate transaction. 

Finally, it's also possible for merchants to issue a refund for an error, but the cardholder may still file for a chargeback or fail to retract their fraud claims even after receiving the refund.

Disputing Reason Code 4863

Considering the rise in CNP fraud, it’s very common for cardholders to lose their card details to fraudsters, which will undoubtedly lead to unrecognizable CNP transactions. As such, a customer’s claim of not recognizing a transaction will almost always be treated as valid by Mastercard.

However, true fraud isn’t always the case, and merchants who have received an unfair 4863 chargeback can easily fight it by presenting evidence that the claims are false. Here are some documents you need to dispute a reason code 4863 chargeback.

• Documents disputing the cardholder’s claim
• Proof that the chargeback is invalid because it’s against Mastercard’s requirements
• Proof of refund and that the cardholder no longer wishes to dispute the transaction.
• Evidence that helps identify the transaction as legitimate, including a description of the merchandise
• Documents showing you got a positive Address Verification Service (AVS) match
• Proof you submitted Mastercard SecureCode with the authorization request
• Documents showing the issuer approved the transaction.

Chargebacks are sometimes unavoidable, and with so many documents required for the representment process, disputing a 4863 chargeback can be tiring and time-consuming. However, you can significantly reduce the time spent fighting chargebacks with innovative tools like the MidMetrics™ Chargeback Representment Management tool, DisputeGenius.

DisputeGenius is a self-service solution that allows merchants to generate dispute letters that fit every possible situation, including a 4863 chargeback, without requiring extensive time, effort, or representment expertise. With this service, you can ease through the dispute process and recover more revenue. Book a demo today!

Preventing Mastercard Reason Code 4863

As we’ve seen, 4863 chargebacks usually result from true fraud and friendly fraud. While friendly fraud might be a little difficult to prevent, merchants can also implement proactive strategies to minimize this kind of chargeback. Here are some tips for preventing Mastercard reason code 4863:

• Implement effective anti-fraud tools in your transactions and e-commerce platforms.
• Include Mastercard SecureCode, Address Verification Service, and CVV in all transactions.
• Make billing descriptors clear and concise to avoid unintentional friendly fraud.
• Maintain updated documentation for both card-present and card-not-present transactions.

Mastercard takes fraud disputes very seriously, and handling these claims involves thorough investigation. As such, merchants must ensure they have every possible documentation regarding the transaction details to exonerate themselves from this chargeback. Also, implementing tools like MidMetrics™ Chargeback solutions can help prevent and successfully dispute fraudulent claims.

Conclusion

Fraud-categorized chargebacks like Reason Code 4836 can be a pain for merchants and are often inevitable when considering the possibility of friendly fraud. As a merchant, there’s a need to understand the nuances of these chargebacks and effective strategies that not only prevent them but also help dispute these chargebacks if they do occur.

The representment process shouldn’t be complex; with the right tools like MidMetrics™ and proper documentation, merchants can successfully dispute invalid chargebacks and protect their businesses from fraudulent claims.