Reason Code 4849: Exploring Mastercard’s (QMAP) Questionable Merchant Audit Program

Merchant fraud, while not as widely regarded as consumer fraud, remains a significant concern within the financial and e-commerce industry. For this process, fraudsters obtain a merchant account to process payments using stolen cards or, in most cases, convince real customers to make purchases that will never be delivered.

Mastercard looks to monitor and address merchants that pose potential risks to the payment ecosystem through the Global Merchant Audit Program (GMAP) compliance program. The program aims to identify and investigate merchants who exhibit suspicious or questionable behavior, like processing payments not compliant with Mastercard’s rules and regulations.

When merchants exhibit such behavior, they are added to the GMAP and receive a chargeback with the reason code 4849. Want to know how this chargeback works? Let’s delve deeper into the chargeback reason code 4849.

4849 Chargeback: Questionable Merchant Activity

The chargeback reason code 4849, often described as “Questionable Merchant Activity,” is another of Mastercard’s fraud-categorized reason codes implemented to address fraudulent merchants within the e-commerce and financial ecosystem. This reason code suggests that a merchant has conducted a transaction that violates Mastercard’s regulations.

More often than not, legitimate merchants encounter chargebacks caused by friendly fraud, third-party fraud, or internal errors. However, Mastercard recognizes the growing prevalence of fraudulent merchants and specifies some reason codes that address their activities.

Possible Causes for a 4849 Chargeback

Simply put, a 4849 chargeback occurs when Mastercard suspects a merchant of fraudulent activities, leading to their inclusion in the Questionable Merchant Audit Program.

In this instance, merchants process unauthorized transactions using payment credentials provided by customers who mistakenly believe they are dealing with legitimate businesses. The criteria for being placed in the audit program for merchants who are not fraudulently processing is based on 3 conditions:

1. At least $50,000 in transaction volume is processed during the case scope period.
2. At least five transactions submitted to one or more acquirers.
3. At least three of the following four conditions apply:
   • A fraud to sales ratio of 70% or greater.
   • At least 20% of all transactions submitted for authorization were declined or referred to the issuer.
   • The merchant has been submitting Mastercard transactions for fewer than six months.
   • The total number or total dollar amount of fraudulent transactions, authorization declines, and issuer referrals is greater than the total number or total dollar amount of approved transactions. In other words, there were more bad than good transactions submitted for authorization.

In other instances, merchants and cardholders can conspire to defraud their issuing banks. Here, card holders apply for a high-credit limit card, which they spend in full with a complicit merchant. Subsequently, the merchant and cardholder divide the profits and abandon the account without repaying the issuer. This practice can also be done using stolen payment cards by fraudulent merchants.

Merchants identified within the QMAP and GMAP compliance programs undergo increased scrutiny, and affected cardholders can recover funds lost in such scenarios. Mastercard typically releases a list of merchants subject to their compliance programs, including associated timeframes. Subsequently, the chargeback reason code 4849 is applied to fraudulent transactions or merchants featured in the GMAP.

Alongside instances involving fraudulent transactions and merchants flagged on Mastercard’s security list, Mastercard might also initiate a 4849 chargeback against the acquiring bank responsible for processing a transaction that violates restrictions under the GMAP and QMAP compliance programs.

Disputing Code 4849

While Mastercard may claim a transaction violates their regulations, this isn’t always the case. Merchants can effectively dispute a 4849 chargeback with compelling evidence demonstrating that the transaction was legitimate and did not violate any regulation. An Issuer can take up to 120 days to issue the chargeback and the merchant must respond to a 4849 chargeback within 15 days. Within this timeframe, merchants must present one or more of these pieces of evidence:

• Proof they are not listed in a Mastercard Announcement.
• Documents show that the transaction did not occur within the required time limit.
• Proof that the chargeback is invalid because it violates Mastercard requirements.
• In case of an error, proof that the cardholder has already been refunded for the transaction.

Preventing Mastercard Reason Code 4849

The chances of receiving a 4849 chargeback without engaging in fraudulent behavior are minimal. As such, merchants can prevent these chargebacks by performing transparent transactions and adhering to Mastercard’s regulations.

One way to ensure you adhere to Mastercard’s regulations is by integrating MidMetrics™ Chargeback Solution into your business processes. Take advantage of MidMetrics™’ concierge service, which can cancel customer accounts, address refunds on error transactions, and notify alert companies of resolutions. These services can help prevent any inaccurate transaction capable of resulting in a 4849 chargeback. 

That said, if you keep receiving this chargeback, it may be time to evaluate your business operations, payment protocols, and staff training. These assessments can help identify deficiencies and areas where improvements are needed to address the underlying issues. In this case, the following practices can help prevent a 4849 chargeback:

• Maintain every rule and regulation for all Mastercard transactions.
• Check transactions against the Mastercard Global Security Bulletin list before finalizing them.
• Maintain accurate, complete, and transparent transaction records.

Ultimately, understanding chargeback reason code 4849 is crucial for merchants looking to distinguish themselves from fraudsters. By familiarizing themselves with the reasons behind 4849 chargebacks and implementing proactive measures to mitigate risks, legitimate merchants can maintain their operations and trust within the payment ecosystem.

Conclusion

At first glance, Mastercard’s Questionable Merchant Audit Program (QMAP) and Global Merchant Audit Program (GMAP) seem very complex. However, they remain critical mechanisms for addressing fraudulent merchant activities by identifying merchants engaging in suspicious or non-compliant transactions.

Avoiding a 4849 chargeback emphasizes the need to adhere to Mastercard’s regulations, and understanding the nuances of the GMAP and QMAP programs can help merchants maintain trust within Mastercard’s payment ecosystem. Furthermore, businesses can also implement tools like MidMetrics™ Chargeback Solution to ensure compliance and transparency in their transactions.

Glossary

GMAP (Global Merchant Audit Program): Chargeback reason code 4849 that indicates a merchant’s transaction processing behavior has been identified as potentially risky and fraudulent.

QMAP (Questionable Merchant Audit Program): Similar to GMAP, but focuses on merchants with a higher risk profile or suspicious activity.