Understanding Discover Card Chargebacks: A Guide for Merchants

If you're a merchant who accepts Discover Card payments, understanding chargebacks is an essential part of managing your business. 

It can be difficult to make sense of the various timelines and responsibilities involved in the process, but it's important to have a basic understanding of how the system works so that you can properly protect yourself from fraudulent activities or disputes. 

In this guide, we'll cover everything merchants need to know about Discover Card chargebacks: what they are, why they happen, and how to reduce risks associated with them.

Understanding Discover Card Chargeback Process

Understanding the Discover Card chargeback process is an important step for all merchants to take. This process begins with the cardholder submitting a dispute to Discover regarding a charge and ends with either the merchant or cardholder being credited and/or debited, depending on the outcome. 

Merchant disputes must be reviewed within specific timeframes, and they may need to provide evidence to fight a claim. There are different types of chargeback reason codes; each code designates a certain type of dispute so that it can be tracked accurately. 

For instance, Reason Code 73 indicates that goods were misrepresented or never delivered at all while Reason Code 57 means that there was a duplicate processing of the same transaction. 

Merchants should also be aware that there are definite timeframes for responding to a chargeback; if these windows are not observed, the consequences for both parties can be significant. A comprehensive knowledge of this process is essential for ensuring successful transactions and happier customers!

Common Reasons for Discover Card Chargebacks

A chargeback is a process in which customers can dispute a transaction they have made and receive a refund. With Discover Card, chargebacks are filed with the issuing bank when customers believe they were charged for goods or services they did not receive. 

Common reasons for filing a Discover Card chargeback include unauthorized purchases, merchant disputes, damaged or unacceptable merchandise, the incorrect amount charged, and cash advance withdrawal requests that haven't been processed correctly. 

It's important to remember though that filing a chargeback against an individual merchant does not absolve the customer from any obligations to pay their credit card bill according to their contract with their issuing bank. 

If customers should experience any of these issues, they need to reach out to their issuing bank as soon as possible to ensure the successful processing of the chargeback.

How to Respond to a Discover Card Chargeback

When a merchant receives a Discover Card chargeback, it is important to respond promptly and provide the necessary evidence to dispute the chargeback. Here are the steps to take when responding to a Discover Card chargeback:

1. Review the chargeback notification: Merchants should carefully review the chargeback notification from Discover Card to understand the reason code and the timeframe for responding. It is important to note the deadline for responding to the chargeback.
2. Gather evidence: Merchants should gather all relevant documentation related to the transaction, including invoices, receipts, shipping information, and any communication with the customer. This evidence should support the merchant's case and prove that the transaction was valid and authorized.
3. Prepare a response: Based on the evidence gathered, merchants should prepare a clear and concise response to the chargeback. The response should address the reason code and provide a compelling argument for why the chargeback is not valid.
4. Submit the response: Merchants should submit the response to Discover Card within the timeframe provided in the chargeback notification. The response should be submitted through the chargeback management system or platform provided by Discover Card.
5. Follow up: Merchants should follow up with Discover Card to ensure that the response was received and is being reviewed. Merchants should also be prepared to provide additional information or evidence if requested.

When responding to a Discover Card chargeback, it is important to provide the following evidence:

• Proof of delivery: If the chargeback is related to a dispute over delivery, the merchant should provide proof of delivery, such as signed delivery confirmation.
• Authorization: Merchants should provide evidence that the customer authorized the transaction, such as a signed contract, email confirmation, or phone recording.
• Merchandise or service details: Merchants should provide evidence of the merchandise or service provided to the customer, such as product descriptions, order details, or service contracts.
• Refund policy: If the chargeback is related to a refund, merchants should provide evidence of their refund policy, such as their return policy or refund terms and conditions.

It is important to respond to a Discover Card chargeback promptly. Failure to respond may result in the chargeback being automatically granted to the customer, and the merchant may be liable for the chargeback amount. In addition, merchants who have a high volume of chargebacks may face increased processing fees or have their accounts terminated by Discover Card.

Dispute Resolution

The dispute resolution process for Discover Card chargebacks can be complicated and daunting. Starting with filing a dispute on behalf of the customer, merchants must submit evidence to support the claim and request to have their funds recreated within ten business days. 

After submitting the disputed material to sources such as banks or third-party processors, merchants await feedback from Discover as to whether the customer’s allegations are legitimate. If the allegations are proven valid, merchant funds may be debited and then credited back depending on certain terms and conditions. 

Consequently, if found guilty of an illegitimate dispute, merchants risk consequences such as disapproved ratings due to the inability to support claims. In either case, they should ensure that customer satisfaction is prioritized during the entire resolution process.

Final Thoughts on Discover Chargebacks

Use the steps in this guide to prevent, manage and fight Discover card chargebacks. If you want to save time on dispute management, Chargeflow offers autopilot solutions that take care of everything for you. 

With our help, you can focus on your business while we handle all the chargeback disputes on your behalf. Try Chargeflow today and see how easy it is to keep your business running smoothly while protecting your revenue.