Chargeback Reason Code

Discover Chargeback Reason Code AA: Does Not Recognize

General Information about Reason Codes

In 2016, Mastercard chargeback reason codes were condensed and consolidated, in a restructuring that resembled Visa Claims Resolution. Prior to this, Mastercard’s list of reason codes was long, convoluted, and confusing; now there are fewer than ten different reason codes relevant to most merchants. All the old reasons are still there, but they’ve been grouped under more comprehensive “umbrella” codes.

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Discover Chargeback Reason Code AA: Does Not Recognize

What is Discover Chargeback Reason Code AA?

The chargeback reason code AA applies to chargebacks where the cardholder does not recognize a transaction. It can only occur with cardholders who have done business with you offline or online. However, you must investigate whether the cardholder truly does not recognize the transaction or if there is a case of friendly fraud.

This chargeback reason code is common, and the underlying cause can vary. The cardholder might not recognize your billing descriptor (merchant name) even after purchasing from you. Usually, the cardholders will call their bank or issuer and file a complaint regarding the charge on their account statement.

A charge does not become invalid simply because the cardholder disputes it as unrecognizable. Hence, you must provide sufficient evidence to refute the cardholder’s claims. Sometimes, you can call or email the cardholder to clear up the misunderstanding.

The Discover Network Dispute System for merchants provides a robust platform to track chargeback cases. You’ll see the dispute, review it, and submit relevant evidence to counter it. That is an added advantage to the chargeback message you receive from Discover.

We can pick out two things from chargebacks with this reason code. First, the cardholder did not authorize the transaction, justifying their stance of not recognizing it. Second, the cardholder authorized the transaction but failed to recognize the charge.

Fraud is also common in chargebacks under this reason code. Nevertheless, you won’t bear the liability if you take adequate steps to verify the cardholder’s authorization.

We’ll explain how to obtain adequate authorization and prevent fraud. In the meantime, let’s review the reasons Discover will likely have when issuing chargebacks with the reason code AA.

Why Did It Happen?

Issuing banks will process chargebacks with the reason code AA when a cardholder contacts them regarding an unrecognized charge. The charge may be illegitimate, meaning the underlying cause is likely merchant error. Conversely, the charge may be legitimate, meaning the case is most likely friendly or actual fraud.

With that in mind, here are the possible causes in a nutshell:

  • The cardholder does not recognize a legitimate charge: Several reasons, including an unfamiliar billing descriptor, may cause cardholders to tag a charge as unrecognizable. When this happens, they may contact their banks and dispute the charge. If the banks are convinced, they may process chargebacks, pending when merchants can respond.

Another instance where cardholders may not recognize a charge is when there is recurring billing. They may be unaware of their earlier authorization for the recurring transaction. With sufficient evidence, you can dispute it and reverse the chargeback.

If the charge is legitimate, we can call it a case of friendly fraud. Family members of the cardholder could’ve authorized the transaction without the cardholder’s knowledge. Nevertheless, that does not invalidate the charge.

  • The transaction was illegitimately performed: Fraudsters may use the credentials of a stolen card to conduct seemingly legitimate transactions. Even though the transaction looks legitimate, you may bear the liability for the fraud if evidence shows that the authorization was fraudulent. That will happen if you do not use adequate fraud prevention tools during processing.

You can contact the cardholder for additional information if the reasons in the chargeback message need to be clarified. However, ensure you do that within the scope of the regulations in the industry. The best approach to clearing any doubt is to contact your acquiring bank.

Acquirers can help you understand the chargeback better and advise you on how to respond.


How to Fight Discover Chargeback Reason Code AA: Does Not Recognize

Your response to chargebacks filed under reason code AA should be within 30 days. While we advise a speedy response, take time to gather evidence and address all points raised by the cardholder.

These are our recommended approaches to responding to chargebacks under this reason code:

  • Submit proof that the cardholder received the goods or services purchased with the disputed charge. For physical purchases, signed receipts on delivery can suffice.
  • Show that the cardholder used the digital goods purchased.
  • Prove that you verified the cardholder’s identity during the purchase. Also, show evidence that you requested and received authorization approval before processing the transaction. The proof, in this instance, can include the cardholder’s PIN entry, signature, or card imprint.
  • Prove that the charge is part of a recurring billing the cardholder authorized earlier.
  • Submit evidence of a refund. The transaction amount should be the same as the disputed amount. If there is a difference, explain the reasons for the lesser amount.
  • Submit evidence of reaching an agreement with the cardholder. Ensure you have proof of the cardholder’s agreement.

When responding to chargebacks under this reason code, address all points raised. Remember that your response must be convincing enough to counter the cardholder’s claims.

How to Prevent Discover Chargeback Reason Code AA: Does Not Recognize

Maintaining good business ethics will prevent chargebacks under this reason code and also give you a good reputation. Incurring many chargebacks caused by fraud places your business at risk of being blacklisted. Hence, your preventive measures should include fraud prevention tools.

With that in mind, here are ways to prevent chargebacks under reason code AA:

  • Using a recognizable billing or merchant descriptor for transactions. Ensure your cardholders are adequately informed if there is a business name change or anything that will affect the descriptor.
  • Using anti-fraud tools like 3-D Secure, AVS, and CVV verification
  • Providing an efficient and friendly customer service
  • Ensuring your cardholders can quickly contact you for any disputes. This will prevent most cases from escalating to a chargeback.
  • Providing prompt investigation and refunds when the cause of a disputed charge is a merchant error
  • Informing the cardholder of an upcoming transaction under recurring billing. That will give them a chance to cancel the transaction.
  • Training staff about proper business procedures, authorization protocols, and troubleshooting disputes
  • Keeping records when cardholders receive purchased goods and services
  • Send follow-up emails to customers when they make an online purchase for physical or digital goods


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