Chargeback Reason Code

Discover Chargeback Reason Code CD: Credit/Debit Posted Incorrectly

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 CD: Credit/Debit Posted Incorrectly

What is Discover Chargeback Reason Code CD?

The Discover chargeback reason code CD indicates a transaction that should’ve been a credit payment from the cardholder's perspective. While they can occur in any transaction, these chargebacks are closely related to improperly processed refunds. Often, you have agreed to process a credit refund for the cardholder but ended up with a debit.

For one reason or another, cardholders may return purchased goods. They can also cancel an order before the goods or services arrive. Both scenarios are liable for refunds, depending on your return and cancellation policies.

Refunds are less expensive than chargebacks. Besides that, it improves customer satisfaction as cardholders do not need to contact their issuing banks to dispute a transaction. When done correctly, you will clear your business of any danger of chargebacks.

Your intentions to process a credit refund could spiral into chargebacks under this reason code if a debit is processed instead. To help you understand where the error can come from, let’s explain how posting a transaction works.

Processing a transaction begins by submitting it to your acquiring bank. Then, your bank will send the transaction details to the card network. The card network will forward the details to the issuing bank for approval.

Once the issuing bank approves the transaction, the charge will appear on the cardholder’s account statement. You cannot cancel the transaction at this point. Hence, you either process a refund if there was a mistake or contact the cardholder immediately.

Chargebacks under reason code CD often occur due to merchant errors. Nevertheless, some cardholders or fraudsters may attempt friendly or actual fraud by claiming that the debit transaction should’ve been a credit.

You should investigate the claims thoroughly and prepare your response. Ensure you are clear of any errors before disputing the chargeback. With that in mind, let’s look at the scenarios that can cause chargebacks under reason code CD.

Why Did It Happen?

Chargebacks under reason code CD occur when cardholders contact their issuing banks regarding a debit transaction that should’ve been a credit. The banks will now assume that you posted the debit incorrectly. Hence, chargebacks will occur to correct the transaction.

Errors can arise when you submit the transaction to your acquiring bank. Debit transactions require the cardholder’s authorization. Hence, mistakes often occur if you submit another authorized transaction instead of the credit.

Chargebacks under this reason code often occur in debit transactions that should’ve been credit payments. That does not mean that mistakes cannot lead to crediting a cardholder when they should’ve been debited. The only difference is that cardholders may not report or dispute the credit transaction.

Promises or expectations of credit are the primary reason for cardholders to dispute the debit transaction. You may have promised a credit, or the cardholder expected a refund after returning your products or canceling an order.

With relevant evidence, you can prove that the transaction was posted correctly. Otherwise, the only option left is to accept the chargeback.

Besides merchant errors, friendly fraud can cause chargebacks under the reason code CD. Some cardholders can dispute a debit transaction even when that was supposed to happen.

Waiting too long to finalize and submit transactions can cause chargebacks under this reason code. That might make the transaction appear on the cardholder’s next account statement instead of the current one when authorization was provided. As a result, the cardholder may not recognize it, especially when a credit is due.

You can contact your acquiring bank or the cardholder for more information. Ensure you have all the details before responding to the chargeback message.


How to Fight Discover Chargeback Reason Code CD: Credit/Debit Posted Incorrectly

The Discover Network Dispute System will help you track the status of any chargeback. You will see new memos that have been added to the case. These could be from the issuing bank or the card network.

You can submit the documentation to refute the cardholder’s claims. Do that within 30 days, and Discover will reverse the chargeback if your evidence is sufficient.

These are the things you can do to fight chargebacks under reason code CD:

  • For instances where the debit transaction is legitimate: Submit evidence that the cardholder authorized the debit transaction. Payment receipts and checkout authorization can suffice. The evidence must show that the cardholder was aware of the debit.
  • For instances where you posted the transaction correctly: Show transaction receipts to prove that you posted the debit transaction correctly.
  • For instances where the cardholder expected a refund: Show evidence that you did not promise a refund to the cardholder. You can also prove that the customer did not qualify for a refund.
  • For instances where you’ve processed a credit to correct the error: Show evidence of the credit transaction, including the date and amount. The amount should match the debit.
  • If you reached an agreement with the cardholder: Provide evidence of the deal and the cardholder’s approval.

How to Prevent Discover Chargeback Reason Code CD: Credit/Debit Posted Incorrectly

Processing transactions correctly and promptly reduces or eliminates the risk of chargebacks under reason code CD. Ensure you have adequate resources for processing transactions. That may mean hiring staff to maintain a quick and correct submission of transactions.

We have a few more tips to help you prevent chargebacks under reason code CD. They are as follows:

  • Processing refunds as soon as possible after promising the cardholder. Inform the customer promptly if any delays will affect your proposed date for a refund.
  • Issue credits promptly if you discover any mistakes in submitted transactions. These can be duplicated transactions, debit payments, recurring billing, etc.
  • Double-check the calculations to ensure the final amount is the same as what the cardholder agreed to pay.
  • Double-check the final amount before submitting the transaction to your acquiring bank.
  • Training staff on how to process credits and handle transaction reversals
  • Responding quickly to inquiries that Discover sends regarding a disputed charge
  • Send follow-up emails after a cardholder makes a purchase
  • Having clear refund policies to prevent cardholders from expecting a credit after returning or cancelling an order


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