Chargeback Reason Code

Discover Chargeback Reason Code UA02: Fraud: Card Not Present Transaction

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 UA02: Fraud: Card Not Present Transaction

What is Discover Chargeback Reason Code UA02?

Discover chargeback reason code UA02 applies to disputed transactions where the cardholder claims they never provided authorization. It is often a fraud case in card-not-present transactions, hence the shorthand description, “Fraud: card not present transaction.” You will get chargebacks under this reason code, primarily for your online sales or mail and telephone orders.

New payment EMV-enabled terminals have robust security measures to prevent fraudulent authorizations. The story differs in online transactions, where the cardholder must manually enter the card details. Furthermore, you cannot tell the circumstances that caused the cardholder to dispute the transaction as fraudulent.

Most cardholders will contact their issuers when they see a charge they did not authorize on their account statement. If actual fraud occurs, they may not recognize your billing description and contact you directly. Instead, they’ll dispute the charge with their banks or issuers, who will, in turn, process a chargeback.

You might receive a retrieval request allowing you to dispute the cardholder’s claims before they escalate to a chargeback. However, we won't always count on that happening. The issuer (Discover) will process a chargeback if it believes the evidence the cardholder tenders is enough.

That aside, you can still fight the chargeback within the allocated time. Your defense will be to prove that the transaction was duly approved.

If actual fraud occurred but you took the necessary steps to obtain authorization, your business will not be liable. On the other hand, if you do not take the required steps to prevent fraud, your business will be held responsible for refunding the customer.

We’ll guide you on approaching from both sides to ensure your business reputation remains. Incurring chargebacks under reason code UA02 frequently places you at risk of losing your credibility. You will also fall under the radar of anti-graft agencies in the country and may receive charges for money laundering.

Why Did It Happen?

The primary cause of chargebacks under reason code UA02 is when cardholders dispute card-not-present transactions as fraudulent. Discover will collect evidence and escalate the claims to a chargeback. To the cardholders, they never authorized or entered their card details for these transactions.

We’ve seen cardholders dispute transactions even when they were legitimate. Hence, their claims are not final. You can still dispute their claims, causing Discover to reverse the chargeback.

Two central claims can lead to chargebacks under reason code UA02. They include the following:

  • Actual fraud: In this case, someone stole the card details and used them to place an order with you. They provided adequate authorizations, just like the cardholder would. Hence, there was no reason to suspect stolen details or a fraudulent transaction.
  • Friendly fraud: The cardholder authorized the transaction but later denied it. They may not recognize your billing descriptor, resulting in a disputed charge. On the other hand, they may do it deliberately to earn on both sides (get your product or service and still get the money back).

Cyber Shoplifting is on the rise, and it is common for shoplifters to attempt to get refunds through chargebacks. As such, they will file claims that the transaction was fraudulent and not authorized on their end.

Phishing attempts, data breaches, and account takeovers have become common in online purchases. Hence, losing one’s card details becomes easier without due diligence.

It is easy to pass the liability to the issuer for card-present transactions. You have more robust security measures to prevent unauthorized use of a card. However, that isn’t the case with online orders.

You will be liable for approving or processing the fraudulent transaction without adequate evidence. The burden of proof is on you. Notwithstanding, we will guide you all the way, including which evidence to present.

How to Fight Discover Chargeback Reason Code UA02: Fraud: Card Not Present Transaction

Your primary evidence to fight chargebacks under reason code UA02 shows that you took adequate security measures. Also, you have 30 days to submit your proof to dispute the cardholder’s claims. Otherwise, you must accept the chargeback and work to prevent future occurrences.

The following are the approaches we recommend to fight chargebacks under reason code UA02:

  • Proof that the cardholder received the products: Provide a signed delivery receipt to show that the cardholder ordered and received the products. For services, you can show that the cardholder used or began using your service after payment was processed.
  • Proof that you used the address verification service for the online order: Submit evidence that you verified the buyer’s address and ZIP code. That shows that the authorization was not fraudulent on your end. For cards issued outside the United States, include the AVS response during your verification.
  • Provide the cardholder’s IP address or email for digital goods or services. Also, provide a description of what was purchased and when the cardholder received the item or service.
  • Submit evidence of the cardholder picking up the item in your physical store. A signed receipt will suffice.

Sometimes, the cardholder may contact you quickly to alert you to the fraudulent transaction before you disburse the item or service. Then, you can process a refund according to your refund policy. If a chargeback still occurs for that transaction, submit evidence of your refund.

Ensure your evidence carries the date and transaction amount. Proof of reaching an alternative settlement with the cardholder is also acceptable.

How to Prevent Discover Chargeback Reason Code UA02: Fraud: Card Not Present Transaction

Effective fraud prevention measures for online orders will prevent fraudulent transactions from escalating to chargebacks. On the other hand, there is little you can do to prevent cyber-shoplifting. 

Do the following to prevent chargebacks under reason code UA02:

  • Use CVV and AVS matching on all your transactions
  • Obtain proper authorization before processing any online order
  • Provide extra security layers for verification on your online channels
  • Require cardholders to register with you if necessary.
  • Use velocity checks to identify suspicious patterns.
  • Don’t force declined or failed transactions. Request an alternative payment method from the buyer.


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