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Mastercard Chargeback Reason Code 4837: No Cardholder Authorization

What is Mastercard Chargeback Reason Code 4837?

This Mastercard chargeback reason code is associated with transactions the cardholder claims they didn't authorize, which can sometimes be a result of fraud or potential mistakes by the merchant. The code is labeled as “No cardholder authorization” indicating situations where the cardholder contests the validity of a transaction. Merchants can challenge this chargeback by providing evidence of authorization. 

However, the type of evidence necessary often depends on the specific circumstances of the transaction, commonly referred to as the 'transaction modifier'. We'll explore the intricacies of reason code 4837, how merchants can effectively contest it, and strategies to prevent such chargebacks in the future.

Reasons for Mastercard Chargeback Reason Code 4837

This reason code is used when a cardholder informs their bank that they did not authorize the transaction. The cause could be due to genuine unauthorized use, what’s known as friendly fraud, or even a mistake on the part of the merchant, leading the cardholder to dispute the payment.

The following are typical reasons for chargeback reason code 4837:

• In cases of transactions where the card was present but there was no proper PIN verification: In other words, the transaction was completed without successful verification through online PIN or on-device cardholder verification.
• The value of a contactless transaction exceeded the set limit for contactless transaction cardholder verification method (CVM).
• A fraudster used stolen payment card credentials to purchase goods and services without the cardholder’s knowledge. This scenario results in a valid fraud chargeback.
• The cardholder doesn’t recall making the purchase and disputes it, claiming ignorance.
• A transaction is disputed by the cardholder because a family member made it after accessing their account, a situation commonly referred to as friendly fraud.
• A cardholder challenges the transaction even after they’ve received the purchased goods or services, which is also a case of friendly fraud.

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How to Fight Mastercard Chargeback Reason Code 4837: No Cardholder Authorization

To counter this chargeback, it's crucial to present compelling evidence that affirms the cardholder's transaction authorization. Take action promptly upon receiving the notification, ensuring no delays in the submission process.

At times, unconventional strategies might be the best approach to win a dispute. For instance, consider a merchant facing a chargeback under reason code 4837 due to a discrepancy between the purchaser's and cardholder's names. Instead of conceding, the merchant delved into the customer's background. Discovering the customer's esteemed credentials in banking and finance, the defense then pivoted, underscoring the improbability of such an individual engaging in fraud. This unique defense angle led to a successful resolution in the merchant's favor.

Should the chargeback not adhere to Mastercard's specific criteria for employing reason code 4837, merchants can challenge it. This often involves providing a copy of the authorization record.

The type of evidence necessary to contest this chargeback hinges on the transaction modifier, which pertains to the particular circumstances of the card purchase. Accordingly, here's what is often required:

• Evidence that secure customer authentication (SCA), such as 3D Secure, was employed for the transaction. In instances like this, the liability shifts from the merchant to the issuer. This approach is only applicable if the issuer participates in 3D Secure.
• A proof of a refund is required before the cardholder initiates a chargeback. This will be a document confirming that the cardholder received the refund. As there’s no financial loss, the issuer lacks grounds to demand a chargeback under the reason code 4837.
• Documentation proving the cardholder withdrew the dispute. This may occur if the cardholder later recognizes the purchase as adequately authorized. You’ll need a copy of the issuer’s reversal notification, coupled with correspondence from the cardholder withdrawing the dispute.

Other Conditions for a Second Presentment

They include the following:

• Instances where the issuer has raised a chargeback for two or more transactions linked to the same card account before the authorization date stated in the disputed transaction. You should cross-check the date of the subsequent fraud-related chargeback from the issuer. This date can be located in the Fraud Notification Information field of the chargeback message sent to you. If the date is prior to the approval of the contested transaction’s authorization, then the second presentment is advised.

• Cases where the issuer has flagged chargebacks for a single account under reason code 4837. The Fraud Notification Service (FNS) will notify you of the total number of fraud-related chargebacks from the issuer involving the same account. If the listed chargeback count surpasses a specified threshold, proceed with your defense. For both situations, the outcome is an unwarranted chargeback, giving you grounds to contest it. 

How to Prevent Mastercard Chargeback Reason Code 4837: No Cardholder Authorization

Merchants have a pivotal role in fraud prevention. Merchants must harness effective tools and take action to prevent fraudulent transactions. They should also use a transaction format that is simple and easily recognizable to cardholders.

The following are steps you can take to prevent this chargeback:

• Perform an AVS check to ensure the ZIP corresponds with the address provided by the cardholder. This record can also serve as defense in your dispute.
• Performing CVV/CVC checks
• Deploying fraud prevention tools with details on their scoring or recommendations.
• Ensuring your merchant name (or descriptor) that appears on bank statements is easily recognizableThat will clear up doubts in the minds of cardholders regarding a transaction. For example, do not use an all-numeric or obfuscated descriptor.
• Ensuring you have comprehensive authorization approval for all processed transactions.
• Using preferred verification methods like signatures, PINs, emails, mobile confirmations, etc., to validate the cardholder's identity.
• Declining transactions attempted with expired cards
• Avoiding the processing of unauthorized transactions.
• Maintaining comprehensive records such as billing authorization, proof of delivery to the cardholder’s address, usage details, contracts, and more.
• Utilizing Europay, Mastercard, and Visa (EMV)-compatible terminals for processing
• Training staff about proper transaction procedures, authorization protocols, and troubleshooting payment terminal issues.

While prevention is always better, ensuring you maintain thorough documentation is equally vital, especially when these documents become crucial during a dispute.

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