Mastercard Chargeback Reason Code 4841: Canceled Recurring or Digital Goods Transaction

What is Mastercard Chargeback Reason Code 4841?

The Mastercard chargeback reason code 4841 is a cardholder dispute for canceled recurring or digital goods transactions. The typical use case is when the cardholder claims to have canceled a subscription before the transaction date. Alternatively, the subscription was processed without the cardholder’s consent.

You’ll receive it if the buyer notifies the issuer of a requested termination for a recurring transaction. For example, the buyer closed the account but was charged. Failure to inform the cardholder of any upcoming charge will also cause a chargeback that falls under this reason code.

Note that a recurring transaction refers to continuous billing without a specified termination date. Hence, this code only covers such transactions, not those for installment billing.

Why it Happened

This chargeback occurs due to unwanted recurring billing or inadequate purchase controls. It covers recurring and digital goods transactions.

Failure to process a cardholder’s cancellation request on recurring billing is a common cause for this chargeback. However, we can have instances where the buyer falsely claims to have sent a cancellation request before the subscription renewal date.

The issuer can process this chargeback if it notifies the merchant with a cancellation request before the transaction date. That may be done on behalf of the cardholder.

These are the common reasons for this chargeback:

• Unprocessed cancellation request: The merchant failed to process the cancellation request before processing the next recurring payment. Cardholders may send requests through email or any other means the merchant provides.
• Unapproved raise in payment: Raising the recurring payment amount without the cardholder’s approval before the transaction date can result in this chargeback.
• Processing a transaction after the cardholder’s account closure for recurring billing
• No adequate information was sent to the cardholder about the recurring payment policies before confirmation.
• The buyer denies receiving any information regarding the charge.
• The card issuer approved the cardholder’s account cancellation before the next transaction date.

The Chargeback on Digital Goods Transaction

This chargeback covers e-commerce transactions with amounts less than or equal to 25 euros (or the local currency equivalent). The reason code 4837 may occur if the issuer determines the unavailability of the following purchase controls for the cardholder:

• The control to turn off all digital goods purchases was unavailable as the default setting at the time of purchase.
• The option for a buyer to cancel or confirm the total transaction amount displayed was unavailable before the processing of the transaction.
• Processing the digital goods purchased on the cardholder’s account should be done within 15 minutes of receiving the cardholder’s account authentication credentials.

The last condition for this chargeback is that the cardholder’s account is active and has no record of fraudulent transactions.

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How to Fight Mastercard Chargeback Reason Code 4841: Canceled Recurring or Digital Goods Transaction

You can only fight this chargeback if you have the pieces of evidence to substantiate your claim to a rightful charge. The conditions to fight it include the following:

• There was no recurring transaction on the cardholder’s account. That is, the transaction was an installment type, or a one-time purchase only.
• The cardholder did not meet the signed terms and conditions for canceling the recurring billing.
• You can document the provision of services to the cardholder and subsequent usage after the cancellation date.
• You can document the provision of proper disclosure when entering into the recurring billing and the subsequent acceptance by the cardholder.
• You offered adequate purchase controls during the cardholder’s transaction processing.

With that in mind, your response should include the following, depending on the chargeback:

• Proof that the transaction was an installment type, not recurring, or for a one-time purchase.
• Evidence that the cardholder did not follow the terms and conditions for cancellation.
• Evidence of continuous usage of the goods or services purchased with the disputed amount
• Proof of a transaction refund.
• Document showing the resolution of the charge with the cardholder. This could be a written correspondence attesting to the cardholder’s withdrawal of the dispute.
• Proof of notifying the customer of a higher transaction amount than previously agreed at least ten days before the payment due date

A chargeback without adequate proof of the cardholder canceling the transaction is easily refutable. Website screen images can be supporting documents to fight chargebacks with the reason code 4841.

Your second presentment will be invalid if you state that you did not receive the cardholder’s cancellation notice, but the chargeback proves that the cardholder canceled the recurring billing accordingly.

How to Prevent Mastercard Chargeback Reason Code 4841: Canceled Recurring or Digital Goods Transaction

Being ignorant of a cardholder’s cancellation request does not absolve you of the chargeback. Hence, you must take adequate steps to ensure transactions are processed correctly and keep all communication channels open.

The following are steps to take to prevent a Mastercard chargeback with the reason code 4841:

• Process all qualified cancellation or non-renewal requests upon receipt.
• Send emails or texts acknowledging receipt of the cancellation request and subsequent cancellation.
• Cancel future transactions if there is a chargeback. This prevents multiple chargebacks and is necessary if you are liable for the first chargeback.
• Ensure that automatic purchases are turned off by default. Instead, provide the option for the buyer to opt in for the purchase.
• Request cardholder authentication information before processing each purchase. Avoid using the same authentication information for multiple purchases unless enabled by the buyer.
• Include a time-out duration for inactivity during digital purchases.
• Ensure the cardholder sees the transaction amounts for pending purchases. Also, ask for the buyer’s confirmation before proceeding.
• Send emails or texts to confirm the purchase. Also, send email reminders to customers of the upcoming charges, especially if a significant amount of time passes between each recurring billing cycle.

These steps will ensure you have adequate documents to fight an unwarranted chargeback.

Important Notice: 

This chargeback reason code has been retired and merged with 4853 for:

• Cardholder disputes
• Digital goods: 25 euros (or equivalent local currency) or less

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