Chargeback Reason Code

Visa Chargeback Reason Code 10.4: Other Fraud: Card-Absent Environment

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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Visa Chargeback Reason Code 10.4: Other Fraud - Card Absent Environment

What is Visa Chargeback Reason Code 10.4?

The Visa chargeback reason code 10.4 applies to transactions conducted without physical card swiping or entry. These transactions are primarily internet-based, where the cardholder enters the card details, or via phone- or mail-based methods. However, the issuing bank disputes the transaction, claiming that the cardholder did not authorize it.

For telephone authorizations, the buyer calls out the details on the card to the merchant during a phone call. The same applies to mail orders, but the buyer sends them by mail instead of providing the card details over the telephone. Any disputed transaction that involves authorization through these methods will fall under reason code 10.4.

Here’s how this chargeback works: Suppose you just processed a telephone order for a buyer who authorized the transaction by calling out the card details. However, the buyer disputes the payment, claiming it was never approved.

You can only receive this chargeback if you operate an internet, telephone, or mail-based service. Physical card-swiping services are excluded and fall under another reason code. Let’s examine the possible causes of the chargeback before exploring how to fight it effectively.

Why Did It Happen?

The chargeback under reason code 10.4 occurs when a cardholder disputes authorizing a card-absent transaction. It often involves internet orders where the buyer enters the card details on your website or a third-party service to process payment. Nevertheless, the chargeback is also linked to telephone and mail orders where the buyer called or sent out the card details for authorization.

We can attribute several causes to this chargeback, some pointing back to the buyer's end and others to you. Here are the typical reasons:

  • True fraud: The card was fraudulently accessed and used for online transactions involving your service or product.
  • Friendly fraud: The cardholder disputes a legitimate transaction they initially authorized
  • Merchant error

Credit card fraud is a menace in today’s society. Hence, you may, through no fault of your own, process a fraudulently authorized transaction. The fraudster could have physically stolen the buyer’s card details or done so through an online breach.

Since the provided details are correct, the payment will go through. However, the buyer will dispute it with claims of stolen card details, if any. The bank will issue the chargeback and contact you with the reason code 10.4.

Conversely, the cardholder may forget or be confused about a transaction involving you. It could be that your merchant name isn’t clear on the debit information, or the cardholder is mistaking you for another merchant. Cases like that can occur and cause a chargeback.

You can fight friendly fraud disputes and reverse the chargeback with compelling evidence. However, things may not be so simple with actual fraud. That is because the transaction, while legitimate, was authorized fraudulently.

Merchant Errors that Can Cause the Chargeback

A few errors on your end can cause the cardholder to dispute the transaction. They include the following:

  • You did not ask for authorization in a telephone or mail order. This applies to one-time and recurring billing.
  • You mistook and marked a card-present transaction as absent, and vice versa.
  • Verification tools were not used.

These errors will legitimize the chargeback and reduce your chances of fighting it. We’ll look at them again in our section on preventing this chargeback. In the meantime, let’s explore ways to fight and reverse the chargeback.

How to Fight Visa Chargeback Reason Code 10.4: Other Fraud - Card Absent Environment

Your efforts in fighting this chargeback must be based on any of the following:

  • You adequately requested authorization by Verified by Visa (legitimate consent)
  • You had already issued a refund to the cardholder before the chargeback.
  • The cardholder has withdrawn the dispute and no longer wishes to claim the chargeback.

Let’s consider how you can fight the chargeback based on these categories.

Legitimate Authorization:

You can contact the card processor if Visa Secure (Verified by Visa) authenticated the transaction. Provide documentation to that end. Other ways you can fight the chargeback if there was legitimate authorization include the following:

  • Provide evidence of a response stating that the cardholder is not participatory in CVV2 if you requested it on checkout.
  • Provide proof that the issuer approved the transaction even after the buyer’s response contrasted with what the issuer had on file.
  • Provided evidence that you attempted to verify by AVS (address verification system), but the issuer did not participate.

Refund Already Processed

All you need are documents to show that you’ve processed a refund for the cardholder. Ensure that the amount and date the refund was processed are included in your evidence.

The Cardholder No Longer Wishes to Dispute

In cases of friendly fraud, the cardholder may realize their mistake and withdraw their claims. You’ll need evidence that shows the cardholder’s withdrawal from the dispute. A letter or email can suffice as evidence.

Additional Compelling Evidence

Some extreme cases may require compelling evidence (as Visa allows) to fight the chargeback. These pieces of evidence include:

  • Photographs or emails proving that the cardholder has the merchandise or is using the service
  • The cardholder's signature on the pick-up form or an identity card to show that the buyer picked up the products
  • The buyer’s IP address and geographical location at the time of purchase of digital goods

You can also prove that the phone number, IP, email, or physical address has been used in a previously undisputed transaction. These can help establish the legitimacy of the transaction.


How to Prevent Visa Chargeback Reason Code 10.4: Other Fraud - Card Absent Environment

We have a few suggestions to prevent this chargeback. They include the following:

  • Carefully separate your card-present and card-absent transactions. Train your staff appropriately.
  • Use as many Visa verification tools as possible, including Visa Secure, CVVs, Address Verification Service (AVS), etc.
  • Use anti-fraud tools to detect fraudulent transactions. These tools can help verify a buyer’s identity and spot potential criminal transactions. Hence, they reduce the risk of processing an unauthorized payment.
  • Request authorization for all mail, telephone, and internet orders. Do the same thing for recurring transactions.
  • Ensure your merchant name in billing debits is easily recognizable.


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