Chargeback Reason Codes

Budgeting credit card balances_CardinalCommerceEvery time a merchant is faced with a chargeback, it comes with a reason code. The codes differ among credit card companies (Visa, American Express and Mastercard), but they all serve the same universal purpose: describe the reason behind the chargeback. Merchants need to pay attention and remain vigilant when it comes to these reason codes. They can help you in the future as you search for ways to avoid transaction disputes. There are trends and patterns in chargeback codes that can reveal fraudulent activity. If a scam artist gets away with a chargeback, he or she is more likely to do it again.


There are three standard categories of chargebacks: merchant error, criminal fraud and friendly fraud.

  1. Merchant Error: these chargebacks are exactly as they sound. When a customer thinks they’ve been wrongly charged, they blame it on the merchant. Maybe the customer doesn’t recognize the order descriptor, or perhaps they were charged for multiple items when they only ordered one.
  2. Criminal Fraud: these chargebacks occur when a scammer commits fraud by using someone else’s credit card information. Without the cardholder’s knowledge or approval, the scammer carries out an unauthorized transaction. It’s easier to identify criminal fraud because the transaction usually looks unique relative to the cardholder's other purchases.
  3. Friendly Fraud: this type of fraud poses a significant problem for merchants. It’s committed by consumers who dispute a credit card transaction they knowingly made, with their bank (instead of clearing it up with the merchant), so that they can secure a refund while still keeping the service or product they purchased. These scam artists may claim they never received a product when, in fact, they did; they may say the product isn’t as advertised, or that it had a defect; they may say that they canceled the transaction even though they didn’t. They also may say that they never ordered the item, and it may have been ordered by someone in their household who has access to their credit card information.

It’s important for merchants to know about these chargeback reason codes so that when one comes about, they can immediately verify whether or not it’s honest, and be prepared to fight it if it’s not. 

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