Reason Code P05 — Incorrect Charge Amount

How to Handle Amex Reason Code P05 Chargebacks

American Express breaks down the acceptable causes for a customer to dispute a credit card transaction in their dispute guidelines. This is done for the sake of simplicity and standardization. 

Each chargeback trigger has a designated “reason code.” Amex can then assign the appropriate code to each case to show the given reason for the chargeback.

Learn more about Amex reason codes

Today, we’re looking at one reason code in particular — P05 — and exploring the causes, timeframes, fees, and other specifics. We’ll also explore what you can do to prevent these chargebacks from happening.

What is American Express Reason Code P05?

American Express chargeback reason code P05 is “Incorrect Charge Amount.” This reason code is used to explain that your cardholder agreed to pay a specific amount at the time a transaction was conducted. However, when you submitted the transaction for processing, you submitted the wrong amount for the charge.

To illustrate, say a cardholder makes a $10 purchase. But, you had to manually key in the transaction information, and accidentally keyed it in as a $100 purchase. You then submitted that transaction for processing without noticing the mistake. This could result in Amex filing a reason code P05 chargeback.

What Caused This Dispute?

Amex Chargeback Reason Code P05 is primarily issued when there’s a mismatch between the amount agreed to by the customer and the amount you requested when you submitted the transaction for processing.

We gave one example above. But, this scenario can also arise if:

How to Respond to Amex Reason Code P05 Chargebacks

So, what happens if you can prove that you charged the customer for the correct amount?

If you believe that an Amex reason code P05 chargeback was initiated incorrectly, it's important to address the situation fast. You’ll need to enter a dispute response; this is done through a process called representment.

Representment involves contesting the chargeback by supplying evidence to the card issuer — American Express in this case — demonstrating that the transaction was valid and adhered to their policies. This may require multiple critical pieces of documentation. Remember the deadline, though; you have just 20 days to send your response to American Express.

This time frame also includes the time it took for your acquirer to notify you of the dispute, plus time spent reviewing and processing your case. You may realistically have just five days or less to prepare and submit your response.

Acceptable Evidence for Amex Reason Code P05 Responses

You can re-represent these charges under the condition that you have compelling evidence. For American Express reason code P05 chargebacks, you’ll need to provide proof that the cardholder agreed to the charge submitted, or that the cardholder was advised of extra fees. Examples of documentation include copies of:

• your terms and conditions, agreed to by the cardholder
• any emails or phone transcripts, showing communication with the buyer
• your refund policy, outlining how credits will be issued

Alternatively, you might have already issued a credit to the buyer as a way of trying to avoid the dispute. In this case, you’ll need to offer proof that you already provided a credit to offset the amount charged.

The success of representment depends on the thoroughness and relevance of the evidence provided. Maintaining detailed records of transactions and communications with customers is vital to effectively counteract all chargebacks, including those under reason code P05.

How to Prevent Amex Reason Code P05 Chargebacks

As the old adage goes, “an ounce of prevention is worth a pound of cure.”

You may never be able to stop chargebacks entirely. But, you can limit your exposure to risk and keep your chargeback ratio in good standing by adopting a few best practices. Generally speaking, you’ll want to:

#1  |  Be Accurate

Make sure that, when you submit transactions for processing, all information is submitted correctly. Avoiding manually keying-in transactions (unless absolutely necessary) will help here.

#2  |  Be Fast

Process credits as soon as possible. Credits and refunds should always be issued within seven days of detecting or being notified of the need to issue a credit.

#3  |  Be Clear & Concise

Make sure your refund and cancellation policies are easy to understand. Make sure they clearly state the time frames in which credits and refunds will be issued.

#4  |  Be Adaptable

Outline the circumstances under which you’re willing to issue credits and refunds… but don’t be afraid to bend the rules when appropriate. Being lenient with customers will create more positive customer experiences and help stop chargebacks at the same time.

Take a Wider View

You can dispute invalid chargebacks from Amex reason code P05. However, it’s much more efficient to take a proactive stance. The same is true of the other chargeback reason codes, as well. A truly effective chargeback management strategy must encompass prevention as well as disputing cases of friendly fraud.

Chargebacks911® can help your business manage all aspects of chargeback reason codes, with proprietary technologies and experience-based expertise. Contact us today for a free ROI analysis to learn how much more you could save.