What are the Cardmember & Merchant American Express Chargeback Time Limits?
American Express (Amex) was one of the first companies to issue payment cards for consumer use. Many aspects of the brand differ greatly from other credit card networks, though. One example is the American Express chargeback time limits for both cardmembers and merchants.
The chargeback process has rules that differ between card networks. In this post, we’ll be looking specifically at Amex dispute time limits, exploring the overall impact they have on combatting fraud.
Why are American Express Chargebacks Different?
American Express is currently the fourth-largest general-purpose card network in the world based on both purchase volume and number of cards in circulation. But, since its introduction in the mid-1950s, Amex has largely isolated itself from mainstream banking.
The company currently allows select banks to issue Amex-branded cards. However, they also serve as both a payment processor and a card issuer for their own products. This means Amex cardholders can take complaints to both the card issuer and the card network at the same time. In some ways this can expedite the process. As a merchant, though, it’s not always in your favor.
When a cardmember disputes a transaction, Amex will review the case and make a decision. If there is sufficient evidence to support the claim, the chargeback is filed and the transaction amount is immediately removed from your merchant account.
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Things work differently if the company has doubts about the claim. They may send you an inquiry—also called a request for information—looking for additional details. Of course, when American Express acts as both the issuer and card network, there are very few situations where you would need to provide additional documentation.
This is where the Amex dispute time limits come into play. Regardless if you receive an inquiry or a chargeback, you will have 20 days to respond. If you don’t reply within the Amex dispute time limit, or the documentation doesn’t sufficiently address the issue, the inquiry automatically turns into a chargeback.
Note: if your inquiry rate (number of disputes) is too high, receiving inquiries will likely no longer be an option. American Express will simply escalate all disputes directly to the chargeback stage, with no input from you.
Amex Chargeback Time Limits: Merchants
If you receive a chargeback you believe was issued incorrectly, you are allowed to contest it. American Express calls this a “Request for Reversal,” and it comes with strict deadlines:
- After an inquiry is issued, you have 20 days from the inquiry date to respond.
- If the inquiry response results in a chargeback issuance, you have 20 days from the chargeback date to contest the chargeback.
- After a chargeback is issued directly from the customer dispute, you have 20 days from the chargeback date to contest the chargeback.
Amex has reason codes that reflect the given reason behind the customer dispute. Each reason code has its own required evidence and documentation that must be submitted within that 20-day window. This is no different from other card networks.
In the case of an inquiry, Amex is essentially asking you to explain the customer’s complaint from your perspective. You give them the details they need to confirm or deny the dispute. If you receive an actual chargeback, it is your responsibility to mount a defense, providing evidence to demonstrate the actual transaction was valid.
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Amex Chargeback Time Limits: Cardholders
Until recently, American Express cardmembers had no time limit as to when they could file a customer dispute. This was an important selling point to consumers. Merchants, as you might imagine, were not happy with the arrangement, though.
Card networks are constantly updating their regulations. The American Express dispute time limit for cardmembers is currently 120 days from the date of the original transaction. This is according to the most recent version of the American Express Merchant Reference Guide as of this writing.
This still gives consumers a considerably larger window for instigating a dispute. However, there is now a limit on how long they can wait. Also, cardmembers are restricted to just two disputes per charge, in most cases. That means you will not have to repeatedly reply to the same dispute.
Bad News for Merchants
Merchants who accept American Express transactions will encounter many challenges regarding chargebacks. Amex makes it painfully easy for cardmembers to dispute a transaction, and a growing number of consumers are using this to commit friendly fraud. Most cardmembers are probably ignorant of the fact that a “dispute” is actually a chargeback, and the act has severe repercussions for the merchant.
Chargeback regulations exist on a constantly shifting landscape. This fact makes it difficult to stay up-to-date. Factors such as American Express dispute time limits may seem like a minor concern. Misunderstanding or ignoring them can have serious impacts on your bottom line, though.
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Does American Express allow chargebacks?
Yes. As per the Fair Credit Billing Act of 1974, card networks are required to have a process in place to reverse charges for consumers in cases of fraud. Like other card networks, Amex uses the chargeback process to do this.
What are American Express chargeback time limits?
In most cases, cardholders have 120 days from the original purchase date to dispute a charge. For merchants, evidence and documentation to support your case must be submitted within 20 days of the date the chargeback (or inquiry) issued.
How long do AMEX chargebacks take?
This depends on the situation. Some Amex chargebacks can be resolved in a matter of days. If the merchant wants to dispute the charge, though, it could take weeks, or even months, for a dispute to be resolved.
What happens if I have too many Amex disputes?
If your American Express inquiry rate is too high, any customer disputes will escalate to the chargeback stage. If the inquiry rate remains high, you may face additional restrictions.