Reason Code A01 — Charge Amount Exceeds Authorization Amount

How to Handle Amex Reason Code A01 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 — Amex reason code A01 — 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 A01?

American Express chargeback reason code A01 is “Charge amount exceeds authorization amount.” This reason code is used to explain that the total amount of the transaction was greater than the amount that the bank had initially authorized at the time that the card was swiped.

This can happen when the final total is not known at the time of authorization, and the merchant requests authorization for a projected amount. This is ordinarily not a problem; it’s a standard practice in many industries.

However, if the final total total exceeds the amount authorized due to unforeseen circumstances, additional authorization approval must be obtained. If the merchant attempted the transaction without obtaining this authorization, it could lead to an A01 chargeback.

What Caused This Dispute?

Amex Chargeback Reason Code A01 is primarily issued when additional charges or fees were added to the charge amount after authorization approval was received. To demonstrate, this scenario can arise if:

• Any additional charges or fees were added to the charge amount after authorization was received
• A restaurant total charge amount exceeds the amount you received authorization approval for by more than 20%
• A cruise line, lodging, or vehicle rental total charge amount exceeds the amount you received authorization approval for by more than 15%

Again, these situations can be handled properly by requesting authorization for additional funds.

How to Respond to Amex Reason Code A01 Chargebacks

So, what happens if you can prove no charges were applied to the cardholder’s statement that were not already authorized?

Naturally, if you receive an Amex A01 chargeback, you’ll want to resolve the issue right away. If you feel that the chargeback was filed in error, you should file a dispute response. This is done through a process called representment.

Representment is the process through which you’ll challenge a chargeback. You provide evidence to the card issuer (in this case, American Express) that all aspects of the transaction were legitimate and in accordance with the card issuer's policies. This can involve several key pieces of evidence.

Also, remember that there’s a strict time limit to consider. You have just 20 days in which to submit your response to American Express. However, this time frame also includes the time it took for your acquirer to provide you with a dispute notification, as well as time spent by the acquirer reviewing and submitting your case. In practical terms, you’ll often have five days or less in which to prepare and submit your response.

Acceptable Evidence for Amex Reason Code A01 Responses

You can re-represent these charges under the condition that you have compelling evidence.

For American Express reason code A01 chargebacks, you’ll need to provide detailed records of the transaction, including invoices and receipts. You’ll also need evidence to show proof of authorization in the amount charged.

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 A01.

How to Prevent Amex Reason Code A01 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:

• Ensure all authorization approval requests comply with the Technical Specifications for Authorization.
• Ensure the total charge amount represents all charges and fees for goods/services purchased before requesting authorization approval.
• Request a new authorization approval when the final total charge amount exceeds the amount for which you received approval.
• Obtain and submit additional authorization approvals where required (recurring billing, cruise line, lodging, vehicle rental, restaurant, etc.).

Preventing Amex Reason Code A01 Chargebacks: Restaurants, Cruise Lines, Lodging, & Vehicle Rentals

Amex also lays out specific instructions for a few verticals that frequently struggle with Amex 01 chargebacks. These include:

At the end of a service period, if a final charge exceeds the initially authorized amount by more than 15%, you’ll need to get additional approval for the extra charges. This applies to all of the verticals outlined above, except restaurants. This step is pretty essential when a customer decides to extend their rental period or has agreed in writing to charges for significant damages. 

Obtaining proper authorization ensures that all charges are transparent and approved by the cardholder, avoiding any potential disputes and maintaining a positive customer relationship. Additionally, subscribing to updates from American Express regarding changes in policies, security requirements, and best practices for fraud prevention can keep your business ahead of potential threats.