Reason Code P04 — Charge Processed as Credit

How to Handle Amex Reason Code P04 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 — P04 — 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 P04?

American Express chargeback reason code P04 is “Charge Processed as Credit.” This is a rather uncommon reason code; unlike most codes in the Amex Disputes Reference Guide, it is not used to explain that you owe the customer money. Instead, it signifies that you credited the customer funds that were not called for.

In short, the cardholder claims that you submitted a credit to their account. However, the credit in question should actually have been submitted as a charge instead.

What Caused This Dispute?

Amex Chargeback Reason Code P04 is primarily issued when the customer expects to receive a charge, but gets a credit instead. To demonstrate, this scenario can arise if:

How to Respond to Amex Reason Code P04 Chargebacks

So, what happens if you can prove that you did not provide an unjustified credit to a buyer?

Naturally, if you receive an Amex P04 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 P04 Responses

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

For American Express reason code P04 chargebacks, you’ll need to provide evidence that the credit in question was submitted correctly. Examples of documents you can submit include:

• transaction invoices or receipts, showing the charge was made to the customer’s account.
• phone transcripts or copies of emails between you and your customer.
• Copy of your terms and policies, outlining how credits are issued to buyers.
• contextual information, explaining why a credit was issued to the buyer.

Alternatively, you might have already submitted another charge as a way of offsetting the credit to try and avoid the dispute. In this case, you’ll need to offer proof that this charge was submitted.

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 P04.

How to Prevent Amex Reason Code P04 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  |  Submit Accurate Information

Always make sure that you’re submitting accurate information to the bank regarding each transaction. This applies regardless of whether the transaction in question is a debit or a credit.

#2  |  Correct Mistakes ASAP

If you make a mistake in submitting transaction information, you’ll want to move fast and provide a correction or issue reversing credit(s) as soon as you discover (or get notice of) the billing mistake.

#3  |  Issue Credits Promptly

Issue all credits and refunds within seven calendar days of the request. This will help avoid confusion and make sure everyone knows why a specific credit was issued.

#4  |  Be Clear With Policies & Terms

Make sure your refund and cancellation policies explicitly outline the timelines for when credits will be processed. This way, you can eliminate confusion and prove that you were up-front about expectations before the purchase occurred.

Take a Wider View

You can dispute invalid chargebacks from Amex reason code P04. 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.