Alright, you've just received a new Discover card chargeback. It's flagged with reason code 05. What’s that supposed to mean, though?

Knowing the specific cause for each chargeback is crucial. In the context of reason code 05, it involves a scenario where a customer alleges they were due a credit that wasn't awarded.

So, what’s this all imply? And, more importantly, how to use this info to prevent further revenue loss? What steps can you take to protect your money?

In this article, we’re gonna run down the critical aspects related to Discover reason code 05 chargebacks and give easy-to-follow advice on pinpointing the problem to fix it quickly and effectively.

What is Discover Reason Code 05?

Reason Code 05 is applicable for when a Good Faith Investigation demand arises. This means either the cardholder or the issuer questions the legitimacy of a card transaction, even after the time window for a conventional dispute has expired.

The issuer has the right to launch a good-faith investigation if they suspect double processing, mistakes in the card number, or errors in the credit amount.

If you accept responsibility for the dispute in question, then the cardholder’s issuing bank can issue a reason code 05 chargeback.

Need help fighting reason code 05 chargebacks? Get help from the experts.

What Caused This Dispute?

Like we discussed above, reason code 05 can be issued in a lot of different cases. For example:

A customer reached out to you for a refund, but the credit wasn't processed. They then contacted Discover, stating it was never refunded
The customer claims they returned the item and didn't receive a refund or credit on their statement
Charges were made without authorization from the cardholder
The customer was charged an incorrect amount for a purchase, either higher than the agreed-upon price or with additional fees they did not consent to
A billing error occurred where a refund or adjustment was promised but was never reflected on the customer's statement

Reason code 05 could be issued in response to one of the above if you (or your acquirer) acknowledge culpability for the disputed card transaction.

Responding to Reason Code 05 Chargebacks

Sorry... no such luck.

For chargebacks filed using most reason codes, you can submit evidence and documentation to recover your money if you believe the chargeback was invalid. This is done through a process called representment.

But, as per the Discover chargeback rules, reason code 05 chargebacks are “final and not able to be appealed.” In other words: if you get one of these chargebacks, you do not have the right to submit a response through representment.

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How to Prevent Discover Reason Code 05 Chargebacks

Prevention is always key when it comes to chargebacks. But, like we just discussed, there’s no option to submit a response to reason code 05 disputes. That means prevention is especially critical here.

Here are a few tips to help you prevent these chargebacks and protect your business:

Provide Excellent Customer Service

Ensure that your customers are satisfied with their purchases or services. For example, give a fast response to customer inquiries or concerns; this fosters trust and demonstrates that customer satisfaction is a priority to you. You want to take proactive steps to give customers a seamless and positive experience.

Keep Accurate Records

Keep detailed records of all transactions, including any refunds or adjustments made. This can help you if a customer makes an inquiry; if you can to provide additional information, showing you gave them a refund or adjustment already, you can keep the situation from escalating.

Make Billing Information Very Clear

Make sure that your customers understand how they will be charged for products or services. This is extra-relevant when we’re talking about any additional fees or charges. You need to clearly explain what these charges are, and why they’re being assessed.

Respond Promptly to Customer Inquiries

Customer has a question or concern about their transaction? Don’t delay — respond to them in a timely manner and work with them to resolve the issue. Even if you have to discount or refund a purchase... that’s still better than a chargeback.

Learn more about chargeback prevention

Again, we want to underscore this: Discover reason code 05 is a final and non-appealable chargeback.

It gets issued if you’re at fault for an incorrect or unauthorized card transaction. Prevent is key to protect your business from financial losses and penalties.

In addition to the basic tips we outlined above, you should also try to maintain a positive relationship with your customers. Stay vigilant and proactive, and continuously educate yourself on chargeback procedures and regulations.

Have additional questions? Reach out to one of our expert — we’re here to help!