Mastercard Chargeback Reason Code 4853: Credit Not Processed
Chargeback reason code 4853/Credit Not Processed applies to situations where customers claim they are owed a refund or other credit that has not appeared, but do not feel the issue being resolved by the merchant. In such circumstances, Mastercard may allow consumers to reverse a transaction by filing a chargeback.
To simplify this process, situations that may qualify for a chargeback are broken down into designated “reason codes.” Banks assign the appropriate code to each case so everyone knows the given reason for the chargeback.
We say the given reason because it may or may not reflect the true reason. Even if they suspect the cardholder is making an invalid claim, however, merchants must respond to the reason code presented by the bank.
The process is further complicated by the fact that each card network has its own set of reason codes. While most of the same scenarios are covered, the designations can vary considerably. Understanding which code is which can be challenging, so we’ve created guides to help merchants know how best to fight or prevent the different types of disputes.
With that in mind, let’s take a look at Chargeback Reason Code 4853: Credit Not Processed
Should Merchants Worry About Reason Code 4853 Chargebacks?
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What Is a 4853 Chargeback?
Chargeback reason code 4853 is used to designate some scenarios referred to as “Cardholder Disputes.” This refers to any dispute involving a transaction that the cardholder claims is incorrect in some way. This umbrella category can be applied to multiple specific situations, many of which had their own specific codes at one time.
Credit Not Processed chargebacks, for example, were at one time indicated by reason code 4860. Now, however, many of these causes have been bundled together under reason code 4853. So how does a merchant know what is specifically to blame for the chargeback?
When applicable, an additional message will be provided along with the reason code. Financial institutions refer to this as the Member Message Text. It tells the merchant which particular type of chargeback is the basis of the claim.
Not all reason codes will require this supplemental information, but many do. Knowing the type of chargeback helps merchants pinpoint the specific reason a cardholder dispute reason code was used. This information is crucial for disputing the chargeback and avoiding future claims of the same type.
Credit Not Processed Disputes: Causes and Conditions
A cardholder filing a claim under reason code 4853 is essentially stating that they have a receipt from either a voided transaction or a credit, but the transaction hasn’t been processed to their account yet. This could easily be the result of carelessness or innocent merchant error, such as:
- The merchant failed to process a credit or reversal.
- The merchant did not acknowledge the return or cancellation.
- The merchant issued the credit but did not deposit it in time for it to appear on the cardholder’s next statement.
- The merchant failed to fully explain the return/cancellation policy.
- The merchant processed a transaction that was canceled or voided.
Issuers have a limited timeframe to file chargebacks with a no-authorization reason code. Challenges must be processed within 120 calendar days of one of three start dates:
- The date on the credit documentation.
- The date of service cancellation.
- The date the order was returned.
In addition, the issuer must wait at least 15 calendar days before initiating a dispute, unless one of the following apply:
- The cardholder can show an improperly disclosed in-store credit or voided transaction receipt.
- The cardholder can provide a letter from the merchant advising the issuer to process a chargeback.
- Waiting will cause the chargeback to exceed 120 days.
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Credit Not Processed Chargebacks and Friendly Fraud
Obviously, there’s a problem that needs to be addressed if a business regularly receives legitimate chargebacks for unprocessed credits. But while this type of chargeback can be the result of innocent merchant error, it will more likely be brought about by fraud. This might be intentional merchant fraud in some cases, which could be legitimate cause for a chargeback. However, it is much more likely to be friendly fraud.
As we noted earlier, the given reason for a chargeback may be completely different from the actual reason. In the case of a Credit Not Processed claim, a cardholder may be aware that a credit is on it’s way, but call the bank in an attempt to “double dip” by procuring refund from both the bank and the merchant. In most cases, however, it’s a simple misunderstanding; the cardholder may simply:
- Forget to return the goods in question.
- Forget to cancel the service (or waits too long to do so).
- Grow impatient and assumes fraudulent merchant actions before the credit is posted.
Whatever the true reason, claiming the business did not process the return is an easy excuse. Merchants with documentation to support their case have the right to challenge these invalid claims through the representment process, and should do so if this is the case.
Preventing Mastercard Reason Code 4853 Chargebacks
Because they are often the result of merchant error, chargebacks with a Credit Not Processed reason code are highly preventable by following basic best practices:
- For in-person transactions, the cancellation or return policy should be clearly displayed on the receipt, particularly if the merchant has a limited return policy. This should ideally be located near the customer signature line; however, the importance of this has waned with the rise of chip-and-pin and contactless payments.
- For eCommerce transactions, clearly display cancellation or return policies (linked to details) on the checkout page near the SUBMIT button. Require customers to acknowledge the policy (a mandatory “Accept” check box, for example) before accepting the order.
- Fulfill all valid refund or cancelation requests as quickly as possible so the credit will show on the cardholder’s next statement.
- The merchant should communicate to the customer that they’ve initiated the credit process. Keep them informed of any delays. Explain any reductions in credit amount (re-stocking fees, etc.) before processing.
- Be sure staff are trained on the proper way to handle credits.
Chargeback Prevention: A Wider View
While merchants can take many steps to help prevent legitimate claims, fraudulent chargebacks are another matter: friendly fraud is post-transactional in nature, meaning there’s no sure way to identify it beforehand. Merchants can do everything “right” yet still have a customer dispute filed against them.
So, while it’s generally more efficient to take a proactive stance when it comes to chargeback management, a truly effective strategy must encompass both prevention and disputing cases of friendly fraud.
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