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12.4 – Incorrect Account Number

Visa Reason Code 12.4: Incorrect Account Number

Reason Code 12.4: Incorrect Account Number

For the sake of simplicity and standardization, card networks like Visa have created a breakdown of the acceptable causes for a customer to dispute a credit card transaction by filing a chargeback. Each of these causes has a designated “reason code,” and banks assign the appropriate code to each case to show the given reason for the chargeback.

That sounds simple enough, but the reality is, the given reason for a chargeback may or may not be the true reason. Plus, each card network has its own set of reason codes—which, while nearly the same in function, nevertheless differ from one another. Keeping track of all these codes, along with the best ways to either fight or prevent each one, is challenging.

With that in mind, let’s take a look at Visa Reason Code 12.4: Incorrect Account Number.

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What is Visa Reason Code 12.4?

Chargeback reason code 12.4 is an updated version of legacy reason code 77, which was phased out under the Visa Claims Resolution initiative. This code applies when either the transaction was processed using an incorrect account number, or the transaction itself was not authorized.

Whenever an incorrect account number is processed, or the account number submitted to the card issuer for a particular transaction does not match any account number in the bank’s master file, merchants will likely receive a 12.4 chargeback. However, since the fault typically lies with the merchant, the majority of these cases can be prevented by following best practices.

Merchant Errors, Rights, & Limitations

Chargebacks of any kind are nothing but trouble for merchants…yet many chargebacks are the direct result of preventable merchant missteps. It’s crucial for businesses to recognize the two most common merchant errors that might trigger a reason code 12.4 chargeback:

  • The merchant keyed in the account number incorrectly.
  • The merchant incorrectly recorded the account number on a mail or telephone order.

Obviously, there’s a problem that needs to be addressed if a merchant is regularly receiving valid chargebacks resulting from incorrect account numbers. These claims can also be filed illegitimately, though.

As mentioned earlier, the given reason for a chargeback may be far different from the actual reason. The cardholder who knowingly tries to file a chargeback under false pretenses—such as knowingly using an invalid account number—commits friendly fraud.

While banks try to investigate all claims thoroughly before processing a dispute, the meteoric rise in chargeback cases has made this extremely difficult. In many cases, it’s more efficient to simply take the customer’s claim at face value.

Fortunately for merchants, there are at least some time limitations placed on chargebacks filed under reason code 12.4:

  • In the US, the dispute processing time limit is 120 calendar days from either the day the transaction was processed (for purchases or returns), or the transaction adjustment date (for ATM cash disbursement or PIN-authenticated transactions).
  • Outside the US, the dispute processing time limit is 120 calendar days from either the day the transaction was processed, or the date of the shared deposit adjustment.

Reason Code 12.4 Chargebacks: Prevention & Response

There will always be people who attempt to take advantage of the system, no matter how faithfully merchants follow the rules. That said, valid reason code 12.4 chargebacks are preventable. Here are a few steps merchants can take to mitigate their risk from this specific type of chargeback:

  • The best way merchants can reduce their risk of 12.4 chargebacks is to always swipe or insert the physical card. Any other method of completing the transaction should be considered a last resort.
  • If the terminal cannot read the magnetic stripe of a swiped card, request authorization by keying in the account number.
  • If your terminal isn’t working at all, call for authorization approval and carefully copy the authorization approval code on the sales receipt in the appropriate space.
  • Always request authorization before completing a transaction. Particularly if you must use a secondary method to achieve authorization, be sure the account number you enter matches the account number embossed on the card. If they do not match, do not complete the transaction.

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Preventative measures can prevent incorrect account number chargebacks stemming from merchant error. However, illegitimate chargebacks may slip through the cracks. Merchants who have evidence that refutes a cardholder’s claim should definitely challenge the chargeback through Visa’s dispute process. Here are some steps merchants can take to make the representment process more successful:

If…

Then…

You believe the account number on the dispute and the account number on the receipt are a match… …… provide a copy of the receipt and (if applicable) a copy of the authorization log.
The account number on the dispute does not match the account number on the receipt… …you must accept the dispute.
You have already processed a reversal, or issued a credit for the transaction... …provide evidence of the credit or reversal,

including the amount and the date it was processed.

The cardholder no longer disputes the transaction… …provide a signed letter or statement from the cardholder which states they no longer dispute the transaction.

Take a Wider View

Invalid chargebacks from Visa Reason Code 12.4 can be disputed, but 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.


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