Visa Chargeback Reason Code 12.7: Invalid Data
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 Chargeback Reason Code 12.7: Invalid Data.
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What is Visa Reason Code 12.7?
Chargeback reason code 12.7 is an updated version of legacy reason code 72 (condition 2), which was phased out under the Visa Claims Resolution initiative. This code applies when a transaction was authorized, but contained incorrect or invalid data.
That definition is pretty broad and vague on its own, though. It’s true that the code could technically apply to any incorrect usage of data. However, there are a few specific information points that most commonly result in a 12.7 code chargeback:
- Incorrect transaction date
- Incorrect MCC
- Incorrect merchant or transaction type indicator
- Incorrect country/state code
- Incorrect “Special Condition” indicator
Again, this list is not exhaustive, but rather shows the most typical conditions for this chargeback. Since the fault here lies with the merchant in almost every instance, 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. That said, many chargebacks are the direct result of preventable merchant missteps. Chargebacks that fall under Visa chargeback reason code 12.7 are a perfect example. Unless the cardholder has supplied the merchant with invalid information, the cause will almost always be an error on the part of the merchant:
- The merchant keyed in the date incorrectly.
- The merchant transposed numbers on the MCC or transaction type.
- The merchant used the wrong state initials (AL instead of AK for Alaska, for instance).
- The merchant neglected to indicate there were special conditions for the transaction.
Obviously, if a business regularly receives legitimate chargebacks with an invalid data reason code, there’s a problem that needs to be addressed by the merchant. It’s the merchant’s responsibility to train staff on how to process Visa transactions, which includes double-checking for errors.
That said, 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 invalid data—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 12.7. Per Visa regulations, no more than 75 calendar days can pass between the transaction processing date and the dispute processing date for these claims.
Reason Code 12.7: Prevention & Response
No matter how faithfully merchants follow the rules, there will always be people who attempt to take advantage of the system. But again: legitimate invalid data 12.7 chargebacks are preventable, and there are certain steps merchants can take to mitigate the risk of this specific type of chargeback:
- Make sure you include all necessary information with each authorization request. Pay special attention to commonly-mistyped information such as city and state codes, transaction date, transaction type, etc.
- Get in the habit of double-checking all fields before submitting an authorization request.
- Take care that you always include the correct MCC, and that it matches what will be included with the transaction clearing.
- Implement ongoing training to ensure your staff understands the proper procedures for processing transactions, including reviewing key fields.
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While preventative measures can significantly lower overall volume, 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:
|he data in the authorization was valid…||…… provide a copy of the transaction receipt.|
|Any of the data used to obtain the authorization was missing or invalid…||…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
In rare cases, chargebacks from Visa chargeback reason code 12.7 can be disputed. However, since most are the result of easily preventable merchant errors, it’s much more efficient to take a proactive stance. In fact, the same thing could be said of other chargeback reason codes, too. 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.