Discover Chargeback ProcessWhy It Pays to Know the Discover Dispute Process
In a Nutshell
The Discover chargeback process begins with either an outright chargeback or a Ticket Retrieval Request, which can escalate into a chargeback. Once a formal chargeback is filed, merchants will be given the opportunity to present evidence to counter the cardholder’s claims.
What is the Discover Chargeback Process? How do Discover Disputes Work?
You already know that dealing with chargebacks is a complex, multi-step ordeal, regardless of the brand name on the card used. But, the Discover chargeback process is a little different from the one used by networks like Visa and Mastercard.
Discover is both a card network and an issuing bank. This closed-loop system means that Discover basically handles all disputes internally. In this article, we break down the Discover chargeback process so that you know how to respond and protect your hard-earned revenue.
Discover Chargebacks
As if dealing with chargebacks isn’t hard enough by itself, every card brand has its own set of rules for contesting invalid disputes. For each network, there are different time frames, exemptions, and more. Discover credit cards are no exception, but what does that mean for merchants and consumers? How does the Discover chargeback process work? And what special tactics might merchants need for winning reversals?
How Does Discover Decide When to Issue a Chargeback?
Discover has a predetermined process for handling chargebacks, just as other networks do.
When a card member contacts Discover to dispute a charge, the company reviews the transaction data it has already obtained to decide whether or not the dispute is valid. Card members typically have 120 days from the transaction date to dispute a transaction.
Since the company acts as both the issuer and card network, they already have an abundance of transaction information available for review. So, at that point, one of two things happen:
These retrieval requests are extremely important. They indicate that Discover needs more information to decide whether or not to issue a chargeback (more on this later).
If they don’t hear from the merchant, the claim will be escalated to a chargeback. The network will assess additional fees as a result.
There’s one more important difference between Discover and the other major card networks to know about. Visa and Mastercard require the merchant to attempt to resolve the matter directly with the cardholder. Discover, however, prohibits any contact between merchants and the card member regarding a Discover card chargeback.
Learn more about retrieval requests
The Discover Chargeback Cycle
If a Discover chargeback gets filed against you, you’ll have the opportunity to challenge the dispute, after which Discover will rule on the case. If you or the cardholder are dissatisfied with the outcome, either party may submit the dispute to arbitration.
So, let’s say you declined to respond to a ticket retrieval request. Or, that you responded, but received a Discover chargeback anyway, or maybe Discover issued a chargeback without ever issuing TRR.
What happens in these cases? Here’s what to expect:
Step #1 | Notification
Once a formal chargeback occurs, Discover will forward you a network-specific chargeback reason code through your acquiring bank. Think of a reason code as shorthand for why the chargeback occurred.
Discover groups their more than two dozen chargeback reason codes into three categories:
- Fraud: These reason codes concern unauthorized activity involving third-party fraud (i.e. true fraud), such as transactions made using stolen cards.
- Processing Errors: A card processing issue occurred, such as an invalid card number, an authorization issue, or a transaction involving a technical point-of-sale error.
- Cardholder Disputes: These reason codes cover everything from merchant errors like double billing and non-receipt of goods to quality issues.
There are also a handful of legacy reason codes that are no longer in use.
Step #2 | Representment
After you receive the reason code, you have a limited window of time — at most 20 days — in which to gather compelling evidence, draft a chargeback rebuttal letter, and submit a representment to your acquirer.
Your merchant acquirer will then review the documentation and forward your package to Discover. Afterwards, the card network will weigh your evidence against the cardholder’s claims and make a ruling. If Discover rules in your favor, the chargeback will be reversed and funds will be returned to your account. If Discover rules in the cardholder’s favor, the chargeback stands.
There’s one more important difference between Discover and the other major card networks to know about. Visa and Mastercard require the merchant to attempt to resolve the matter directly with the cardholder. Discover, however, prohibits any contact between merchants and the card member regarding a Discover card chargeback.
Step #3 | Arbitration
If either you or the cardholder are unsatisfied with Discover’s ruling, the case may move into arbitration.
If a dispute requires arbitration, merchants will have just 30 calendar days to submit additional documents. Once Discover receives documentation from both parties, it will rule on the arbitration within 15 business days. This marks the end of the line: if the case is ruled in favor of the cardholder, the merchant has 30 in which to comply with Discover’s decision.
Arbitration is a time-consuming and costly process. Unless there’s a high dollar amount at stake, or you believe you have additional evidence that is highly compelling, you’re usually better served by just accepting the loss and moving on.
When Can Cardholders Dispute Discover Transactions?
Discover lets cardholders dispute transactions within 120 days of the original purchase or estimated delivery date. This is allowed under specific circumstances including (but not limited to) fraud, missing goods, or counterfeit goods.
The network’s rules establish legitimate and illegitimate reasons for chargebacks. These guidelines are meant to discourage buyers from filing bogus chargebacks. They’re also meant to protect merchants against baseless disputes, and reduce administrative fees related to chargebacks and stop fraudulent claims.
In general, buyers have 120 days from the original purchase (or estimated delivery date) to file a Discover chargeback. They also need a valid reason; legitimate reasons for Discover disputes include (but are not limited to):
Learn more about valid reasons for chargebacksHow to Dispute a Charge on a Discover Card
Discover advises cardholders to contact merchants before disputing transactions. Merchants may offer refunds or product replacements if the dispute concerns billing errors, fulfillment mistakes, or defective goods; chargebacks should only be filed as a last resort.
Cardholders who are unable to secure a refund form the seller directly may dispute charges by calling Discover’s customer service line at (800) 347-2683. Cardholders can also take the following steps to file chargebacks online:
- Log into your Discover online banking account
- Select the “Activity and Statement’ page under the “Activity” icon
- Select the transaction you wish to dispute and click the “Dispute This Charge” icon
After filing a chargeback, you should provide evidence to back your claim by either faxing Discover at (224) 813-5109 or by uploading the documents online through the “Upload Documents” section available under the “Security” drop-down menu on the “Disputes” page.
Once the dispute is reported, Discover representatives will check purchase details and contact the merchant involved. If Discover looks at all the evidence and feels the claim is legitimate, the dispute is escalated to a chargeback. The cardholder will be issued a provisional credit for the amount of the disputed transaction. That said, the dispute may not be fully resolved for weeks, or even months.
In most situations, asking the merchant for a refund brings a faster and more equitable resolution to the dispute. That will typically end the matter, too, whereas with chargebacks, retailers will have an opportunity to challenge the claim.
