Common Reasons Cardholders File Chargebacks

What are the Most Common Reasons Cardholders File Chargebacks?

Many merchants accept chargebacks as simply a cost of doing business. Without a clear understanding of what transaction disputes are and the reasons cardholders file chargebacks, merchants are losing revenue and potentially hurting their relationship with card networks.

In order to prevent chargebacks from occurring, it is necessary to understand what the most common chargeback reason codes are, as well as the reasons why they are filed.

Chargeback Reason Codes

Each chargeback is assigned a reason code by the issuing bank, which is supposed to inform the merchant of the specific reason the transaction was disputed. While each card network has its own numbering system, the reasons are similar throughout the industry. Unfortunately, the coding system is not without its drawbacks.

Reason codes don’t show the real motivation for chargebacks; Intelligent Source Detection does. Click to learn more.


The issuing bank assign reason codes based on the cardholder’s explanation of what went wrong with the transaction. Everyone knows there are always two sides to every story, but the bank only considers one side of the argument—the consumer’s. Chargebacks often turn into a he said, she said type situation.

Consumers have learned how to exploit loopholes in the chargeback process, and it is easy to dispute a transaction with a claim that isn’t entirely accurate. If the consumer isn’t honest about the reason for the dispute, the wrong reason code is used, and the merchant is unable to identify the true chargeback trigger.

Bank vs. Consumer Chargebacks

Processing both the original credit card transaction and the resulting chargeback involves multiple parties: the cardholder, the merchant, the issuing bank, the acquirer and the card network.

Chargebacks can be instigated by the bank or the consumer. Unlike cardholder-filed chargebacks, most bank chargebacks occur without the knowledge or involvement of the cardholder.

A bank chargeback is instigated by the issuer when there is an anomaly in the transaction process. Bank chargebacks have reason codes exclusively for their use, and the chargeback can typically be resolved between the issuing bank and acquirer. The merchant’s involvement is to simply pay any associated chargeback fees.

The majority of chargebacks are initiated by the cardholder. These chargebacks result from either merchant error, criminal fraud, or friendly fraud. Depending on the reason code assigned, the merchant may have the opportunity to dispute the chargeback with representment.

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Common Chargeback Reason Codes

Every merchant, vertical and industry is different. The chargeback reason codes used most frequently against one merchant may be different than those of another. Some merchants may see more  counterfeit transactions chargebacks, while others may suffer from higher credit-not-processed chargeback instances.

However, according to issuing bank reason codes, these are the most common reasons cardholders file chargebacks against the average merchant.

  1. Fraudulent transaction
  2. Products or services not as described
  3. Cardholder doesn't recognize the transaction
  4. Services not rendered or merchandise not received
  5. Credit not processed
  6. Duplicate processing
  7. Transaction amount differs from the agreed upon amount
  8. Cancelled recurring transaction

Each card network has its own coding system. Merchants need to thoroughly understand the charges levied against them in order to create the most compelling chargeback dispute case possible.

The following reason codes are used to describe transaction disputes initiated by cardholders. The popularity of each code is dependent on the business.

Visa MasterCard Explanation Causes

Fraud (card-not-present)


No cardholder authorization

The cardholder did not authorize the transaction Account information was obtained fraudulently by the person placing order

Cardholder’s family member used account without permission (friendly fraud)


Not as described or defective merchandise


Defective/Not as described

Merchandise was… damaged or defective upon delivery; not as described (telephone) or shown (online); unsuitable for the consumer’s needs The wrong item was sent

Items were damaged during shipping

Products or services were inaccurately described

Services were not performed as described

Product return was not accepted and/or credited back to account

Products were counterfeit

Quality of goods and services were inadequate


Transaction not recognized


Cardholder does not recognize—potential fraud

The cardholder does  not remember or recognize the  transaction The merchant’s name or billing address on the card statement was not recognized by the cardholder

Services not provided or merchandise not received


Goods or services not provided

Merchandise or services were not received by arranged delivery date The merchant failed to provide services or product

The cardholder was billed before products were shipped

Items were not sent by arranged delivery date

Products were not made available for pickup


Credit not processed


Credit not processed

The cardholder was not credited after an item was returned Credit was not issued by the merchant; credit was issued after the statement date

The merchant neglected to inform the  customer of the return policy at time of sale


Duplicate processing


Duplicate processing

The transaction was processed multiple times The merchant submitted a single batch of transactions multiple times

Both copies of the sales receipt were deposited

Receipt deposited with more than one acquirer

Transaction was processed multiple times


Cancelled recurring transaction


Cancelled recurring transaction


Installment billing dispute

The recurring transaction was processed after the cardholder requested termination, the account was closed, the charge exceeded the predetermined amount, or the customer was not informed of the upcoming charge The cardholder was charged after requesting transaction termination

The merchant processed a transaction for closed card

The customer was not notified of an increase in the transaction amount (must be notified in writing 10 days before the charge)

The merchant billed the customer prematurely on installment plan


Fraudulent multiple transactions


Fraudulent processing of transactions

The cardholder has purchased from the merchant in past, but this transaction wasn’t authorized The merchant failed to void multiple transactions

The merchant attempted to process fraudulent transactions


Incorrect transaction amount or account number


Transaction amount differs

The card was not charged the correct amount The merchant made a calculation error in the transaction amount

Without the cardholder’s consent, the transaction amount changed after the sale

The transaction amount increased without the cardholder consent


Incorrect currency or transaction code, or domestic transaction processing violation


Correct transaction currency code not provided

The merchant failed to provide adequate currency information or process credit correctly Credit was issued, but processed as sale

The cardholder was not permitted to make the purchase in merchant’s local currency

The sales receipt was not deposited in country where the purchase was made

The customer was not informed of currency conversion

Knowing the Real Reason

Merchants who are interested in understanding the common reasons cardholders file chargebacks won’t get the information they seek by analyzing chargeback reason codes.

Friendly fraud has made reason code intelligence less effective. By exploiting loopholes in the chargeback process, consumers are able to file transaction disputes with reason codes that don’t accurately portray the real motivation for the chargeback.

Chargebacks911® created Intelligent Source Detection™, a patent-pending technology capable of identifying the real reason behind the reason code. We are able to help merchants distinguish the true chargeback triggers and implement effective management techniques.

If you want to know the real reasons cardholders file chargebacks, contact us today. We can tell you exactly what you want to know!

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