The following sections describe the proper and improper use of message reason code 4840.
Proper Use of Message Reason Code 4840
This message reason code can be used if the cardholder states the following in a letter.
• The cardholder or anyone authorized by the cardholder was still in possession and control of all valid cards at the time of the transaction, and
• The cardholder admits to at least one legitimate face-to-face transaction, on the same card at a given merchant location, but denies making one or more additional face-to-face transactions at that same merchant location.
The chargeback must reflect the entire amount of the transaction in question.
Use of Expedited Billing Dispute Resolution Process (Fraud) Form. The Expedited Billing Dispute Resolution Process Form for Fraud (Form 412) may be used in lieu of the cardholder letter or cardholder affidavit of alleged fraud if the MasterCard card account is closed. Before processing the chargeback, the issuer must block the account on its host, list the account
Fraud-related Chargebacks
number on the MasterCard Stand-in Account File with a “capture card” response until card expiration, and report the transaction to SAFE.
SAFE Reporting. The issuer must report the transaction to SAFE if fraud was committed.
These situations may not stop at one transaction, and if enough issuers file similar fraud claims, the merchant can be placed in the Questionable Merchant Activity category and listed in a Global Security Bulletin. At that point, an issuer can charge back a transaction
retroactively under message reason code 4849, Questionable Merchant Activity.
Transactions Processed through Two Different Acquirers. An issuer may process a chargeback for message reason code 4840 if the dispute involves two different acquirers and the merchant descriptions are the same. All other requirements of the chargeback reason must be met.
Example—Chargeback Message Reason Code 4840. The following scenario presents a situation when message reason code 4840 would apply.
A cardholder gives his or her card to a gas or petrol station attendant who walks away to imprint it but also makes several additional imprints of the card. After the cardholder drives away, the attendant completes and deposits the other sales slips and takes the equivalent amount of cash from the register. The cardholder subsequently is billed for several
unauthorized transactions from this one merchant.
Improper Use of Message Reason Code 4840
The issuer may not use this message reason code for the following types of transactions.
• Non–face-to-face Transactions.
• Addendum Disputes. Issuers must not use this chargeback message reason code if the issuer is made aware that the disputed transaction is a subsequent separate addendum transaction that was appended to a previous valid transaction involving the same merchant. The issuer must process a chargeback for message reason code 4859 RS7 (Addendum Dispute) if the cardholder acknowledges participation in the original transaction.
• The transaction was a MasterCard Commercial Payments Account transaction. A MasterCard Commercial Payments Account transaction occurs when PDS 0002 (GCMS Product Identifier) was MAP (MasterCard Commercial Payments Account) in the First Presentment/1240 message.
• Brazil only—The transaction was a MasterCard Agro Card transaction occurring in Brazil with a MasterCard Agro Card issued in Brazil. A MasterCard Agro Card transaction occurs when PDS 0002 (GCMS Product Identifier) was MLF (MasterCard Agro Card) in the First Presentment/1240 message.
Fraud-related Chargebacks
Proper Use for Issuer’s First Chargeback
The conditions shown below represent valid options that the issuer can use to process a first chargeback for message reason code 4840.
Fraudulent Processing of Transaction
Time Frame 120 calendar days Retrieval Request No
Supporting Documents The issuer must support this chargeback with a cardholder letter, completed Expedited Billing Dispute Resolution Process Form for Fraud (Form 412), or an email message from the cardholder.
DE 72 (Data Record) NNNNNNNNNNNNNNNNNNNNNNN
Notes Replace NNNNNNNNNNNNNNNNNNNNNNN with the Acquirer Reference Data (ARD) of the genuine transaction.
If the valid transaction was not posted, the cardholder must state that the legitimate transaction has not posted in the supporting chargeback documentation.
The Expedited Billing Dispute Resolution Process Form for Fraud (Form 412) may be used if the MasterCard card account is closed. Before processing the chargeback using this form, the issuer must block the account on its host; list the account number on the MasterCard Stand in Account File with a “capture card” response until card expiration, and report the transaction to SAFE.
Proper Use for Acquirer’s Second Presentment
The following conditions represent valid options that the acquirer may choose to process a second presentment for message reason code 4840.
Addendum Disputes—Second Presentments. Acquirers may remedy the dispute with documentation substantiating the cardholder has participated in the original transaction and documentation to establish the cardholder is responsible for the addendum transaction.
Suggested documentation is proof of card presence and signature for the original transaction as well as documentation to support that the addendum transaction is the cardholder’s responsibility. Once the issuer is made aware that the disputed transaction is a subsequent separate addendum transaction that was appended to a previous valid transaction involving the same merchant, the issuer must change the message reason code to 4859 RS7.
Example—Chargeback Message Reason Code 4840 Remedy. The following example illustrates a possible remedy.
A department store can show, using the times and descriptions printed on terminal receipts or on the authorization logs, that the cardholder made one transaction in the sportswear
department at 09:00 and the second transaction in the jewelry department at 12:30. The Fraud-related Chargebacks
difference between the times may indicate either that the cardholder made both transactions or that the card was out of the cardholder’s possession.
PIN Transaction
IPM Second Presentment Message
Reason Code 2008
Issuer authorized transaction Second Presentment Condition Both of the following:
• The acquirer can substantiate that a PIN was present in the Authorization Request/0100 message for at least one transaction.
• The acquirer can provide a letter of explanation from the merchant.
Supporting Documents Both of the following:
• A merchant explanation
• The acquirer must provide the sales slips or POI-generated receipts for any non-PIN transaction.
DE 72 (Data Record) PIN MMDDYY NNNNNN
Notes Replace MMDDYY with the date the transaction was authorized of the valid posted transaction.
Replace NNNNNN with the Dual Message System Authorization Number of the valid posted transaction.
Credit Previously Issued
IPM Second Presentment Message
Reason Code 2011
Credit previously issued Second Presentment Condition None
Supporting Documents None
DE 72 (Data Record) Date of credit, and optionally the credit ARD.
Notes None
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Two Separate Transactions
IPM Second
Presentment Message Reason Code
2700
See Corresponding Documentation/Chargeback Remedied
Second Presentment Condition The acquirer can document that two separate transactions occurred.
Supporting Documents Both of the following as applicable:
• The legitimate and unauthorized sales slips or POI terminal-generated receipts.
• A merchant explanation, if the TID does not provide sufficient information to allow the cardholder to identify the transaction.
DE 72 (Data Record) None
Notes The TID may provide sufficient information to allow the cardholder to identify the transaction.
Duplicate Chargeback
IPM Second Presentment Message
Reason Code 2701
Duplicate Chargeback Second Presentment Condition None
Supporting Documents None
DE 72 (Data Record) First chargeback reference number and date of original chargeback.
Notes None
Data Record did not Contain the Valid ARD
IPM Second
Presentment Message Reason Code
2704
Invalid data record text
Second Presentment Condition Data record did not contain the valid ARD if a valid sale posted.
Supporting Documents None
DE 72 (Data Record) None
Fraud-related Chargebacks
Notes None
Arbitration Chargeback
If the first chargeback was valid and the acquirer failed to remedy the dispute properly, the issuer may continue the chargeback with the same message reason code originally processed (4840).
The issuer will have chargeback rights if examination of the documentation reveals a new valid chargeback reason. If the situation requires a different message reason, the issuer must
process the arbitration chargeback using the appropriate message reason code.
IPM Arbitration Chargeback Message
Reason Code 4840
Fraudulent processing of transactions
Arbitration Chargeback Details The cardholder continues to dispute the transaction.
Supporting Documents Progressive documentation from the cardholder disputing the transaction and rebutting any merchant explanation.
The progressive cardholder letter must be dated after the second presentment.
DE 72 (Data Record) Reason for the return
Notes If the MasterCard card account is closed, the Expedited Billing Dispute Resolution Process (Fraud) form may be used in lieu of the cardholder letter. Before processing the arbitration chargeback, the issuer must block the account on its host, list the account number on the MasterCard Stand-in Account File with a “capture card” response until card expiration, and report the transaction to SAFE.
The issuer may use the following additional message reason codes to submit an arbitration chargeback:
• 48xx—New valid message reason code
• 4901—Required documentation not received to support prior Second Presentment/1240
• 4902—Documentation received was illegible
• 4903—Scanning error—unrelated documents or partial scan
• 4908—Invalid Acquirer Reference Data on Second Presentment/1240 (2004);
documentation was received
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Arbitration Case Filing
Refer to the Arbitration Procedures chapter.