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The right to a chargeback is based on laws passed in the United States in the 1970s offering cardholders certain consumer protections, but these laws were implemented very differently by the various card networks. So while they are all compliant with the relevant laws and regulations, the Mastercard chargeback guide is nevertheless totally different from that of Visa. If you ever need to charge back Mastercard transactions, familiarizing yourself with the process will help improve your chances of success.
When America passed the Fair Credit Billing Act in 1974, it marked the beginning of consumer protections for credit card holders. Four years later, the Electronic Fund Transfer Act of 1978 gave similar protections to holders of debit cards. It was then left to the various companies to make the appropriate changes to reflect the legal landscape.
Debit cards and credit cards give consumers different protections since as mentioned above they are based on different laws. However, for ease of use and a simpler and more streamlined process, the Mastercard chargeback guide implemented a unified set of policies for both debit and credit cards.
Since, like Visa, Mastercard is a multinational corporation with its headquarters in the U.S., it needs to make sure that its rules and policies are compliant with American laws and financial regulations. In addition, the Mastercard chargeback rules are adapted to comply with the local laws and regulations for many of the world’s countries and jurisdictions for cardholders, banks, and merchants.
Mastercard traces its origins back to the late 1950s and grew into its present structure between the 1960s and 1970s, the same time that its arch-rival Visa was taking form.
The first criterion to understand when dealing with a Mastercard chargeback payment dispute is the difference between two basic chargeback categories: fraud and cardholder disputes. Your bank even has separate departments to deal with them. Let’s dig a little deeper so that the distinction can be made as clearly as possible.
According to Mastercard chargeback rules, “fraud” applies only to unauthorized transactions. Examples would include identity theft or stolen credit card or card data.
This may seem to be an overly limited definition of fraud. After all, isn’t the term “fraud” applied to many cases that involve the merchant or broker misleading customers? However, according to Mastercard chargeback rules, fraud always means unauthorized transactions.
If your chargeback is for a transaction you authorized, it will fall under the cardholder dispute category. The Mastercard chargeback guide recognizes no less than thirteen subcategories of cardholder disputes. The most common ones include:
Correctly categorizing your particular dispute is critical, but the rules are complex and the distinctions can be very fine.
Regardless of whether your particular dispute is based on fraud or a consumer dispute, your claim with the bank will need to be categorized with the correct reason code. The various card networks follow completely different systems, and in the case of Mastercard, each reason code is a four-digit number, sometimes accompanied by an explanatory phrase.
It can hardly be overstated that you generally do not get a second chance to raise a chargeback, so getting it right the first time is critical. Getting professional help with complex disputes is a very good idea.
It probably goes without saying that a chargeback needs to be raised within a limited time frame. The Mastercard chargeback time limit is no later than 120 days from the transaction date. There are some fine points to this basic rule and it’s worthwhile to read the fine print. It’s important to file a claim within the Mastercard Chargeback time limit or it can lead to the claim being thrown out.