Card Brand Dispute Updates

As mentioned on the October 2021 Merchant Processing Statement, the Card Brands announced changes to their dispute processing rules that may have an impact on your business. These changes are as follows:

Merchants under MCC 4722 Travel agencies and tour operators – Category 13 Consumer dispute:

An Issuer (Card Issuing bank) will be required to wait 30 calendar days from the date the merchant cancelled the services. Note, the 30-day waiting period does not apply if it would cause the issuer to exceed the dispute time limit. Per VISA, the additional time will allow the travel agent time to research relevant information that will avoid the potential of processing additional credits.

Time Frame Reductions for Third Party Gift Cards:

Issuer will be required to file a dispute under code 13.1 within 120-days of the purchase transaction date. Previously Issuer’s had up to 120-days from the date the cardholder expected the merchandise or services not to exceed 540 days.

Compelling evidence use for dispute response on 13.1 Merchandise/Services Not Received or Provided:

Issuer only addresses merchant supplied documentation during the Pre-arbitration phase as it relates to compelling evidence. Effective for dispute responses processed on or after 16 October 2021, the issuer will be required to address all information supplied by the merchant to support that the cardholder (or an authorized person) received the merchandise or services at the agreed location or by the agreed date / time.

Credits/Reversals processed prior to dispute:

Effective on or after 16 October 2021, if the credit was applied by the merchant before the dispute, the issuer must either: apply the credit to the disputed transaction or certify to which transaction/s the credit/s was applied and why the credit does not resolve the dispute.

This can apply to the following dispute code types:

  • 10.3 Other Fraud- Card-Present Environment
  • 10.4 Other Fraud- Card-Absent Environment
  • 13.1 Merchandise/Services Not Received
  • 13.2 Cancelled Recurring
  • 13.6 Credit Not Processed
  • 13.7 Cancelled Merchandise/Services

Misrepresentation of investment products or services: (for example: binary options or foreign exchange trading), where the Merchant refuses to allow the Cardholder to withdraw available balances.

Effective on or after 16 October 2021, an issuer may use proof of lack or inaccessible cardholder’s service account with merchant. Copies of e-mail/s from the system showing cardholder that their account is inaccessible.

Wait time limits for Dispute Conditions 13.7 Cancelled Goods/Services:

Effective on or after 16 October 2021, an issuer must wait 15 calendar days from the date the merchandise was returned, or services were cancelled.

Rapid Dispute resolution (RDR) credit issued:

Merchant should not be issuing a credit if they are responding to accept a Rapid Dispute Response inquiry. An acceptance will debit the merchant’s account. If a credit is issued on top of accepting the RDR case will result in the cardholder being unjustly enriched. Note: there are no re-presentment or Pre-arbitration filings allowed. Merchant must now request a Pre-compliance filing which can lead to additional cost for filing and technical fees for issuing a credit after or during the RDR acceptance.