Fraud: King of the Chargeback Reason Codes

By Chris Alarie on Feb 10, 2022

There are more than 100 distinct reason codes among the four major card brands. Approximately one-sixth of these reason codes deal with different forms of fraud. These are the most consequential of all the categories of reason codes.

According to LexisNexis’s 2021 True Cost of Fraud study, the average number of monthly fraud attacks increased by 15% from 2020 to 2021. Merchants need to understand fraud reason codes in order to protect their businesses from fraud and chargebacks.

What Kinds of Fraud Reason Codes Are There?

In our Payment Industry Glossary, we define reason code as “an alphanumeric code that indicates the claimed reason for a chargeback” and note that “each card brand has their own unique set of reason codes.” These reason codes are divided into three categories depending on the supposed cause of a chargeback: consumer disputes, processing error, or fraud. The reason codes help merchants understand the reason for particular chargebacks and better tailor their responses to chargebacks.

The most significant category of reason codes is fraud. This category of reason codes is further divided to provide more specific information about the chargeback. For example, card brands may have different fraud reason codes for “card present” transactions and “card not present” transactions. Other specific fraud reason codes relate to potential counterfeit EMV chips, PIN liability shifts, and specific card brand programs such as Visa’s Fraud Monitoring Program.

Card Brand Fraud Reason Code Description
Visa 10.1 EMV Liability Shift Counterfeit Fraud
Visa 10.2 EMV Liability Shift Non-Counterfeit Fraud
Visa 10.3 Other Fraud — Card Present Environment
Visa 10.4 Other Fraud — Card Absent Environment
Visa 10.5 Visa Fraud Monitoring Program
Mastercard 4837 No Cardholder Authorization
Mastercard 4849 Questionable Merchant Activity
Mastercard 4870 EMV Chip Liability Shift
Mastercard 4871 EMV Chip/PIN Liability Shift
American Express F10 Missing Imprint
American Express F14 Missing Signature
American Express F24 No Card Member Authorization
American Express F29 Card Not Present
American Express F30 EMV Counterfeit
American Express F31 EMV Lost/Stolen/Non-Received
Discover UA01 Fraud – Card Present Transaction
Discover UA02 Fraud – Card Not Present Transaction
Discover UA05 Fraud – Chip Counterfeit Transaction
Discover UA06 Fraud – Chip and PIN Transaction
Discover UA10 Request Transaction Receipt (swiped card transactions)
Discover UA11 Cardholder Claims Fraud (swiped transaction, no signature)


How Do I Respond to Fraud?

The reason codes guide merchants in how to respond to chargebacks. With fraud reason codes, merchants need to be careful about challenging any chargeback as genuine fraud-derived chargebacks can be difficult to dispute. However, if the merchant believes the fraud claim is in error and can support that contention, the reason code offers guidance as to what evidence is necessary.

For example, for Visa reason code 10.5 (Visa Fraud Monitoring Program), the following compelling evidence may be useful for representment:

  • If the transaction has been previously disputed with a different reason or dispute condition, provide documentation that proves this second dispute is invalid.
  • If you have already processed a refund for the transaction in question, provide documentation that proves you have credited the cardholder’s account.
  • If the cardholder no longer wishes to dispute the transaction, provide documentation that proves the issue has been resolved.

Chargeback representment needs to have compelling evidence tailored to the reason code. Similarly, any efforts to mitigate future chargebacks should be informed by reason codes.

How Do I Avoid Fraud Reason Codes in the Future?

Just as the compelling evidence needs to match the reason code, so should any prophylactic efforts. If a merchant sees a particular fraud reason code on a repeated basis, measures should be taken to reduce it in the future.

For example, repeatedly receiving chargebacks from Discover with the reason code UA02 (Fraud: Card Not Present Transaction) might necessitate the following efforts:

  • Always respond to retrieval requests on time and with the required information.
  • Consider using fraud detection tools such as card security code (CID) and Address Verification Service (AVS).
  • Use pre-sale fraud detection service providers that can help verify the cardholder’s identity, detect potential criminal activity, and reduce the risk of accepting an unauthorized transaction.
  • Use a billing descriptor that is easily recognized by the cardholder.
  • Always submit an authorization request, no matter the transaction amount.
  • Make sure you differentiate between card-absent and card-present transactions during clearing by noting internet, phone, or mail orders.

Tracking reason code patterns through the use of chargeback analytics can inform any changes to business protocols or implementation of chargeback prevention efforts. For fraud reason codes, repeated instances of specific reason codes can indicate persistent sources of fraud.