we listened to Brian's webinar last week and we have a good one. We filed a consumer dispute for an on-line purchase. He never got it in the mail. Our processor, Jack Henry, credited us back for the purchase and we provided final credit to the customer. Today, we see a debit from Jack Henry for the purchase. The merchant represented the purchase. The merchandise was delivered to another person at another address.

Can we debit the customer for the purchase now? Any idea why they would have credited us and then debited us?

Thanks for listening in. To your question at hand.

When your processer files a chargeback with MasterCard, MasterCard debits the merchant for the amount of the chargeback and credits you. This credit is provisional. The merchant has 45 days after your chargeback to represent with documentation to remedy the chargeback reason you specified. Since Reg E provides 90 days to complete your investigation, don't provide final credit until you are at least outside of that representment timeframe. Reg E prohibits you from reversing credit once final.

Since your cardholder did not authorize the charge, nor did they receive the merchandise, I don't see how you could conclude that this wasn't a Reg E error. Your requirement under Reg E to reimburse the cardholder for fraudulent charges is not connected to your ability to recover funds using the MasterCard chargeback process.

That being said, we still have one arrow left in our quiver. MasterCard operating rules place liability for merchandise shipped to an address other than the billing address of the cardholder on the merchant. Although the merchant has represented, you can go back to your customer, request that they complete a new dispute letter stating again that the charge is not authorized and also state that they do not know the recipient or the address where the merchandise went. You can use this documentation to ask Jack Henry to file an arbitration chargeback on your behalf and kick the liability back to the merchant. Since MasterCard rules are stacked against the merchant in this case, I am confident that they will not pursue this claim into arbitration and you will get your money back.

Thanks Brian!! We wil contact the customer and Jack Henry ASAP. Have a great weekend!!