We have a customer who stayed at a hotel and had two charges that posted to his account. He claims he authorized one and not the other. He claims he contacted the hotel and they do not have record of the second disputed charge. We feel that there most likely is a legitimate reason for the charge, but still it is a Reg E claim and don't have a way to deny it. We are not sure what type of chargeback we could do and what further documentation we would need. Anyone able to help?

Thank you

The valid chargeback reason will depend on the nature of the charge.

1. Are the charges identical?
Use Duplicate Charge VISA code 82 MasterCard code 4834
2. Is the charge for room damages that the customer claims to not be responsible for? VISA code 80 "incorrect amount" MasterCard code 4859 RS7 "Addendum Dispute"
3. Is the cardholder being charged for an extra night in error?
VISA code 30 "Services not provided" MasterCard code 4855 "Services not Provided":
4. If the cardholder can't specify a reason for the additional charge, file VISA code 80 "incorrect amount" MasterCard code 4831 "Transaction amount differs"

Ask the customer for a written letter describing in detail what he authorized vs. what was charged as well as his account of the conversation with the hotel. If he has a copy of his checkout receipt, include this with the documentation you provide for the chargeback. Your chargeback will compel the hotel to either provide documentation to justify the charge or if it cannot, you will win the chargeback and recover the funds.

Thank you for the reply. I appreciate your expertise on this matter. The two transaction amounts do differ. So, I am looking at MC code 4831. Am I correct that regardless of the information we need to request from the cardholder, we still need to provisionally credit within 10 business days?

Assuming that you require written confirmation of the error, and the cardholder has already provided it, yes, Reg E requires provisional credit in 10 business days while you continue your investigation.

Regarding Regulation E, if you have or know that the folio shows he is subject to final audit (as most folios state), he admits to the first transaction (which he seems to have done), and you can prove that the second transaction does actually represent charges that are allowed by the folio, then there is no error. Failing that solid foundation, then you can't be sure the second transaction represents allowable and incurred amounts related to the first transaction and you would have a valid dispute assertion on your hands.

However you asked about chargebacks and that answer is different. BrianC, I agree with some of your comments regarding chargebacks but I am going to be disagreeing with you on some others.

While the customer may have agreed to be charged for incidentals related to the room, a practice that V and MC allow, once the folio is closed out the hotel cannot just use the card on file to recoup ancillary charges on the card that they should have made sure were in final transaction amount.

The folio is considered closed out when the merchant submits the transaction amount (assuming all proper authorizations were obtained prior to that final submission). The submission of a second transaction lacking a signed and imprinted sales draft (or card not present verbal authorization but I'm guessing from what you stated the cardholder did not do this) is unauthorized. There are transactions that can be submitted separately include such things as room service and parking assuming the cardholder signed at the time of service but otherwise, separate submission is not allowed.

You cannot use Services Not Rendered or Incorrect Transaction Amount on the second transaction for either V or MC or for Visa's Services Not Rendered if the cardholder claims the second transaction is unauthorized.

You may be able to use MC Addendum Dispute but only if you meet the exact criteria.

See this section and take note of what is allowed and what is excepted regarding hotel folios

MC - 8.3.3.3 Lodging, Cruise Line, and Vehicle Rental Transactions
V - Delayed or Amended Charges - Acceptable Charges 5.2.M.4

Whether your pursue a Chargeback or a Compliance case depends on what documentation you have as well as what actions the hotel took (terminal and authorizations) and the documentation they have regarding the submission of the transactions.

The cardholder may in fact be liable for the amount, but both V and MC prohibit the use of their card as a collection tool and if the hotel closed out the folio without ensuring all related charges were on it (or failed to obtain a valid sales draft or verbal authorization) then they have violated V and MC operating rules. As such the hotel would need to pursue the cardholder directly for reimbursement.

I addressed addendum disputes as one possible reason for the additional charge in the 2nd scenario I provided to the OP. The original question was vague as to the circumstances surrounding the charge and I was not ready to jump to that conclusion without additional information from the OP. Consequently I outlined several possible circumstances that could have possibly fit the available facts.

The citations that David provides from VISA/MasterCard are useful in that as he points out, you may determine that the customer legitimately owes the hotel the money, but they violated the card brands' operating rules to collect it.

David and Brian remind me why I like Reg E, and not Visa and MasterCard rules. You really have to work with and study those rules to keep abreast of them and how to use them.

But one point I do want to make based on the title of this thread, is that Reg E has no chargeback rules. Those are association rules. You can do more for a customer than Reg E requires, like chargebacks and faster refunds/provisional credit or zero liability, but you cannot do less.