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#1882050 - 12/30/13 10:31 PM Business Cardholder Dispute
BSA for GWB Offline
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BSA for GWB
Joined: Feb 2013
Posts: 3
We are a small bank and do not run across very many debit card chargebacks or disputes. We have a Business customer that has a dispute with an advertising company they did business with. The advertisement that was sold to our customer is not what they had agreed to. They have been trying to work with the advertising company for a refund or a comparable service, but have not gotten a refund or had them work with them on the issue because the advertising company says they signed a contract which states that the contract shall not be changed, modified or cancelled. Does our business customer have any chargeback or dispute rights for this transaction? If so, is provisional credit to be given back to the business cardholder? Any help or direction on this would be appreciated. Thanks!

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eBanking / Technology
#1882055 - 12/30/13 10:55 PM Re: Business Cardholder Dispute BSA for GWB
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
Welcome to BankersOnline. We have a couple of things to consider. First your business customer does not have Reg E protections, and since the original purchase was authorized, VISA/MC Zero Liability protections for fraudulent transactions do not apply.

VISA/MC do provide chargeback rights for "Defective/Not as Described" goods or services. (VISA chargeback code 53 or MasterCard chargeback code 4853).

Note that in order to file either chargeback you will need a detailed letter from the cardholder including their card number, a description of what was promised vs. what was actually provided and a detailed account of their effort to resolve the dispute with the merchant. To support their claim it will be helpful if you can obtain documentation (such as the contract or advertising) that demonstrates what the merchant promised.

Ultimiately, prior to proceeding with a chargeback, you should evaluate the merits of the cardholder's claim to determine if there is a basis from filing on their behalf. If you determine this is a case of buyer's remorse, you have the right to refuse to file a chargeback. However, if you do decide to file a claim with VISA/MC, you are obligated to provide provisional credit to the cardholder once you file the chargeback.

The merchant has the right to represent if they can demonstrate that the have fulfilled their obligations under the terms on the contract. (In the event that the cardholder still disputes the merchant's claims, they can, if you permit, file an updated dispute letter refuting the merchant's representment documentation and the bank can file a pre-arbitration claim (VISA) or an arbitration chargeback (MasterCard.)
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#1882692 - 01/02/14 09:49 PM Re: Business Cardholder Dispute BSA for GWB
John Burnett Offline
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John Burnett
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Before you proceed with allowing your customer (assuming you try the chargeback route that Brian describes and the merchant re-presents) to go the MC or Visa arbitration route, be aware there are costs involved, and you'll need to be able to quantify them and give that information to your customer before moving forward.
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#2174285 - 04/19/18 05:03 PM Re: Business Cardholder Dispute BrianC
tserbin Offline
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Joined: Sep 2017
Posts: 27
Originally Posted By BrianC


However, if you do decide to file a claim with VISA/MC, you are obligated to provide provisional credit to the cardholder once you file the chargeback.



Brian, we are trying to make sure we are compliant and this question has come up lately in regards to non-fraud disputes. Where is it cited that we are required to provide provisional credit once we file a chargeback? Is this a MasterCard rule or Reg E?

Thanks in advance,
Tammi

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#2174288 - 04/19/18 05:08 PM Re: Business Cardholder Dispute BSA for GWB
BrianC Online
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BrianC
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Illinois
MasterCard rule. Reg E does not apply to business cardholders.

Related thread
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#2174372 - 04/19/18 09:09 PM Re: Business Cardholder Dispute BSA for GWB
Valley girl Offline
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Joined: Aug 2014
Posts: 394
TX
John,

You said that we need to be able to give our customer information on the cost of arbitration. Does that mean on authorized transactions where the member is claiming product not received or defective/not as described that we can revoke the provisional credit and charge the fees back to our member if we are not successful?

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#2174587 - 04/23/18 02:41 PM Re: Business Cardholder Dispute BrianC
tserbin Offline
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Joined: Sep 2017
Posts: 27
Who monitors banks to ensure they are following MasterCard rules?

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#2174618 - 04/23/18 03:48 PM Re: Business Cardholder Dispute BSA for GWB
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
Valley girl - Arbitration fees are part of your contractual obligation to Mastercard. These cannot be passed to the customer.

Tserbin - Mastercard's contract gives them the right to audit their customers. If Mastercard receives complaints directly from cardholders, sees an unusually high denial rate of chargebacks, or other factors they do not disclose in their operating rules, then can review an institution's program. Non-compliance fees built into their operating rules and contracts can be significant.
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#2182596 - 06/21/18 03:26 PM Re: Business Cardholder Dispute tserbin
tserbin Offline
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Joined: Sep 2017
Posts: 27
Follow up question: Is there a required timeframe per MC that we have, to give the customer provisional credit? For example, our customer confirms fraud with our 3rd party processor Fraud Prevention Services and they will automatically key any transaction $25.00 or more if there are chargeback rights. We then receive credit for that transaction, however the customer has not yet come in to file the claim. We have notified them via letter that we are requesting written confirmation. Can we delay giving them the credit? We would not hold onto it longer than the 45/90 day investigation period.

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#2182613 - 06/21/18 04:00 PM Re: Business Cardholder Dispute BSA for GWB
BrianC Online
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BrianC
Joined: Nov 2004
Posts: 6,694
Illinois
Mastercard does not specify an exact time frame, but this excerpt from the chargeback guide indicates that you should provide credit to your customer at the time your receive it from your processor.

Under no circumstances should the issuer, acquirer, merchant, or cardholder retain funds, goods, and/or services twice for the same transaction. For example, when an issuer has billed a transaction to its cardholder’s account for payment and then chooses to exercise a chargeback right, the issuer must credit the cardholder’s account for the amount of the chargeback. An issuer must not allow a cardholder to be credited twice because of a chargeback processed by the issuer and a refund processed by the merchant.
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