We have a cardholder who ordered an item online and has never received it. He has provided us with email correspondence between him and the merchant. The merchant continually pushes the expected ship date back and then finally provides what appears to be a fraudulent tracking number for the item. Our customer did authorize the purchase so Reg E doesn't apply, but how does the Mastercard part work? I believe we still have to provide provisional credit. Other than that, what are the timeframes and other guidelines we have to follow?

Mastercard dispute timeframes relate to how long each party (issuer and acquirer) have to file chargebacks, representments, etc. There are no investigation timeframes relating to the customer as there are in Reg E. With respect to providing provisional credit to the cardholder, Mastercard says this in the "Rights and Obligations" section of the Chargeback Guide. "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."

In order to file a chargeback, you must provide a cardholder letter or Customer Dispute Resolution Form and enough details to document the customer's claim and a reasonably specific description of the goods or services that were not received.

The merchant has 30 days from the receipt of your chargeback to respond. If the merchant responds, you have 30 days to review the merchant's documentation with your customer and either decide to deny the claim or ask the cardholder for an updated letter to refute the merchant's statement and file an Arbitration Chargeback. The merchant can then elect to file an arbitration claim or accept liability.

Thank you so much BrianC!

So final resolution of a claim like this (item not received/lost) would need to be done within 30days under MasterCard rules? The 90 day investigation timeframe under Reg. E, doesn't apply, correct?

No. Mastercard doesn't have investigation timeframes. Mastercard has response times for each stage of the chargeback process when determining whether the issuing financial institution or acquiring merchant has financial responsibility for a transaction.

You have 120 days from the date the merchandise was supposed to be delivered to file a chargeback (not to exceed 540 days from the transaction date.) If you file a chargeback, the merchant has 30 days to respond with a representment and documentation to show why they should not be liable for the chargeback.

You then have 15 days to review the representment docs and decide whether you will file pre-arbitration with updated information from your customer to refute the merchant's claim. The merchant then has 30 more days to consider the additional documentation and accept liability or force you to file arbitration within 45 days of your prearbitration filing. You may or may not use all stages of the chargeback process depending on what you learn from the initial representment or the merchant doesn't represent at all.

Thanks BrianC. So if we provide a notice letter to the customer telling them we have received their request and will send the dispute to be processed, and we will notify them in writing of the outcome of the investigation, we don't need to indicate a timeframe in which this will be done? Do we? Or are we not even required to send a notice to customer in this type of scenario (item not received/lost)? Thanks.

Mastercard does not have error resolution procedures, it only has processes for how to process chargebacks, representments, and arbitration. How you communicate with your customer for non-Reg E claims is a matter of your cardholder agreement and customer service procedures.