How to Handle American Express Chargebacks as a Merchant?

As an e-commerce store owner, you know that being able to accept payments directly from customers is a critical component of your operations. Even though there are several payment options available today, American Express remains one of the most preferred card networks among consumers and merchants alike. 

The convenience and security it provides make it a great choice for any business looking to grow its sales. Unfortunately, as with other payment methods, accepting American Express cards also comes with its own set of challenges – particularly when handling chargebacks. 

In this blog post, we’ll explore how you can better understand chargebacks related to American Express transactions as well as how to correctly handle them to maintain a healthy working relationship between your store and the card network.

Understanding American Express Chargebacks

Understanding chargebacks from American Express is an essential part of any business that accepts payments from customers. Chargebacks result when a customer disputes a transaction with their bank or credit card issuer and requests a refund from the merchant. Knowing how to handle American Express chargebacks can help businesses resolve disputes quickly and avoid losing revenue.

Common reasons for American Express chargebacks

They typically occur when customers question the validity of their purchase, either because they don’t recognize the merchant on their statement or because they didn’t receive their product or service as expected. 

Other common causes of chargebacks include improper authorizations, mistakes in pricing or delivery, software errors, and duplicate payments. Consumers may also initiate a chargeback if they feel that a merchant has billed them unfairly or misled them with inaccurate information or sales tactics. 

While understanding how to prevent chargebacks is important, it's also important for businesses to have mechanisms in place for dealing with them should one occur. Knowing how to respond efficiently and effectively is key to success.

Chargeback codes and their meanings specific to American Express

here are some common chargeback codes used by American Express and their meanings:

1. 100: Fraudulent Card/Transaction - This chargeback code is used when a transaction is identified as fraudulent, and the cardholder did not participate in or authorize the transaction.
2. 125: Credit Not Processed - This code is used when a merchant fails to process a credit to a cardholder's account after the cardholder has returned merchandise.
3. 165: No Authorization - It is used when a merchant fails to obtain proper authorization for a transaction.
4. 286: Cardholder Disputes - This chargeback code is used when a cardholder disputes a transaction due to reasons such as not receiving merchandise, receiving defective merchandise, or being overcharged.
5. 375: Cardholder Does Not Recognize - This code is used when a cardholder disputes a transaction because they do not recognize the transaction on their statement.
6. 376: Credit Not Processed - It is used when a merchant fails to process a credit to a cardholder's account after the cardholder has returned merchandise.
7. 485: ATM Dispute - This chargeback code is used when a cardholder disputes a transaction made at an ATM.
8. 498: Duplicate Processing - This code is used when a transaction is mistakenly processed twice.
9. 530: Cardholder Exceeds Authorization - This chargeback code is used when a cardholder exceeds their authorized credit limit.

Time limits for responding to American Express chargebacks

American Express has specific time limits for merchants to respond to chargebacks. It's important for merchants to be aware of these time frames and to respond promptly to avoid forfeiting their rights to contest the chargeback. Here are the time limits for responding to American Express chargebacks:

1. Preliminary Chargeback Notification (PCN) - Merchants have ten calendar days from the date of the PCN to respond with supporting documentation.
2. Chargeback - Merchants have twenty calendar days from the date of the chargeback to respond with supporting documentation.
3. Second Chargeback - If a merchant contests a chargeback, and the dispute is not resolved in their favor, a second chargeback may be issued. Merchants have twenty calendar days from the date of the second chargeback to respond with supporting documentation.

It's important to note that these time frames are strict, and failure to respond within the allotted time may result in the merchant forfeiting their rights to contest the chargeback. Additionally, American Express may charge a fee for each chargeback received, so it's in the merchant's best interest to resolve disputes as quickly as possible.

Preventing American Express Chargebacks

Best practices to minimize American Express chargebacks

When it comes to minimizing American Express chargebacks, the best practice for any business is to have clear policies in place that make all customers aware of their rights and what to expect when using your service. 

Plus, merchants should also ensure they are providing quality customer services, such as easy access to product and account information and attentive customer service representatives, to keep customers satisfied with the experience. 

Additionally, a policy of reviewing transactions thoroughly via banks or payment processors can help identify any suspicious activity before a cardholder raises a dispute with the credit card issuer. Also, many businesses find reviewing their chargeback ratios on a monthly basis beneficial in curbing unnecessary fees and keeping track of transactions quickly and accurately.

Address Verification System (AVS)

To help prevent American Express chargebacks, merchants should implement an Address Verification System (AVS). AVS is a security measure that checks the billing address provided by an American Express cardholder to verify it matches their bank records. 

It helps merchants detect fraudulent activity immediately by comparing the two pieces of information. Additionally, AVS also helps protect merchants from fraud liability and allows them to accept more orders safely. 

Furthermore, it helps to streamline the payment process and provide customers with a secure shopping experience. Ultimately, using AVS can be very beneficial for merchants seeking to minimize American Express chargebacks due to fraudulent activity.

Card Security Code (CSC)

A Card Security Code (CSC) is an added security measure used by American Express to protect customers from fraud. It is also known as Card Verification Value (CVV) and a Customer Identification Number (CID). 

The CSC consists of three or four numbers located on the back of the card and typically follows the expiration date. When requesting payment from a customer, merchants must ask for the CSC, allowing them to verify that they are the actual cardholder. 

It helps prevent unauthorized use and minimizes chargeback liability for merchants. Merchants should inform their customers to never share their CSC with anyone other than their financial institution since misuse can lead to fraudulent activity related to chargebacks.

Effective communication with customers

Communicating effectively with customers is an incredibly important part of preventing chargebacks and managing customer relations with American Express. It is essential to ensure that customers understand the terms and conditions of their transactions and that customer service representatives provide concise helpful responses. 

To facilitate effective communication, representatives should take time to listen carefully to customer questions and complaints before responding. Furthermore, written communications with customers should be kept clear, concise, and unambiguous. 

Taking care to answer any questions or address any concerns promptly can help to prevent misunderstandings and frustrations which could lead to chargebacks. Properly managing communication between the vendor, customer, and American Express is a key part of building a long-lasting successful relationship.

Handling American Express Chargebacks

When a merchant receives an American Express chargeback, they need to take proactive steps to address the situation. The first step is collecting all the available evidence and documents which support their position in the dispute including sales receipts, invoices, credit memos, and any relevant emails or communications with the cardholder. 

All this evidence should be provided to American Express within their time limit of forty-five days from when they receive the chargeback notification. Merchants who fail to provide acceptable documentation on time waive their right to dispute and accept liability for the chargeback amount. 

They can then proceed with American Express's dispute resolution process which includes an internal review and arbitration hearings depending on the complexity of the dispute. Through this process, merchants have an opportunity to present their cases, defend disputed transactions, and possibly overturn the chargeback decisions.

Bank of America Return Item Chargeback Fees for E-commerce Merchants

As a Bank of America user, you might sometimes receive a chargeback fee for returned items. If you're not familiar with the term "chargeback," it refers to a transaction reversal initiated by the bank that issued the customer's payment card.

If you're a merchant who accepts payment cards, you should be aware of the potential for chargebacks and the associated fees. By understanding how chargebacks work, you can take steps to reduce the risk of chargebacks and minimize the impact of any fees.

As a Bank of America customer, you might receive a return item chargeback fee if a customer disputes a transaction that you've processed. The fee can range from $25 to $50, depending on the type of account you have with Bank of America.

To avoid return item chargeback fees, you should ensure that your transactions are accurate and that you communicate clearly with your customers. If a customer has an issue with a transaction, try to resolve it as quickly and fairly as possible. By being proactive, you can reduce the likelihood of chargebacks and the associated fees.

If you do receive a return item chargeback fee, you can contact Bank of America to discuss the situation. They may be able to provide more information or help you dispute the fee if you believe it was charged in error.

Final Thoughts on American Express Chargeback

Handling American Express chargebacks can be a daunting challenge for any business. With the right guidance and the understanding of how American Express processes them, along with some preventative measures, merchants can be better prepared to handle chargebacks from this issuer. 

By taking back control of the dispute process and automating responses, Chargeflow Autopilot solutions can help take the stress out of chargeback management. Additionally, Chargeflow automated system makes sure that merchants are always compliant with industry standards.

Merchants need complete control over every step of the chargeback process -- Chargeflow Autopilot strategies provide just that! Take a proactive approach to protect your business against fraud and false refusals to pay by investing in Chargeflow today. 

Fight back against credit card disputes and become an unbeatable merchant with the most reliable services: Chargeflow Autopilot Solutions!