Mastercard Chargeback Reason Code 4863: Cardholder Does Not Recognize - Potential Fraud

What is Mastercard Chargeback Reason Code 4863?

How easy is saying, “I don’t recognize this transaction”? This claim, often requiring minimal corroborating evidence, can be effectively used by cardholders. A cardholder can claim not to recognize a transaction, call the issuer, and you’ll receive this chargeback for that reason.

This chargeback under reason code 4863 applies to card-not-present (CNP) transactions. That could be online purchases where you don’t physically process the buyer’s card before processing payments. Sometimes the claims could be valid; other times, it could be a case of friendly fraud.

Let’s paint a clearer picture of this chargeback. For instance, imagine you're an e-commerce seller who has processed a payment for goods to be delivered in a month. A few days later, the buyer looks at their bank statement and does not recognize the transaction.

A call and explanation to the issuer may result in this chargeback if the buyer’s claims seem valid. There is no need to panic if you think the transaction was legitimate (the buyer provided adequate authorization). We’ll show you how to fight the chargeback and receive a refund from the issuer.

Conversely, you may have already issued a refund but still received the chargeback. It’s easy to dispute it and get your money back.

We’ll give you tips to prevent this chargeback in your business transactions. In the meantime, let’s examine the common reasons that can lead to it.

Why Did It Happen?

This chargeback occurs when a buyer disputes a transaction as unrecognized. In other words, they claim not to have authorized that transaction. After listening to the claims, the issuer may deem them valid and issue the chargeback under this reason code.

These are the primary reasons this situation will most likely come up:

• The transaction you processed was fraudulently authorized
• The cardholder does not remember the transaction or does not remember your merchant name
• You’ve issued a refund, but the cardholder did not see it but still went on to file for the chargeback

Given the recent rise in fraud, there's a possibility that buyers might unknowingly lose their card details to fraudsters. As such, the buyer’s claim of not recognizing the transaction will be valid. In other words, that will be a case of actual fraud.

This chargeback can still occur even after you’ve taken adequate steps to verify a cardholder before processing a payment. Friendly fraud may be the underlying reason. Here, the buyer may have forgotten to purchase your services or merchandise and file the chargeback claim.

Friendly fraud is even more common than actual fraud. However, distinguishing between friendly and actual fraud can be challenging. That is why we always recommend taking adequate verification measures for your transactions.

The third cause of this chargeback is still closely related to friendly fraud. Let’s assume a cardholder called you to dispute a transaction. After verifying the claims to be true (actual fraud), you issued a refund, but the issuer still processed the chargeback.

It could be that the buyer did not retract their fraud claims after receiving your refund. The chargeback will occur, but you can easily fight it.

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How to Fight Mastercard Chargeback Reason Code 4863: Cardholder Does Not Recognize - Potential Fraud

Issuers have 120 days to issue the chargeback. We want you to remember that timeframe because you might need it to fight the claim.

Remember, you have a 45-day window to respond to the chargeback, after which it may no longer be reversible. Your defense will be either proof that the claims are false or that you’ve already issued a refund. Hence, these are the documents you’ll need to fight this claim.

• Documents refuting the cardholder’s claims of not recognizing the transaction - could be a signed receipt when the cardholder received the merchandise. Email acknowledgments can also serve to refute claims of unrecognized payments.
• Proof that the cardholder has withdrawn the claims and does not wish to refute the transaction. Emails or written communication will suffice.
• Proof that you issued a refund and the buyer acknowledged receiving the money. Credit statements will suffice to substantiate your claim.
• Evidence that the chargeback is against Mastercard’s rule. That could mean that the statutory 120 days have been exceeded.
• Proof of shipping the merchandise to the AVS-approved address
• Documentation confirming a positive match from the Address Verification Service
• Evidence of submitting the authorization request with the Mastercard SecureCode information

You can also use any condition-specific evidence to refute this claim and receive a refund. Include any specific evidence related to the transaction, such as discrepancies in the authorization message or inconsistencies in goods shipment.

We recommend filing your second presentment as soon as possible. Remember, you have 45 days to refute it or lose the window.

Fighting this chargeback is easy. However, you may not have much to work with if the case is an actual fraud. We have a few tips to keep you safe and prevent situations leading to this claim.

How to Prevent Mastercard Chargeback Reason Code 4863: Cardholder Does Not Recognize: Potential Fraud

The most effective strategy against this chargeback is to take proactive steps to prevent it. What are the steps you can take to prevent this chargeback? They include the following:

• Use practical anti-fraud tools in your transactions. You can pick tools that integrate with e-commerce platforms (if you are an e-commerce merchant) or others that provide end-to-end communication. Some use machine learning to identify fraudulent authorizations.
• Include Mastercard SecureCode, Address Verification Service (AVS), and CVV in your transactions.
• Describe your billing for bank statements clearly and concisely. That ensures the cardholder quickly recognizes your merchant name. Hence, you’ll leave little room for any confusion resulting in chargeback claims.
• Maintain adequate documentation for card-present and card-not-present transactions. That should be done during the clearing and authorization stages and cover mail, phone, and internet orders.
• Ensure you keep the requested signed receipts when the cardholder receives the merchandise.

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