Mastercard debit card chargeback Q&A with Diana Kern
Diana: The answer can vary by situation. Whether a card issuer incurs a financial loss is based on compliance with Regulation E as well as other applicable rules and regulations, including Mastercard.
When disputing a charge that is UCAF and the network informs us that there are no "Chargeback Rights," is that an automatic loss to the financial institution if they can't prove the customer didn't authorize the charge?
Diana: Generally, the chargeback timeframe is based on the date of expected delivery or fulfillment when a transaction involves the promise of some future product or service.
Here is a scenario: A customer made a purchase of a hot tub cover that had to be custom made and the merchant kept telling him that the materials were not available. Six months later the customer still did not receive the cover that he paid for with his debit card and he can't reach the merchant. When would the dispute time start on this--from the time he expected to receive the cover or when he did the initial purchase?
Diana: Whether a card has only a magnetic stripe or is EMV enabled (contains a chip) is relevant to transactions conducted in a card-present environment. Therefore, chargeback reasons for the EMV liability shift are relevant. Currently, all merchant types in the U.S. fall into the liability shift rules.
How does having a chip in the card vs. no chip in the card factor into chargeback rights?
Diana: As with any other claim you take the information from the cardholder and evaluate the applicability of Regulation E, brand rules and any other requirements. Subsequent steps are based on which of those apply to the specific claim.
How would you handle a customer stating they ordered a product online, through Facebook for example, and then decide it was fraud and do not have a receipt?
Diana: Brand rules have certain requirements to assist cardholders with claims, including claims resulting from dissatisfaction with a merchant’s fulfillment as promised. Other than fees related to compliance with Regulation E error resolution, I am not aware of any prohibition of fees for handling exceptions. In the spirit of the brand rules, I believe issuers should assist their cardholders to the extent possible and without charging. Using a card instead of any other payment method benefits the entire ecosystem, including the cardholder and issuer.
For financial institutions that have a minimum transaction they submit to their processor, for 4853 dispute groups how do you handle disputes? Can you pass the processing fee onto the customer? Or do most financial institutions write off that amount in good customer service.
Diana: Clearly understanding the initial claim is important. When compelling evidence is received with the second presentation it’s critical to review it thoroughly with your cardholder. Your processor should also be prepared to advise on your potential success with pre-arbitration based on their experience, so don’t be afraid to ask.
With arbitration costs being so high, what should be reviewed prior to going to arbitration?
Diana: The Mastercard rules have no stated timeframe for applicability. Refer to the comparison supplemental handout for the exact verbiage or view it online in the rules document linked in a supplement.
Is there a time limit on the zero liability for Mastercard? For example, if a cardholder notices charges from 2021 and they notify their institution at the end of 2022, does that zero liability still apply?
The chargeback process is riddled with rules and time restrictions. Don’t risk a loss for your financial institution or cardholder. Learn the ins and outs of debit card chargebacks to protect everyone’s rights with this timely on-demand webinar, Mastercard Debit Card Chargebacks: Rules, Rights & Challenges.
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