Best Practices for Responding to Chargebacks With Reason Code “Credit Not Processed”
In part 3 of Fidelity’s Effective Chargeback Management Series, we’ll be focusing on the chargeback reason code “Credit Not Processed”
Why Would a Customer File a Chargeback With Reason Code “Credit Not Processed?”
“Credit Not Processed” chargebacks are filed by customers who have canceled their purchase or returned their purchase but did not receive a credit/refund from the merchant.
In the event that the merchant did, in fact, provide a refund and has supporting documentation that attests to this, they have a good chance of winning the dispute. If they didn’t provide a refund because it went against their customer-disclosed policies, providing a rebuttal with proper supporting documentation will give them a chance to respond and get the case reversed in their favor.
Best Practices for Managing Chargebacks With Reason Code “Credit Not Processed”
1. If the refund/credit was not provided
If the merchant has terms and conditions for customer refunds or cancellations, it’s essential that they adhere to the following practices:
- Disclose clear refund and return policies to the customer upfront, and obtain a signature. If there are several terms and conditions, each one should be initialed by the customer. This will serve as evidence that the customer was aware of any circumstances in which a refund or cancellation wouldn’t be allowed (i.e.., in the case of a custom order). It is important that the refund and return policies clearly explain why certain refunds or cancellations are not allowed.
- Request customer signatures on authorization forms, invoices, order forms, and receipts. These will all help prove that the customer approved of the order and wanted to receive the product/service.
- If the item is being delivered:
- Maintain tracking information and proof of delivery for shipments, as these also help prove that the customer approved of the order.
- Use the address verification system (AVS) to prevent you from fulfilling illegitimate orders.
2. If the refund/credit was provided
By adhering to the following practices, merchants can increase the chances that they’ll win a dispute for a “Credit Not Processed” chargeback that was filed even after the customer was refunded.
- Keep all refund receipts on file as proof that the refund transaction was completed.
- Refund all funds to the same card that was used to make the initial purchase. If the refund is provided with a different payment method than the original, it cannot be considered supporting documentation.
- It’s important to note that even if the customer claims they no longer have the card with which they made the purchase, or that their card has expired, the merchant can still go ahead and return the funds to the same card. The cardholder’s issuing bank will then be responsible for returning the funds to the cardholder, either by applying them to the customer’s new card or by sending a check in the mail.
When it’s Best Not to Fight the Chargeback
In the event that business losses are minimal or nonexistent, it’s advisable that merchants choose not to fight the chargeback so that they can avoid frustrations that so often accompany the chargeback dispute process. For example, if the chargeback was in response to a custom order that hadn’t been prepared or could be easily resold, or if the chargeback was for a small deposit, providing a refund can likely save much time and hassle down the road.
Fidelity’s Chargeback Alerts Program is here to help merchants respond to chargebacks fast! Click here to learn more.
Stay tuned for our next installment!