American Express Chargebacks: Your Policy Guide for Amex Disputes
- October 7, 2019
- 6 minutes
Chargeback management can be confusing.
One thing that complicates the task is a lack of consistency: the chargeback process can change drastically depending on the card used to process the original transaction.
For example, American Express® handles payment disputes differently than Visa® and Mastercard®.
If you want to get the best chargeback management results possible, you need to understand the rules and regulations for each individual card brand.
The following is a high-level overview of American Express chargebacks. You can read all the information below, or you can click on the topic you are most interested in.
Issuing Cards & Processing Transactions
Visa and Mastercard create networks of partners to work on their behalf with cardholders and merchants. They partner with issuing banks to issue cards to cardholders. And they partner with acquiring banks to process transactions for merchants.
Traditionally, American Express has done things differently. The card brand issues its own cards directly to cardholders without the assistance of issuing banks. And, American Express processes payments for merchants too.
Recently, American Express changed its practices just slightly. The brand still issues cards, but it also allows a few select banks to issue cards on its behalf. And while the brand still processes payments, certain merchants are allowed to run American Express transactions through the same processor that handles their Visa and Mastercard transactions.
Because there are fewer parties involved, American Express chargebacks tend to be more straightforward with less back and forth.
The Dispute Process
American Express has a unique process for managing disputes. The most notable characteristics are:
- American Express handles nearly everything itself. For most Mastercard and Visa disputes, the card brand just acts as a go-between for the issuer and acquirer. But for American Express chargebacks, the card brand is much more involved.
- American Express will sometimes send an inquiry and request additional information before escalating the case to a chargeback.
- There are no formal rules or guidelines for pre-arbitration or second chargebacks. The network does limit cardholders to two disputes per transaction, but there is no written explanation of what a second round would involve.
The following flowchart explains the American Express dispute process:
When a cardholder contacts American Express to dispute a transaction, American Express will first consult internal data. Since American Express operates as card issuer and sometimes processor, there is usually a lot of transaction data available to review.
The card brand will use this information to try to resolve the issue with the cardholder. If American Express and the cardholder can’t come to an agreement, the case advances to the next phase of the dispute process. This could mean sending you an inquiry.
An inquiry is a request for additional information. If you provide the information that American Express is looking for, you may be able to resolve the dispute and avoid a chargeback.
You won’t receive an inquiry for all disputes. There are a couple situations where American Express would skip this step and go straight to a chargeback. For example, you likely won’t receive an inquiry if:
- American Express feels there is enough evidence available to support the cardholder’s claim.
- You are classified as a high-risk merchant.
- You are enrolled in a chargeback monitoring program.
There are several reasons why American Express might send an inquiry. The following table lists the inquiry reasons and the suggested documents you should send in response.
|INQUIRY REASON||RESPONSE DOCUMENTS|
|The cardholder ordered something, but it hasn’t been received.||Provide proof that merchandise was delivered or services rendered.|
|The cardholder canceled services or tried to cancel and was unable to.||Provide proof that a refund has been issued. If a refund isn’t allowed, provide a copy of the cancellation policy that the cardholder agreed to and explain why credit is not due.|
|The merchandise was damaged or defective and the cardholder is requesting a refund.||Provide proof that a refund has been issued. If a return is not allowed, provide a copy of your return or refund policy and explain why credit is not due.|
|The merchandise was damaged or defective and the cardholder is requesting a repair or replacement.||If a replacement or repair is allowed, provide the cardholder with any necessary instructions. If the merchandise can not be repaired or replaced, provide a copy of the return policy the cardholder agreed to and explain why additional services are not due.|
|A charge should have been processed as a credit.||Provide proof that a refund has been issued. If credit is not due, explain why the charge is valid.|
|The goods or services were not as described and the cardholder would like a replacement or credit.||Provide proof that a replacement has been given or credit has been issued.|
|The cardholder doesn’t recognize the transaction.||Provide information that explains the transaction. If merchandise was purchased, provide proof of delivery. If you do not have documentation available to explain the purchase, issue a refund and provide proof that the account has been credited.|
|Merchandise was returned to your business, but the cardholder hasn’t received a refund.||Provide proof that a refund has been issued. If a refund isn’t allowed, provide a copy of the cancellation policy that the cardholder agreed to and explain why credit is not due.|
|The cardholder is requesting a refund for a duplicate charge.||Provide proof that credit has been issued. If a refund is not due, explain why the charge is valid.|
|The cardholder believes the charge was unauthorized.||If the purchase was a card-present transaction, provide a copy of the transaction receipt and an imprint of the card. If the purchase was a card-not-present transaction, provide a copy of the transaction receipt and any details associated with the purchase (such as signed contracts or proof of delivery).|
|The amount charged to the card differs from what was agreed upon.||Provide proof that a refund has been issued. If a refund is not due, explain why the charge is valid.|
|The cardholder claims to have used a different form of payment.||If the refund request is valid, provide proof that credit has been issued. If the charge is unrelated to the other payment that was made, provide proof that both transactions are legitimate. If there was no other payment made, provide proof that the charge is the only transaction you have on file.|
|The cardholder isn’t disputing the purchase, but would like additional information.||Provide the requested documents.|
|A charge relating to damages, theft, or loss is being questioned.||Provide proof that credit has been issued. Or, provide the following: the rental agreement, an itemized explanation of the charge, proof the cardholder agreed in writing to accept responsibility for the transaction, and proof the cardholder agreed in writing to use American Express to pay the charge.|
A Complete Listing of all American Express Chargeback Reason Codes
There are a number of reasons why customers dispute transactions. American Express uses unique codes to explain those reasons to merchants.
American Express chargeback reason codes are divided into five categories: authorization, cardmember disputes, fraud, processing errors, and miscellaneous.
Each chargeback reason has its own, individual prevention techniques. And, each code has unique compelling evidence requirements if you choose to fight. Click on the categories below to view the American Express chargeback reason codes and access tips to help manage each one.