Updated Card Absent Chargeback Rule – 540 days

Business to business, automotive  and parts dealers, are especially stung by chargebacks for disputes relating to the quality of merchandise or services received. Effective for transactions processed on or after April 18, 2015, is a new clause that can increase the chargeback period from 120 days to 540 days for US and Canada.

Both Visa and MasterCard have implemented the new rule. I didn’t find a similar rule in a quick research of Discover and American Express, but my research was not exhaustive.  The rules are not identical and readers are advised to read the rules thoroughly, as this article does not include the full context for when the rule applies.

Visa Core Rules and MasterCard Chargeback Guide October 30, 2014:

  • Visa Chargeback Reason Code 53 – Not as Described or Defective Merchandise
  • MasterCard Reason Code 4853—Cardholder Dispute—Defective/Not as Described

One goal of the MasterCard rule appears to be providing customer recourse for ongoing interrupted services. The customer paid for something, they complained and worked it out within 120 days, but then there were recurring quality issues.

They both make it clear that a customer does not have to return goods and services in order to dispute at a later date. This is a change from the old rule.

How can merchants protect themselves in a dispute for these reasons?

  • Written return policy and proof of acknowledgement
  • All guarantees in writing acknowledged
  • Signed sales orders; include specific deliverables and policies at the time of agreement
  • All written communications, including emails, prior to and after the sale as part of the dispute process.
  • Save a log of phone calls with who, what, when, to submit as evidence.
  • For online payments, require check box to acceptance of your terms of sale

Note: the 540 day rule has been in existence, however, the rules have been updated with more specificity, certainly for Visa.

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