What is Auth Code 51, declined?

A credit card processing response of Auth Code 51, is a decline for insufficient funds, the credit limit has been exceeded. What happens when the customer says, “there’s nothing wrong my Visa card, put it through again”? If put through again without a voice authorization, the merchant is at risk for chargeback of funds for invalid authorization.

Visa Product and Service Rules, Original Credit Transactions – Prohibition against Clearing a Declined Transaction

An Originating Member must not send an Original Credit Clearing Transaction if it received a Decline Response to the corresponding Authorization Request.

Further information at page PSR-564, 11.1.16 Chargeback Reason Code 71 – Declined Authorization. NEW. Effective for Transactions completed on or after 15 April 2016,
A Transaction for which Authorization was obtained after a Decline Response
was received for the same purchase. This does not include an Authorization
Request that received a Pickup Response 04, 07, 41, or 43 or was submitted
more than 12 hours after the submission of the first Authorization Request.

This period is known as the black hole or dark period. For the first 12 hours after a decline, merchants should not attempt to process the same retail transaction. The reality is a consumer could simply walk away and go back to another cashier and try again. Some cloud based payment gateways will enable merchants to choose to prohibit multiple attempts in the black hole period.

Disclaimer: The rules of card acceptance are very complex. Merchants should read the manual for complete details regarding card acceptance for your business type.

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.

Visa Merchant Chargeback & Fraud Dispute Modifications April 2013- Compelling Evidence

Effective April 20, 2013, Visa will be updating the International Operating Regulations to allow additional as well as clarify the types of compelling evidence that can be used during the dispute resolution process. Compelling evidence can be provided during the representment stage to allow the merchant the opportunity to show that the cardholder participated in the transaction. Compelling evidence does not mandate that the cardholder participated in, received goods or services, or benefited from the transaction.

Allowable Compelling Evidence examples:

Evidence, such as photographs or e-mails, to prove a link between the person receiving the merchandise and the cardholder, or to prove that the cardholder disputing the transaction is in possession of the merchandise.

For a card-not-present transaction in which the merchandise is delivered, documentation (evidence of delivery and time delivered) that the item was delivered to the same physical address for which the merchant received an AVS match of “Y” or “M.” A signature is not required as evidence of delivery.

For a transaction in which merchandise was delivered to a business address, evidence that the merchandise was delivered and that, at the time of delivery, the cardholder was an employee of the company at that address (e.g. confirmation that the cardholder was listed in the company directory or had an email address with the company’s domain name). A signature is not required as evidence of delivery.

For a Mail/Phone Order transaction, a signed order form.

Please refer to the Visa International Operating Regulations after April 19, 2013 for specific details.

MasterCard Fraud Notification Service Update- Excessive Chargeback Merchant Relief

Merchants Have New Representment Right for Multiple Fraud-Related Chargebacks

In 2011, MasterCard implemented the Fraud Notification Service (FNS) as a means of ensuring that chargebacks are properly submitted by the issuer.
Accounts that are deemed fraudulent must either be closed by the issuer or the chargeback rights must be relinquished for those accounts. This service also helps determine if a chargeback representment option is possible.

Effective April 19, 2013, MasterCard will expand their rules regarding excessive fraud chargebacks on a single MasterCard card account number and expiration date combination.
Prior to this change, if fraud-related chargebacks occurred on any one MasterCard card account (used at any merchant), the chargebacks could only be represented if the transaction occurred prior to the date of the second fraud-related chargeback (the FNS date). With this modification, if there are over 35 fraud-related chargebacks on any one MasterCard cardholder account (used at any merchant), merchants will have the right to represent the transaction to the issuer. This is a positive change to protect merchants from fraud.


If I have a faxed approval form why do I lose chargebacks?

Do you take orders over the phone? How can you defend against chargebacks? You’re not going to like the answer I outline below because the burden on merchants is nearly insurmountable.

RULE NUMBER ONE.  You must have a MOTO* merchant account. If you run a card absent transaction on an RETAIL account, you will automatically lose because you won’t be presenting the transaction according to the rules of the merchant account with an in-person signature or pin entry AND card swipe or manual imprint. * MOTO is an abbreviation for mail order / telephone order; Faxed orders fall under this rule as well.

RULE NUMBER TWO: If the payment was made via a web page or ecommerce shopping site, the merchant must have an ECOMMERCE merchant account.

What if you accept credit cards via the internet and MOTO? Ecommerce presentment rules generally include MOTO requirements, but MOTO presentment rules do not include all Ecommerce presentment requirements.  You should read the rules carefully as it applies to your particular situation and NOT rely on this article.

Below are excerpts of the relevant rule from Visa and the condition I most often see cited on merchant chargeback forms. (Other cards have similar language. Please note the Visa International Operations Guidelines book is over 1100 pages so to keep this brief, this is a very narrow look, with text beginning from page 836.  Excerpts may be taken out of context to provide insights and should not be replied upon.

Reason Code 83 Fraud—Card-Absent Environment
Overview: Time Limit: 120 calendar days
Cardholder did not authorize or participate in a Card-Absent Transaction or Transaction was
processed with a Fictitious Account Number or no valid Card was outstanding bearing the Account
Number on the Transaction Receipt.

Chargeback Conditions – Reason Code 83
1. Cardholder did not authorize or participate in a Card-Absent Environment Transaction.

Representment Processing Requirements – Reason Code 83
b. Evidence of Imprint and signature or PIN  (Yes, it really says this under card not present!)
d. For Chargeback Condition 1, compelling evidence that the Cardholder participated in the
Transaction, excluding U.S. Domestic Transactions.


8. Mail/Phone Order or Electronic Commerce Transactions, if both: This provision applies to U.S.
Domestic Transactions (This only applies in the U.S. Region.)
a. Merchandise was shipped or delivered, or services were purchased (This only applies in the
U.S. Region.)
b. Issuer was not a participant in the Address Verification Service on the Transaction Date and
Acquirer received an Address Verification Service response code “U” (This only applies in the
U.S. Region.)

Additional Information – Reason Code 83
1. “Signature on file” notation is not an acceptable signature.
2. Pencil rubbing of the Card or a photocopy of the Card is not considered proof of a valid Imprint.


  • When a merchant account is opened merchants are issued a metal plate with their required merchant account identifying information to use with imprinting forms.  Don’t toss is into a drawer. Buy an imprinter (about $25 from most office supply stores) and some voucher forms, put your plate in and keep it secured but handy in case you need it.  If you don’t know where your plate is, call your processor and ask for a new one. To mitigate risk, run the form through your imprinter, fill in all the information and then send the form to your customer. They must a) rub a pen across it to simulate as if the imprint mechanism ran across it. b) sign the form. This creates additional burdens to the merchant for PCI Compliance, since the imprint would have to be stored for 180 days, the current allowable chargeback time. But think of the burden of proof trail you’ll be able to produce- the form is sent to the customer address, the card must  pass AVS verify (address on card matches address mailed to), and you have a signature.
  • To save time, merchants frequently only partially fill in the form, but this is not sufficient. All fields must be completed and the customer must sign.
  • Ship merchandise with signature required, only to addressee.
  • Shipping address and billing address must match. (You will lose automatically if they don’t unless you have special supporting document signed by the customer stating their desire to have shipped to a 3rd party address.)

Editors note: This article primarily addresses card absent,  not ecommerce.  A merchant solution to help mitigate risk is Cenpos. Here’s a few ways you can use CenPOS tools:

  • Restrict user permissions for transactions.
  • Set additional requirements to pass a transaction over merchant defined thresholds.
  • Set up email alerts for notification of transactions over thresholds.
  • Restrict types of cards accepted and rules for acceptance.

Is a pencil rubbing of the credit card or a photocopy of the credit card OK to defend against chargebacks? Yes, but only if the merchant has an imprint of the card on a credit card voucher form that is fully completed and signed by the customer.

Is a faxed approval form for the charge amount OK to defend against chargebacks? No. The merchant must have an imprint of the card on a credit card voucher form that is fully completed and signed by the customer.