Fraud, committed either by the merchant or the customer, is the primary cause for the majority of chargebacks. It can take many forms, some of which can be more sophisticated than others. Using counterfeit cards is one of these more sophisticated fraud types and it can be very damaging, especially when the card is used at unattended checkout locations, where there is no one to examine the card’s security features.
Visa uses Reason Code 62 to designate chargebacks that can often be traced to counterfeit cards. Reason Code 62 is initiated when an issuer receives a claim by one of its cardholders that he or she did not authorize or participate in the disputed transaction.
In this article I will review the reasons, conditions, limitations and processing requirements applicable to Reason Code 62 and will offer strategies for preventing this type of chargeback, as well as actions you can take in response to it.
What Causes Reason Code 62
- Failed to compare the first four digits of the embossed account number on the front of the card to the printed digits below the embossed number.
- Received an authorization approval without transmitting all required data.
- Accepted an EMV (chip) card, but processed the payment as a fallback transaction, i.e. via swipe, key-entry, or paper voucher, and did not follow applicable acceptance procedures.
Reason Code 62 Rights, Limitations and Processing Requirements
All of the following conditions apply to this reason code:
- The chargeback is invalid if the issuer did not participate in the Card Verification Value program at the time of the transaction.
- The issuer is required to close the affected cardholder account.
- The chargeback is invalid if the authorization contains a POS Entry Mode code.
- The account number must be listed on the Exception File with a “pick up” response for at least 30 calendar days.
- The transaction must be reported to Visa as fraud.
The time limit for Reason Code 62 is 120 calendar days from the transaction date.
Reason Code 62 Re-presentment Conditions
A Reason Code 62 chargeback can be re-presented in one of the following circumstances:
- A credit or reversal was processed.
- The chargeback is invalid.
- The authorization record contains a POS Entry Mode code.
Reason Code 62 re-presentments must be processed within 45 calendar days from the chargeback settlement day.
How to Respond to Reason Code 62
Your actions in response to a Reason Code 62 chargeback will be determined by the particular circumstances, as follows:
|The card was swiped and the transaction was authorized.||Provide your processor with a copy of the printed sales receipt.|
|The transaction was counterfeit.||Accept the chargeback, but do not process a credit as the chargeback has already done this for you.|
How to Prevent Reason Code 62
As I already mentioned, preventing this type of chargeback is close to impossible at non-attended checkout locations. Elsewhere you should:
- Check the card’s security features. In particular, you should:
- Verify that the first four digits of the embossed account number on the front of the card match the printed four-digit number underneath it. A mismatch is a strong indication of a counterfeit card and you should make a Code 10 call.
- Verify that the 16-digit account number on the front of the card is identical with the number that appears on the point-of-sale (POS) terminal after the card is swiped.
- Be on a lookout for any other signs that may indicate that the card has been altered, such as embossed numbers that are blurry or uneven or any other signs of possible tampering.
- Make a Code 10 call. If you become suspicious of the card or your customer for any reason, make a Code 10 call to your processor’s voice authorization center and follow the instructions.
Preventing Reason Code 62 chargebacks is not easy. What makes it especially difficult, however, is that most merchants don’t even look at the cards used by their customers, which makes it impossible to identify counterfeits.
If you are to stand any chance against criminals using fake cards at your store, you will first have to make a commitment to inspecting all cards presented for payment. Then educate yourself and your staff on how to recognize counterfeits and how to make a Code 10 call when you suspect fraud. We’ve developed plenty of resources to help you do that and have made them freely available to everyone, so there is no excuse for inaction.
Image credit: Wicu.org.