Knowledge Base
Top Reasons For Chargebacks ( Part 1 )
This article will guide you through understanding some of the top reasons for customer chargebacks. This will show possible reasons why customer is disputing the charge, the documentation needed/used to send back to the bank, and a brief explanation of what the card companies are looking for and why. 



Reasons For Chargebacks 


1. Services Not Provided / Merchandise Not Received / Non-Receipt of Merchandise


VISA Reason Code: 0030
MasterCard Reason Code: 4855
Discover Reason Code: 4755


Most Common Reasons: 
  • Club ceased doing business
  • Club was temporarily closed (i.e. weather, renovations, cleaning)
  • Staff was unavailable for scheduled service, such as, a Personal Training appointment or a Specialty Class
  • Club merged with another location, and member was unaware

Documentation used to prove member received services: 
  • Signed agreement
  • Check In History and Booking Log 
  • Club Notes and email correspondence (if provided)
  • Email Blast notifications that informed member of temporary closure
  • Email notification stating club is merging with another location, or is permanently closing

NOTES: 
  • Credit Card Companies require the club to prove services were available at the time the payment was taken.
  • The signed agreement will normally disclose all policies for rendering services, including scheduling and cancellation.
  • A current Booking Log and consistent Check In History will show the member has used the services provided by the membership. 
  • Emails and notes will show the club communicated to the member regarding cancellations or closing. 



2. Cancelled Recurring Transaction


VISA Reason Code: 0041
MasterCard Reason Code: 4841
Discover Reason Code: 4541


Most Common Reasons: 
  • Contract is in Auto-Renewal, and billing monthly after the initial term of the contract is Paid In Full
  • Member did not understand the length of agreement
  • Member did not understand the cancellation policy
  • Club did not properly cancel the agreement
  • Club did not follow the cancellation policy

Documentation used to provide member did not cancel, OR, proving WHEN the member cancelled:
 
  • Signed Agreement 
  • Check In History and Booking Log
  • Signed cancellation (or freeze, if applicable) form
  • Email correspondence between club and member regarding cancellation
  • Rescission letter and certified tracking information, and a copy of the dated post mark
  • Club notes, showing member and club communication regarding cancellation reasons and terms
  • Medical or relocation documentation and date of receipt

NOTES: 
  • This reason code is both the easiest and hardest to win. If the member is still within the initial term of the membership (and the club did not receive documentation to cancel for rescission, medical or relocation), the contract is not eligible for cancellation and the club most likely will win the dispute.
  • If the member has filled out the cancellation form, or the club has record of the member using services AFTER claim of cancellation, the credit card company will accept the dispute and the club will win.
  • However, if the contract is in auto-renewal and the member is not using the services after the member claims to have cancelled, the credit card company will not honor the signed agreement as proof. If the member states they cancelled and the club cannot DISPROVE the claim, per regulations, the club has to accept the chargeback.



3. Transaction Not Recognized / Does Not Recognize - Potential Fraud


VISA Reason Code: 0075
MasterCard Reason Code: 4863 
Discover Reason Code: 4752


Most Common Reasons: 
  • Member believes membership is cancelled
  • Member used another person's card to purchase membership (spouse, parent or significant other is primary cardholder)
  • Club changed billing services and description of charges on CC statement is changed or different
  • A change in the amount normally billed (i.e. the annual enhancement fee is paid along with the typical monthly dues)
  • The member has a past due balance and the club collects the money by charging the card on file, to bring the account current

Documentation to show the reason for the transaction and proof of authorization to collect payment:
  • Signed agreement
  • Invoice and Payment receipt for transaction
  • Club notes showing communication between staff and member
  • Booking Log and Check In History showing member used the services. 

NOTES:
 
  • Providing documentation that proves what the transaction is for, and that the member acknowledged the terms and policies, is effective in winning these particular cases.
  • Often times, simple miscommunication regarding the charge is what will prompt a member to initiate a chargeback.


To continue to read more about possible reasons for chargebacks, click here
 
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