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Amex Disputes and Chargebacks for Merchants Explained

Learn how to successfully win an Amex dispute as a merchant to protect your revenue and reputation in this simple guide.

Amex Disputes and Chargebacks for Merchants Explained
Amex disputes and chargebacks for merchants explain

Managing disputes and chargebacks can be tricky for merchants, especially with American Express cards. It has a completely different process compared to other major credit cards. If you want to know how to navigate through amex disputes and chargebacks, keep reading ahead.

What Happens During the Dispute Process?

When a cardholder disputes a transaction, Amex initiates an inquiry with the merchant. This process, known as a dispute, is the first step before a chargeback may occur. During this phase, the cardholder's claim questions the legitimacy of a charge, which can be due to several reasons, such as unrecognized transactions, dissatisfaction with the product or service, or billing errors.

Once a dispute is raised, the merchant is notified and given an opportunity to respond. The merchant must provide evidence to validate the transaction. If the merchant’s response satisfies Amex, the dispute is resolved in the merchant’s favor. However, if the evidence is insufficient, the dispute may escalate to a chargeback.

The Different Amex Reason Codes

There are a plethora of reasons as to why customers dispute transactions. As the card issuer, American Express categorizes these into different reason codes.

There are five categories for these chargeback reason codes: authorization, card members disputes, fraud, processing errors, and others.

Each chargeback comes with its own set of prevention techniques that are helpful for merchants to study. These codes help merchants understand why a chargeback was issued and how to address it.

Some of the common Amex reason codes are listed below:

Understanding these reason codes is important for merchants to give an effective response to disputes and avoid potential chargebacks.

The Chargeback Process for Merchants

Being on the other side of the dispute doesn’t necessarily mean that you’re on the losing team. Understanding the Amex chargeback process for merchants allows them to defend their side and protect their reputation and revenue. By knowing how the process works, merchants can effectively respond to disputes, minimize the risk of chargebacks, and protect their business from unnecessary financial strain.

Review the Chargeback Notification

If a chargeback has been escalated, you’ll receive a chargeback notification from Amex. Different card networks, including American Express, Visa, and Mastercard, have their own unique processes for handling chargebacks. Make sure to thoroughly read and go over the information provided before you decide to do something.

Identify the Reason for the Chargeback

Pinpoint the exact reason as to why the chargeback happened. Keep in mind that you have to tailor your response in order to address the concern raised by the cardholder, such as a situation where the merchant failed to deliver goods or services as expected. Having a generic response is not the best route to take.

Gather the Necessary Documentation

Collect all the sufficient evidence for this case. This can be invoices, sales receipts, shipping information, and address information. These documents are usually already accessible in the file.

Create a Thorough Response

This step is very important; write a detailed response letter that acknowledges the cardholder's claim and presents the most comprehensive case. Don’t forget to submit your documentation to prove your side.

Submit

Submit your response to Amex. Take note of the deadline to ensure your response isn't delayed. If you fail to submit your response on time, it will automatically result in your loss of the dispute.

Keep an Open Communication

Maintaining an open and respectful communication with the cardholder throughout the dispute process is highly recommended as it shows your efforts in addressing the customer's concerns.

Restricted Business Categories

There are several business models that aren’t authorized to accept card payments from Amex. There are several business models that aren’t authorized to accept American Express cards. Below is a list of business types that are prohibited:

How Long Does an American Express Dispute Process Take?

Majority of disputes under AmEx are usually resolved within 30 days. American Express operates in dual roles as both an issuing bank and sometimes a processor, which allows them to handle transaction disputes differently compared to other card networks. However, it can depend on the complexity of the situation, it is possible to extend after a month.

How to Prevent American Express Chargebacks

Winning an Amex Dispute requires a strong strategy. However, the best way for merchants to fight against these chargebacks is to prevent them from happening initially. One important factor of chargeback prevention is maintaining clear communication with the customer. Here are some examples merchants should abide by:

Following these practices can help prevent some disputes from happening. That being said, every merchant needs an efficient chargeback management strategy to be able to tackle the issue from different perspectives.

Reduce AmEx Chargebacks with Chargeblast

Resolving Amex chargebacks is painfully inconvenient. Don’t wait until your business’s reputation gets tarnished, and prevent these chargebacks ASAP! Discover how you can reduce chargeback rates with Chargeblast today!