Mastercard debit card chargeback Q&A with Diana Kern

Mar. 8, 2023

Operations Compliance Frontline & New Accts

Diana Kern answers your questions about Mastercard debit card chargebacks from her recent webinar. Learn how you can stay within Reg E timelines if the Mastercard chargeback goes to pre-arbitration, how to determine who did the transaction, and if there is a time limit on the zero liability for Mastercard.

Is there a time limit on the zero liability for Mastercard? For example, if a cardholder notices charges from 2021 and they notify their institution at the end of 2022, does that zero liability still apply?

Diana: The Mastercard rules have no stated timeframe for applicability. Refer to the comparison supplemental handout for the exact verbiage or view it online in the rules document linked in a supplement.

How can you stay within Reg E timelines if the Mastercard chargeback goes to pre-arbitration?

Diana: The two sets of requirements are separate governance from two distinct entities and for which compliance with one is not dependent on the other.

Regulation E governs an account-holding financial institution’s relationship with its consumer accountholders. Brand rules govern the relationship between card issuers and merchant acquirers. Compliance with Regulation E should not be dependent on your success with recovering funds through chargeback.

Can you give suggestions on how to proceed with chargebacks that are denied for UCAF data collected? How do you determine who did the transaction?

Diana: Without evidence obtained in the chargeback process, your investigation techniques include in-depth conversations with the cardholder, an assessment of the cardholder’s overall relationship with your financial institution, the cardholder’s transaction history overall (both card activity and other payment types), and what you know of the merchant’s business and their practices. Also, you are not prohibited from contacting a merchant directly.

With arbitration costs being so high, what should be reviewed prior to going to arbitration?

Diana: Clearly understanding the initial claim is important. When compelling evidence is received with the second presentation it’s critical to review it thoroughly with your cardholder. Your processor should also be prepared to advise on your potential success with pre-arbitration based on their experience, so don’t be afraid to ask.

How does having a chip in the card vs. no chip in the card factor into chargeback rights?

Diana: Whether a card has only a magnetic stripe or is EMV enabled (contains a chip) is relevant to transactions conducted in a card-present environment. Therefore, chargeback reasons for the EMV liability shift are relevant. Currently, all merchant types in the U.S. fall into the liability shift rules.

Want more?

The chargeback process is riddled with rules and time restrictions. Don’t risk a loss for your financial institution or cardholder. Learn the ins and outs of debit card chargebacks to protect everyone’s rights with this timely on-demand webinar, Mastercard Debit Card Chargebacks: Rules, Rights & Challenges.

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