How Merchants Should Handle Visa Reason Code 10.2

What Visa reason code 10.2 means

Visa reason code 10.2 is the EMV Liability Shift Non-Counterfeit Fraud dispute. It sits in Dispute Category 10, which is Visa's fraud group.

Under this condition, the cardholder says they did not make a purchase done with a lost, stolen or never received card. The card itself is real. Nobody counterfeited it. The claim is that someone else got hold of the real card and used it.

This is what separates it from code 10.1. That code covers counterfeit fraud, where a fake card was made from stolen card data. If you got a chargeback notice and are not sure which code you have, start with how to read a chargeback notice.

When a 10.2 dispute is invalid

There are cases where the issuer should not have filed this code at all. Check for these before you spend time on proof.

A 10.2 dispute is invalid for a contactless sale. It is also invalid if the sale was correctly processed at an EMV PIN-Compliant Acceptance Device. In that situation, the liability for this kind of fraud has shifted away from you as the merchant.

If either of these fits your sale, say so in your response. Point to the terminal record that shows how the card was read. That alone can end the case.

Why Compelling Evidence does not apply to 10.2

This is the part that trips up many merchants. Visa lets merchants send Compelling Evidence for conditions 10.1, 10.3 and 10.4. Code 10.2 is not on that list.

Compelling Evidence is proof from the merchant that the cardholder took part in, received, or benefited from the transaction. Think order history, device numbers, past charges to the same card. It is a strong tool, and it works well for the other fraud codes in category 10.

But you cannot use it here. A response built on Compelling Evidence for a 10.2 dispute will not fit the rules for this condition. You need a different plan.

How to respond to a 10.2 chargeback

Start with the validity check above. If the sale was contactless or ran on an EMV PIN-Compliant Acceptance Device, lead with that.

If neither applies, look for proof that the real cardholder made or took part in the sale. A signed receipt, a PIN entry, or a delivery to the cardholder's own address can all help. The claim is that the card was lost or stolen, so proof that the cardholder used it directly answers that claim.

Keep your response tight. Visa dispute evidence must be easy to read and in English, or come with an English translation. Label each document so the reader knows what it shows.

What to do if you cannot use Compelling Evidence

If your only proof is the kind of thing you would send for 10.1, do not send a Compelling Evidence package anyway. It does not fit this condition, and a mismatched response can waste your one shot.

Remember that an acquirer may respond only once to the original Visa dispute. You get a single reply, so make it count. Put everything relevant in that one response.

One more thing to check first. The acquirer may send a Dispute Response unless the merchant already accepted the dispute through Rapid Dispute Resolution. If you or your processor already accepted the case that way, the dispute is settled and there is no response to send.

Key deadlines and rules for 10.2

Each step of a Visa dispute has a set time limit, so a late answer can lose the case. Find the date on your notice and mark it the day the notice arrives.

If your response does not end the case, it moves to the next round. In pre-Arbitration, the issuer must deal with the evidence the acquirer gave in its Dispute Response. It cannot skip your proof.

The issuer can switch dispute conditions at that point, but only if the first condition was valid. If the 10.2 was filed in error, that switch is not allowed.

To see what happens after your reply goes in, read what happens after you answer a chargeback. For the counterfeit fraud code in the same family, see Visa reason code 10.1.

Sources

• usa.visa.com
• usa.visa.com