10.1 – EMV Liability Shift Counterfeit Fraud

DESCRIPTION

Why did I receive a chargeback with reason code 10.1?

You received this chargeback because the card-present transaction you processed used a counterfeit version of a valid chip-enabled card. Now, the cardholder claims the purchase was unauthorised.

One of the following errors caused the counterfeit activity to go undetected:

• You used a terminal that wasn’t EMV-compliant rather than using a chip-reading device that would have detected the fraud.
• You used an EMV-compliant terminal and captured the chip information, but the full-chip data was not sent to Visa during the authorisation request.
• You approved the transaction offline, but the full-chip data was not sent to Visa during the clearing record.

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CLASSIFICATION

How does the issuer classify this type of dispute?

Visa has grouped its reason codes into four different categories: fraud, authorisation errors, processing errors, and consumer disputes. Reason codes that start with 10 are in the fraud category.

Fraud-related chargebacks have additional classification requirements.

Prior to filing the chargeback, the issuer must submit a fraud report to Visa (called a TC40). For a dispute with this reason code, the issuer will use fraud type code 4 (counterfeit).

Click here to learn more about how TC40 data is used in your VAMP ratio.

ISSUER TIME LIMIT

How long can the issuer wait to file a chargeback with reason code 10.1?

The issuer must file a 10.1 chargeback within 120 calendar days of the transaction processing date.

VALIDITY

What would make a 10.1 chargeback invalid?

An issuer is not allowed to use reason code 10.1 if any of the following characteristics are applicable:

• The card did not contain a chip.
• The transaction was fully compliant with chip reading and data submission requirements.
• The transaction was an emergency cash disbursement.
• The transaction was a mobile push payment.
• The authorisation request contained CVV data but a CVV check was not performed or the issuer failed to verify the code.
• The issuer had previously reported fraud activity for the card and the transaction shouldn’t have been approved.
• The transaction was a delayed charge that relates to a prior stay, trip or rental period, was properly identified as such, and had a chip-read transaction during the same stay, trip, or rental.
• The transaction was with a Visa Commercial Choice Omni Product.
• The transaction contained a token (not applicable in Europe).

SUPPORTING DOCUMENTS

Can I fight a chargeback with reason code 10.1?

Yes. You can fight a chargeback with this reason code as long as you have one of the following:

• Evidence that the chargeback is invalid. (Note: Your acquirer’s technology should catch these errors and automatically respond on your behalf. If your acquirer doesn’t automatically respond and you receive a chargeback notice, you can challenge the chargeback yourself.)
• Evidence that you issued a credit or reversal to the cardholder’s account before the chargeback was filed.
• Evidence that the cardholder no longer disputes the transaction.
• Evidence that a stay, trip, or rental was disputed improperly. You must show that the transaction relates to a prior stay, trip, or rental period and a chip-read transaction was processed as part of the same stay, trip, or rental.
• Evidence that Visa defines as compelling. The next section has a complete list of acceptable compelling evidence options. This is only applicable in the USA.

PROOF

What compelling evidence is needed for reason code 10.1?

For a US domestic card-present transaction that is key-entered and did not take place at a chip-reading device, you must provide one of the following:

• Evidence that the same card used in the disputed transaction was used in a previous or subsequent transaction that was not disputed
• A copy of the cardholder’s identification and a receipt, invoice, or contract that contains the information provided in the cardholder’s identification document.

WORKFLOW

What process do I use to respond to a chargeback with reason code 10.1?

Visa reason code 10.1 is managed with the allocation workflow.

If you want to respond to a chargeback with this reason code, you’ll use the pre-arbitration process. Submit your supporting documents or compelling evidence with a chargeback rebuttal letter.

ACQUIRER TIME LIMIT

How fast do I need to respond to a 10.1 chargeback?

Your acquirer must submit your chargeback response within 30 calendar days of the chargeback filing date.

Note: This is the acquirer time limit. Your time limit, as the merchant, is much shorter. Merchants often only have between 3 and 20 days to file a response. Ask your acquirer about the expiration date.

PREVENT

How can I avoid chargebacks like this in the future?

Here are steps you can take to avoid reason code 10.1 in the future.

• Only use EMV-compliant terminals.
• Always follow Visa’s guidelines for processing EMV chip transactions and understand industry-specific requirements for stays, trips, and rentals.
• Always use the correct cardholder verification method — signature, PIN, etc.
• Train employees with best practices for card-present transactions.
• Carefully monitor self-checkout kiosks.
• Capture required information in electronic imprints.
• Make sure you are submitting all required information in authorisation requests and clearing records.
• Request a different payment method if the authorisation request is declined. Don’t revert to fallback options like swiping or key-entering card details.
• Keep your payment terminals up-to-date with the latest security patches and software updates.

For a full list of chargeback prevention tips, visit our detailed guide.