10.2 – EMV Liability Shift Non-Counterfeit Fraud

DESCRIPTION

Why did I receive a chargeback with reason code 10.2?

You received this chargeback because you processed a card-present transaction on a PIN-preferring chip card, but you didn’t manage it properly. Now, the cardholder claims the purchase was unauthorised.

One of the following errors caused the dispute to happen:

• You did not use a chip-reading device to process the transaction.
• You used a chip-reading device to process the transaction, but it wasn’t PIN compliant.
• The transaction was chip-initiated, but the full-chip data was not sent to Visa during the authorisation request.

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CLASSIFICATION

How will the issuer classify this dispute?

Visa has four reason code 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 0 (lost), 1 (stolen), or 2 (card not received as issued – NRI).

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 10.2?

The maximum amount of time that can pass between the transaction processing date and the dispute processing date is 120 calendar days.

VALIDITY

What would make a 10.2 chargeback invalid?

An issuer is not allowed to use reason code 10.2 if any of the following characteristics are applicable:

• The transaction was correctly processed at a PIN-compliant EMV device.
• The transaction was contactless (including all mobility and transport payments).
• The transaction was an ATM cash disbursement.
• The transaction was an emergency cash disbursement.
• The transaction was a mobile push payment.
• 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 an imprint was obtained at a chip-reading device that was EMV PIN-compliant during the same stay, trip, or rental.
• The transaction was with a Visa Commercial Choice Omni Product.
• The transaction was a Visa Easy Payment Service (VEPS) transaction that bypassed PIN requirements for low-value transactions.

SUPPORTING DOCUMENTS

Can I fight a chargeback with reason code 10.2?

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 an imprint was obtained at a chip-reading device that was EMV PIN-compliant as part of the same stay, trip, or rental.

WORKFLOW

What process do I use to respond to a chargeback with reason code 10.2?

Visa reason code 10.2 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. Gather your supporting documents, write a rebuttal letter to explain your case, and submit your package to your acquirer for review.

ACQUIRER TIME LIMIT

How quickly do I need to file a chargeback response?

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

Note: This is the acquirer time limit. The amount of time you, the merchant, have to prepare and submit your response will be much less. Usually, merchant time limits are about 3- 20 days. Make sure you know how much time your acquirer allows.

PREVENT

How can I avoid chargebacks like this in the future?

Here are steps you can take to avoid reason code 10.2 in the future.

• Only use EMV-compliant terminals that are PIN-preferring.
• 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 on how to properly handle card-present transactions.
• Monitor self-checkout kiosks for signs of potentially unauthorised activity.
• Capture all necessary information in electronic imprints.
• Submit all pertinent information in authorisation requests.
• Request an alternate payment method if an authorisation request is declined. Don’t resort 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 more information on preventing chargebacks, visit our blog article.