What Mastercard Reason Code 4871 Means for Merchants

Mastercard reason code 4871 is a chargeback. You can get one when a cardholder denies a charge and your terminal could not take a PIN. It sits in Mastercard's fraud group. It exists because of the chip and PIN liability shift, so the details matter more than with most codes. Here is what the code means, when it applies, and what you can do about it. If you are new to these notices, start with how to read a chargeback notice.

What is Mastercard reason code 4871?

The full name is Chip Liability Shift-Lost/Stolen/Never Received Issue (NRI) Fraud. Mastercard puts it in its fraud group, with codes like 4870, Chip Liability Shift.

The claim behind a 4871 has three parts. The cardholder denies making the charge. The card was a PIN preferring chip card. And your terminal could not accept a PIN, so the sale went through without one.

The "lost, stolen, never received" part describes the card. The cardholder says the physical card was lost, stolen, or never arrived in the mail. Someone else then used it at your terminal.

When is reason code 4871 used?

An issuer may start a chargeback when the transaction meets the requirements of a chargeback reason code. For 4871, one requirement stands above the rest. The code only works when both banks are in the chip/PIN liability shift. That means the issuer and the acquirer are in a country or region covered by it. If either bank is outside that region, the issuer cannot use this code.

The issuer also gets just one chargeback per sale amount. So a 4871 is usually the issuer's single shot at this dispute.

How the chip/PIN liability shift applies

The liability shift is a rule about who pays for fraud on chip cards. When a PIN preferring chip card is used at a terminal that cannot take a PIN, the fraud loss can shift to the merchant's side. The idea is simple. Terminals that support PIN make stolen cards much harder to use.

A 4871 chargeback is the issuer using that rule. The cardholder says the card was lost or stolen, and your terminal let the sale through without a PIN. The shift puts the loss on you, not the issuer.

This is why the code rarely appears for merchants whose terminals take PINs. It shows up where older or limited terminals processed a chip card without that check.

How to respond to a 4871 chargeback

Your options are narrow. The acquirer can respond if DE 55 was provided in the first presentment, or if a refund was already issued.

DE 55 is the chip data from the card. If that data was in the first authorization, it proves the real card was there. Your terminal read it. That is your strongest answer when it applies.

The refund path is different. If a cardholder got both a chargeback credit and a merchant refund, the acquirer must second present showing the refund. The cardholder cannot be paid twice for one sale.

The acquirer may also second present when the chargeback did not meet the reason code rules. For a 4871, that could mean the issuer used the code outside the liability shift region.

If the case keeps going, the issuer can push on. It may file a pre-arbitration case, then an arbitration case. If your side does nothing on a pre-arbitration case, you accept the loss for that sale. The acquirer may reject a pre-arbitration case with a rebuttal and any relevant documents. Once a pre-arbitration or arbitration case is filed, Mastercard throws out late second presentment papers. So send everything early. For the full flow, see what happens after you answer a chargeback.

How to prevent 4871 chargebacks

Stopping these starts with your terminals. Make sure every chip terminal you use can also take a PIN. If you run locations with older hardware, ask your processor which units cannot take a PIN and replace those first.

Train staff on what to do when a customer cannot enter a PIN. Do not fall back to a swipe or a signature without thinking. Each fallback sale on a PIN preferring card is a possible 4871.

Watch for fraud codes that point to other problems too. Watch for other codes too. A run of cardholder disputes under 4853 or questionable merchant activity under 4849 needs a different fix than a 4871 run does.

Last, keep your chip data flowing. Terminals that read the chip and pass the data through give you the proof you need if a 4871 ever arrives.

Sources

• dm.mastercard.us