What Visa Reason Code 10.1 Means for Merchants

A chargeback notice with Visa reason code 10.1 means the cardholder says they did not make or allow a purchase. You took it on a counterfeit card. The code is one of the fraud disputes in Visa's Category 10. Here is what it covers and how to answer it.

What is Visa dispute condition 10.1?

The full name of Visa dispute condition 10.1 is EMV Liability Shift Counterfeit Fraud. It sits in Dispute Category 10, which is Fraud.

The claim behind it is simple. Someone copied a real card onto a fake one and spent money with it. The real cardholder then told their bank they never made the purchase. The bank took the money back from you and filed the dispute under 10.1.

The name points to the chip rules. If your terminal read the chip on a real card, Visa shifts fraud losses away from you. If it did not, the losses can land on you. That is why the first thing to check is how the card was read.

When is a 10.1 dispute invalid?

A 10.1 dispute is invalid for a chip initiated transaction. If the card was dipped into a chip reader and the full chip data went through, the issuer should not have filed it.

It is also invalid for a fallback transaction. A fallback happens when the chip cannot be read, so the card is swiped or keyed instead. Those sales follow a different rule set, and 10.1 does not fit them.

So pull the transaction record first. If it shows a chip read, you have a strong case that the dispute was filed in error.

How to defend against a 10.1 dispute

To fight a counterfeit card chip dispute, show the card was chip read and the full chip data was sent. Your processor's transaction record should show this. Ask for it as soon as the notice arrives.

If the sale was not chip read, the chip defense is gone. That does not mean you have no answer. You can still try Compelling Evidence.

Before you write your reply, check the code on the notice and make sure you are answering the right claim. If you need help finding it, see how to read a chargeback notice.

Using Compelling Evidence for condition 10.1

Visa lets merchants send Compelling Evidence for conditions 10.1, 10.3 and 10.4. So it is an allowed defense here.

Compelling Evidence is proof from the merchant that the cardholder took part in, received, or benefited from the transaction. The goal is to show the person behind the card knew about and accepted the sale, even if the plastic was fake.

Good items include past undisputed sales from the same card. Also use delivery records to the cardholder's address, or account activity that ties the buyer to your store. Match each item to the claim. A delivery slip does nothing for a fraud code on its own, but a pattern of past accepted sales on the same card can.

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

Timeline and next steps after a 10.1 dispute

You get one shot. An acquirer may respond only once to the original Visa dispute. Put everything in that single reply.

The acquirer may send a Dispute Response unless the merchant already accepted the dispute through Rapid Dispute Resolution. If you accepted it there, the case is done and no reply will go out.

Each step of a Visa dispute has a set time limit, so a late answer can lose the case. Find the deadline on the notice or in your processor's portal and mark it the day the notice arrives.

If your Dispute Response wins, the case may still move on. In pre-Arbitration, the issuer must deal with the evidence the acquirer gave in its Dispute Response. It cannot skip it. The issuer may switch dispute conditions only if the first condition was valid.

To see how those later rounds work, read what happens after you answer a chargeback. Keep a copy of everything you send, and answer any new notice just as fast.

Sources

• usa.visa.com
• usa.visa.com