Whether a merchant fighting unfair American Express chargebacks or a cardholder dealing with a fraudster, you need to understand dispute time limits.
Time limits are incorporated into the credit card dispute process to prevent it from dragging out while still upholding merchant and cardholders' rights. However, time limits aren't standard across card networks; in some instances, they vary by 60 days depending on the chargeback type.
Because the largest amount of credit card payments by volume are on the Visa and Mastercard networks, merchants and cardholders are often clueless when dealing with American Express chargebacks. On that note, here's a quick guide on how the Amex chargeback process plays out and the time limits they impose.
Unlike Visa and Mastercard, American Express operates as a card network and an issuing bank. Even though Amex now allows select banks to issue their cards, they usually issue the cards themselves. Since fewer parties are involved, Amex chargebacks are more streamlined and shorter. However, it can limit a merchant's ability to fight invalid chargebacks.
Bear in mind that Amex caps cardholder disputes at two for every transaction. This keeps customers from abusing their chargeback system. The second dispute is meant to provide customers who didn't know what evidence to submit the first time a second chance. On the flip side, this leeway for customers translates to an extra workload for merchants who may have to respond to disputes twice.
When a customer disputes a transaction, Amex reviews the claim and either offers an immediate chargeback if there's enough evidence or sends an inquiry to the merchant for extra information.
Amex allows the merchant 20 days to respond to their inquiry by either providing evidence against the claim or accepting the dispute. If the submitted evidence is insufficient or the merchant misses the deadline, the dispute becomes a chargeback.
It’s worth noting that because Amex acts as the card network and issuer in most transactions, they'll rarely think they have insufficient information to make an initial decision.
If a merchant still feels the dispute or chargeback is incorrect, they can contest it under strict deadlines:
Second chargebacks or pre-arbitration phases aren't standard practice for Amex. Moreover, if a merchant's inquiry rate is high, Amex might stop sending inquiries and instead escalate disputes to chargebacks without consulting the merchant.
In the past, Amex cardholders could file a dispute any time after the transaction date. However, Amex recently put a cap on the time to 120 days from the transaction date. For chargebacks related to defective or damaged products, the clock starts when the item is delivered. If products are not delivered, the clock starts on the expected delivery date or when you are aware you won't receive the product – whichever comes earlier.
The time limits set have a “Day One,” which resets at every chargeback stage.
For instance, a merchant has 20 days to respond to an inquiry. If the dispute progresses into a chargeback, they have an additional 20 days from the chargeback date to challenge the chargeback. The initial “Day One” is when they received the inquiry and the new “Day One” is when it became a chargeback.
Because Amex and Discover's chargeback process differs from Visa and Mastercard's process, the time limits are different too. Below is an overview of what to expect in terms of chargeback timelines by phase.
Although American Express takes about a month to resolve disputes, some complex cases might take longer.
American Express cardholders are limited to two disputes per charge. This limitation is designed to prevent fraudsters from abusing Amex’s chargeback system by filing a dispute multiple times.
Unlike Mastercard and Visa, Amex also functions as an issuing bank. As such, the chargeback process is simple and involves the following steps:
Contact American Express through your account
Click review charges
File a claim and give a reason for the dispute
American Express cardholders have 120 days after the transaction, but the countdown starts at different times depending on the reason code. It starts after delivery for defective or damaged products, and for missing products, on the expected delivery date.
Amex doesn’t have formal guidelines and rules on second chargebacks and pre-arbitration.
