AT: Addendum/No-Show

Most merchants have no idea that there’s a problem until their first AT chargeback arrives. If merchants learn Discover’s alphabetic coding system and strict response requirements, they can improve win rates. AT chargebacks depend on the quality of your records and authorization compliance.

Since this code covers two different scenarios, merchants need different evidence strategies for the unexpected extra charges versus reservation penalties. Get familiar with what Discover wants, and AT disputes can go from automatic losses to winnable cases.

How It Works

A cardholder glances at their credit card statement and sees a charge that doesn’t look right to them. Nine times out of ten, they pick up the phone and call their bank as soon as they can. Maybe it was a rental car add-on fee that slipped their mind, or maybe they didn’t know the hotel was going to charge them for canceling too late. In either case, they’ve decided that the charge shouldn’t be there and they want to get their money back as fast as possible.

The cardholder gets on the phone with Discover and explains their case for why the charge is incorrect. Sometimes they’ll claim that they never agreed to any extra fees, or maybe they’ll insist that they actually did show up for their appointment on time. Discover takes down this information and starts to dig into the transaction to see what’s what.

After Discover reviews everything and decides that the cardholder has a legitimate complaint worth pursuing, they’ll move forward and process the dispute under reason code AT. This whole process from their first complaint to the official dispute takes just a few days. Discover will reverse the charge on the cardholder’s account and then send you a chargeback notification with the relevant dispute info included.

On your end, you’ll see this notification about a week or so after the cardholder first picked up the phone to complain. At that point, the funds have already been taken out of your merchant account, and it can feel pretty frustrating when you know that the customer never even bothered to contact you directly before escalating it to their bank.

Plenty of cardholders will skip calling the merchant altogether and go straight to their bank instead. It seems like the easier option if you compare it to what might be an awkward or confrontational conversation with a business. Cardholders also know that the bank is probably going to take their side in the dispute and that it saves them from having to make their case to the merchant. Federal laws actually give cardholders pretty strong dispute rights, so from their perspective, it makes sense to use that option.

How it Affects Chargeback Prevention

Your chargeback data will show that authorization disputes have different win rates than fraud cases. What determines the outcome isn’t if you delivered the service – it’s if you have the right paperwork to back it up. It can be really frustrating.

Prevention works best when you build it into your day-to-day operations from the start. Before customers finish buying, have them check a box confirming they’ve read and understood your cancellation policy. Some hotels photograph the minibar contents during check-in to resolve any uncertainty later about what was used. Small operational changes like these can make a big difference in your win rate because you’re creating a paper trail of what you and the customer agreed to at the time of the sale.

The disputed transaction amount isn’t the only financial hit you’ll take from an authorization chargeback. Each one comes with chargeback fees that might be anywhere from $20 to $100. Rack up enough of these disputes and your payment processor may enroll you in a tracking program that will mean even higher fees and much stricter operating requirements going forward.

Payment processors view fraud and authorization disputes through different lenses. Fraud is seen as something that happens to a merchant, while authorization disputes are viewed as controllable through stronger business practices. This distinction works in your favor because the power to fix the problem sits with you – no need to wait around for the banks to improve their fraud detection systems. What solves authorization chargebacks isn’t better customer service after the fact – it’s more explicit policies and solid records established at the point of sale.

Example Scenarios

A guest books a standard hotel room online for $150 per night. After a long flight, they check in late and go straight to bed without much thought about it. The next morning at checkout, the bill shows an extra $40 resort fee per night that nobody had mentioned when they booked. The guest doesn’t pay it, disputes the charge with their credit card company and wins because the hotel can’t actually prove they mentioned the fee anywhere.

Another hotel down the street deals with the exact same situation. But the way that they handle it is different. At check-in, guests have to sign off on a disclosure form that breaks down the extra fees that they’ll be charged. Their confirmation emails also show these charges in darker text right near the total price where it’s hard to miss. When a dispute comes in, the hotel submits those two pieces of evidence and the charge holds up just fine.

The rental car industry runs into this type of problem over and over. A customer returns a car with a small scratch on the bumper that they claim was already there when they picked it up. The rental company goes ahead and charges them $500 for the repairs. But they don’t have any record of what condition the car was in before or after the rental period. If you don’t have solid photos from the pickup and the return, they lose the dispute almost every time. The rental places that actually do this well will use timestamped video walkarounds where the customer confirms they saw it and it saves them from these problems.

Requirements and Timeframes

A Discover AT chargeback gives you just 10 days to respond. That clock starts when your processor receives it – not when you finally see it in your dashboard. Miss this deadline and you lose automatically, even if you have all of the right proof for your case.

This 10-day window is actually shorter compared to what you’d get with Visa or Mastercard for similar disputes. What this means for you is that you’ll have to move fast and have your documents ready to go before a dispute even arrives. The good news is that when you know what Discover wants, you can put together most of it ahead of time.

For the addendum charges, you’ll have to show proof that the customer actually used the service. You need minibar receipts, damage photos or signed rental agreements that spell out the extra fees.

No-show fees are a little different. For these, you’ll have to prove that your cancellation policy was spelled out and that the customer agreed to it. So you need the original reservation confirmation along with the evidence that your policy was visible at the time they booked. A buried policy on page 12 of your terms won’t work.

The main point for Discover is that the customers knew what they agreed to from the start.