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NC: Not Classified
The NC code is Discover’s catch-all chargeback reason for disputes that don’t fit neatly into their standard categories, and it’s one of the more frustrating codes you’ll see because it gives you no quick clue about what went wrong with the transaction.
When an NC code shows up, you’re left without much input. The dispute could come from almost anything that Discover doesn’t already have a different code for; it’s sort of like a “D.) Other” answer on a multiple choice test. If they can’t classify it, it ends up with this label.
Maybe the customer has some unusual complaint about your product or service. Maybe there’s a technical issue that doesn’t match up with their usual fraud or authorization problems. This uncertainty means that you need to look more closely at each individual case just to see what actually happened in the first place.
This lack of information creates plenty of issues for your chargeback prevention strategy. Most chargeback codes give you a pretty simple guide to follow – they tell you right down to the last detail what evidence to get together and which particular points you need to cover in your response. But NC codes force you to do more investigation.
The extra work these disputes need can quickly add up over time. You have to review more transaction information and customer communications just to see what the actual issue turns out to be. Your team ends up spending 2x as much time on each NC dispute compared to a standard chargeback with simple guidelines. And without a set category to work from, it gets much harder for you to create helpful templates or standard replies that work well across different cases, and each NC code dispute can turn into its own personal challenge to solve.
How It Works
When a cardholder files a dispute with Discover, the bank has to figure out what went wrong with the transaction. Usually, the problem is fairly easy and obvious. Maybe the customer never actually received what they ordered, or maybe the charge amount was very different from what they expected to pay. Sometimes, Discover gets stuck when they try to figure out the exact issue after they’ve gone through all the documentation and evidence multiple times.
The NC code matters quite a bit in the whole dispute process when this happens. Discover takes a close look at the dispute claim and tries to match it up with one of its usual reason codes. They review the cardholder’s statement line by line and look at any evidence or documentation that the customer provided to support their case. When nothing fits well into any of their normal categories, they’ll mark the whole case as NC instead of trying to squeeze it into the wrong category where it doesn’t belong.
After Discover makes that call, your payment processor receives the notification about the dispute – these notices usually show up 3 to 5 business days after the dispute was first filed. Your processor then sends the NC code over to you along with whatever limited info Discover was able to share about the dispute. The issue is that the information is usually pretty thin since Discover couldn’t classify the problem in the first place.
The whole experience feels very different from standard disputes because you’re working without much direction. With a normal chargeback, you at least know what the customer is claiming went wrong. An NC code just tells you that something is obviously off, but Discover can’t tell you what that something actually is. You’ll have to dig deep into your own transaction records and order history to piece together what could have triggered the dispute in the first place. Your processor may be able to help so you can make sense of the limited information they received, but they’re usually just as confused about the situation as you are.
How it Affects Chargeback Prevention
An NC code on a chargeback means that it’s a mystery dispute territory. The card network had no clue which category this case belonged to and just marked it as “not classified.” Your job as a merchant gets quite a bit harder because you have no clue what evidence to get together or how to defend yourself against something that’s so vague.
Most chargebacks at least give you a roadmap to follow. A fraud dispute needs transaction records and maybe some delivery confirmation. An authorization error means you need proof that you had approval from the bank. NC chargebacks leave you completely in the dark about what went wrong, and not learning about what happened usually means that you’ll lose the dispute.
The financial hit is harder, too. Without a reason code, so you can improve your response, you’re likely to have much lower win rates than normal disputes. Merchants usually send in all the documents that they have and still lose the case because they never actually dealt with the real issue.
There’s some positive news in all this mess, though. Track your NC chargebacks over a few months, and patterns will start to show up in the data. Maybe they all come from the same payment processor, or maybe they only happen with certain product types.
Sometimes it turns out to be a technical issue that nobody has seen. Other times, it’s a confusing checkout process that leaves customers thinking that they never completed their order.
Example Scenarios
The customer downloads the product immediately and even sends along a thank-you email. But 3 weeks later, a non-categorizable chargeback lands in the merchant’s inbox because the customer claims a combination of fraud and quality problems. The merchant tries to respond with their usual fraud defense package. But the card network rejects it because the dispute doesn’t fit neatly into just one category.
This scenario happens all the time lately. A subscription box company might run into the same non-categorizable chargebacks when customers dispute charges after making vague attempts to cancel their service. Maybe the customer tried to cancel through email instead of the official cancellation portal. But the charge went through anyway. Now the dispute combines unauthorized transaction claims with service-cancellation problems, and neither standard defense template works for the situation.
Online course sellers face their own version of this frustration. A merchant sells online courses for $200 each and delivers them through a third-party platform. When a chargeback arrives with vague complaints about a combination of access problems and content quality issues, the merchant sends along some screenshots and delivery confirmations. But these standard pieces of evidence don’t actually cover the mixed nature of non-categorizable disputes, so the merchant ends up losing because they treated it like a basic non-delivery case.
The merchants who actually win these disputes take a very different strategy to this problem. They document each and every customer interaction right from the start and create custom response letters that work with each complaint separately. They don’t use templates or believe that the dispute fits into any of the familiar categories they’re used to seeing.
Requirements and Timeframes
An NC code from Discover means the clock starts ticking much faster than with your usual chargebacks. Most merchants get the standard timeframe. But with NC codes, you only have 10 business days to put together a response. Discover uses this shorter window because it needs to sort out the dispute reason before it can move the case forward.
The paperwork laws are a bit tough here. Nobody knows what the customer actually complained about at that point, and you have to get ready for every possible dispute scenario. You’ll need to pull together transaction records, delivery confirmations, customer communications, and payment authorization information, all at the same time.
Your payment processor gives you a hand here – they manage the communication between you and the card network. Sometimes they already know what the actual dispute reason is. But they just haven’t updated the coding yet. A quick phone call might save you from building the wrong defense strategy.
Discover keeps a close eye on merchants who rack up multiple NC codes over time. If these codes start showing up again and again, it probably means your processor isn’t submitting dispute information correctly to the network. Five or more NC disputes in a single month will usually trigger a review of your merchant account. Discover may then ask you to work directly with your processor to fix whatever communication problems are happening behind the scenes.
Frequently Asked Questions
How can I defend against an NC code chargeback?
When you get an NC code chargeback, you're working blind. The bank won't tell you why the customer disputed the charge, so defending yourself gets much harder.
The first step in any chargeback dispute is building your evidence file, since this part can make or break your entire case. Collect the documents that relate to that exact transaction. Get your authorization records, any email exchanges or message logs that you had with the customer, delivery confirmations, and tracking numbers if you shipped anything physical. And grab screenshots that show what the customer actually ordered and the exact date they placed that order. The stronger evidence you can show the bank, the better your odds of winning this dispute will be.
Call your bank immediately and ask for more information about what actually happened with this dispute. Banks usually have extra information sitting in their system that didn't make it into the chargeback letter they sent. Even a small detail about the customer's complaint can go a long way toward helping your case.
Your rebuttal letter has to cover multiple scenarios since the exact issue remains unknown. Hit the most common dispute reasons in your response. Show that the transaction had valid cardholder authorization. Prove that you delivered the product or service as promised. Make sure the customer actually received what they paid for - even though it takes more work. But it has the strongest shot at winning the chargeback.
What evidence works best for NC chargeback disputes?
When Discover sends an NC code, it means that the dispute doesn't fit into their standard categories. Maybe the customer has a few complaints mixed together, and the situation is pretty unusual - it happens more usually.
The best way to manage these tough cases is to be thorough with your evidence. Don't try to guess what the actual issue is - just show everything that you have. Get proof that the customer authorized the transaction in the first place. Then add your communication logs that show each interaction you had with them. Delivery tracking matters here because it proves that the customer received just what they ordered.
Your product descriptions and business policies matter quite a bit, too. These documents show that you run a legitimate operation with fair terms. The best strategy is to show consistency across your entire business. Showing that this particular transaction followed your normal procedures puts you well ahead.
Don't submit 20 different documents just because you have them. Pick the ones that tell a story from start to finish. A judge needs to see what happened without getting buried in unnecessary paperwork. Quality beats quantity every time in these cases.
NC codes show up when regulatory problems are involved or when fraud claims get mixed with quality complaints. Discover uses these codes when they can't fit the dispute into their normal categories - it's a sign that you need a stronger defense than usual.
How common are NC chargebacks compared to other Discover codes?
NC codes from Discover My Transaction disputes don't actually pop up very often in most merchant reports. Most businesses will only see them in about 1-2% of their total disputes, and it's completely normal territory - not something that ought to keep you up at night.
These disputes usually call for more legwork when you do run into an NC code. Since the code itself is pretty vague about what happened, your team is going to need to do some detective work to figure out the true issue. These cases take about twice as long to work through compared with your standard disputes.
Different types of businesses see different patterns with these codes. An online subscription service might see more NC codes than a local restaurant would. The way your business operates and processes payments shapes what kinds of disputes eventually land on your desk.
It's well worth the effort to track your NC codes alongside your other chargeback data. Over time, you'll probably start to see some interesting patterns show up. Maybe they spike during certain months or with certain product categories - this information ends up being helpful as you're writing replies and picking where to focus your team's attention.
Most merchants manage to hold their NC rates well below 1% of total transactions - it's just where you want to be. Taking care of these codes carefully helps you head off any unwanted effects on your dispute ratios when they do show up.
Can NC chargebacks indicate problems with my business operations?
Step back and look at the bigger picture, and these unusual disputes become some of your most helpful resources. The fact that they don't fit neatly into your standard dispute categories means they're telling you something helpful about gaps in your business operations that you might not have picked up on otherwise, and each one helps you find areas where your customers are ending up confused or frustrated in ways that your usual dispute codes just can't capture.
The patterns you find in these cases can be pretty revealing - even single disputes that seem completely unrelated on the surface. Maybe you'll find out that a few of them trace back to a checkout process that's more confusing than you realized or to customer service replies that aren't as easy to understand as they should be. You can cut down on disputes across all categories by fixing the root causes that create customer confusion in the first place.
Viewing these tough disputes as opportunities to get to know your customers better and improve their whole experience lets you turn what may feel like a frustrating problem into a genuine competitive edge.