American Express (Amex) operates as both a card network and an issuing bank, providing businesses with tools to manage transactions while reducing fraud and chargeback risks. Like Visa and Mastercard, it has its programs to monitor merchant performance, dispute trends, and fraud activity.

• Fraud Full Recourse program restricts merchants who exceed Amex’s chargeback threshold from disputing fraud-related chargebacks, with Amex expediting these chargebacks and denying reversal requests.
• Immediate Chargeback program applies to merchants with excessive overall chargeback rates, skipping the standard inquiry process. Disputes are processed instantly with a special reason code, reducing the merchant’s ability to challenge them.
• Partial Immediate Chargeback program targets merchants with high chargeback rates but only bypasses the inquiry process for transactions under a specific dollar amount, providing a targeted intervention while allowing normal dispute processes for higher-value transactions.

These programs encourage merchants to improve transaction quality and dispute management practices.

Fraud Full Recourse

The Fraud Full Recourse program is an Amex compliance initiative aimed at managing merchants who exceed the threshold for chargebacks. If a merchant surpasses the acceptable limit for fraudulent transactions, the program allows Amex to expedite chargebacks with a fraud reason code and denies the ability to request a reversal. In this situation, the merchant loses the right to dispute fraud-related chargebacks, and Amex assumes liability for any claims. Merchants in this program cannot submit documentation to reverse chargebacks, even if they believe the transaction was valid, unless they can prove they have already issued credit, meaning refund, to the cardmember for the amount of the disputed charge.

A merchant is placed in the Fraud Full Recourse Program if they:

• engage or participate in fraudulent, collusive, deceptive, or unfair business practices.
• are involved in illegal activities or prohibited uses of the card.
• have a fraud-related disputed charge volume that falls into either a Low Tier or High Tier Fraud-to-Gross (FTG) calculation.

Exit conditions

A merchant is removed from the Fraud Full Recourse program if either of the following occurs:

• Fraud-to-Gross (FTG) performance stays below 0.9% for three consecutive months
• Total fraud-related disputes remain below $25,000 for three consecutive months

Amex reserves the right to remove merchants from the program at its sole discretion.

Immediate Chargeback

The Immediate Chargeback program targets merchants with high chargeback rates. When a merchant exceeds Amex’s chargeback threshold, Amex bypasses the standard merchant inquiry process and immediately processes chargebacks with a special reason code. This program addresses merchants who may be using outdated fraud detection tools or failing to implement essential security measures.

A merchant is placed in this program if the chargeback threshold is exceeded for three consecutive months.

Implications

• Amex may issue chargebacks without sending an inquiry if a cardmember disputes a charge for any reason other than actual or alleged fraud.
• Excessive Chargeback Fee for each chargeback after the 1% chargeback ratio threshold has been reached.

Partial Immediate Chargeback

The Partial Immediate Chargeback program is a more flexible approach for merchants with high chargeback rates. In this program, Amex bypasses the inquiry process only for transactions under a specific dollar amount while still processing inquiries for higher-value transactions. This targeted intervention helps Amex manage high chargeback rates while keeping some standard dispute processes for larger transactions.

A merchant is placed in this program if the chargeback threshold is exceeded for three consecutive months.

Implications

• Transactions below a set amount may be charged back without an inquiry if a cardmember disputes the charge for any non-fraud reason.
• Disputed amounts above this threshold follow the standard Amex Chargeback and Inquiry policy.
• Excessive Chargeback Fee applies to each chargeback exceeding the 1% threshold.

General dispute flow

When a charge is disputed, Amex first attempts to resolve it directly with the cardmember. If the issue remains unresolved, Amex may issue an Inquiry or an Upfront chargeback.

If Amex sends an Inquiry notice, the Merchant Services Provider (MSP) forwards it to the merchant, requesting supporting documents. The merchant must respond within the given time frame to provide evidence for dispute resolution. If Amex has already gathered enough information from the cardmember, it bypasses the Inquiry and issues a Chargeback notice, which follows the same process.

The final resolution depends on the notice type and merchant’s response:

• Inquiry
  • If the merchant submits sufficient documents on time, the dispute may be resolved in their favor.
  • If the response is late or lacks evidence, Amex processes a chargeback.
• Upfront chargeback
  • If the merchant provides strong supporting documents on time, Amex may reverse the chargeback.
  • If the response is insufficient or delayed, the chargeback stands.

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