Visa Reason Code 13.1: Merchandise/Service Not Received is one of the chargeback reason codes cardholders take advantage of to commit friendly fraud in peak seasons.
Chargeback reason codes?
If you ask any eCommerce merchant, they’d tell you chargeback reason codes are the source of significant headaches in the industry.
They’re supposed to serve as simple, harmonized tools for identifying chargeback causes. So when a buyer wishes to seek remediation from their bank, the bank can quickly assign the predefined alphanumeric code for the dispute.
Merchants at their end can readily understand what they’re dealing with.
The problem is chargeback reason codes do not always reflect the genuine reason for chargebacks. The cardholder can give any reason for the dispute. But their intent could be different.
More so, card brands have distinct sets of chargeback reason codes. Although many of these codes are identical in principle, differences still abound in their application.
And understanding those nuances -- plus grasping all the numerous codes out there and piercing through the corporate veil of the buyer's objective -- is a lot of work.
That makes winning disputes an uphill battle for merchants.
Yet, that’s what we’ve got for now. Until there’s a better policy instrument to replace the current dispute remediation protocols, it’s best to get educated about the unspoken rules of the game.
And our focus for this piece is to help you understand what goes into winning disputes under Visa chargeback reason code 13.1: Merchandise or Services Not Received.
What is Visa Reason Code 13.1?
Visa chargeback reason code 13.1 is the code banks apply when a cardholder claims they did not receive goods or services purchased with a Visa card. It was predated by reason code 30, which Visa eclipsed under their Claims Resolution initiative.
Besides the primary Merchandise/Service Not Received primary designation, Visa reason code 13.1 applies if the package got missing from the buyer’s porch. Another applicable instance is when the buyer cancels a transaction that hasn’t arrived by the due date.
On that note, below are some vendor missteps that could result in Visa reason code 13.1 chargeback:
- Poor order fulfillment:
- Late order fulfillment or billing for an order before shipping the goods.
- Poor order shipping:
- Not shipping goods or delivering services as promised, shipping to the wrong address, or not making the goods available for pick-up.
Do Vendors Have any Rights Regarding Visa Reason Code 13.1
Despite their best efforts, banks cannot possibly match the incremental spike in false chargebacks.
Consequently, they established checks and balances for easily-exploited reason codes, such as Visa reason code 13.1. Below are significant merchant rights and limitations regarding Visa reason code 13:1.
- Before filing a chargeback, the customer must make available to the processor evidence of how they tried to work with the seller to remediate the dispute.
- In the case of a late shipment, the buyer must try to return it to the seller if they no longer require it and wait for 10 days before filing a chargeback request.
- The dispute processing time limit is 120 calendar days, either from the day of transaction processing or the last day the buyer expected the order to arrive. However, that should not be more than 540 days from the initial transaction processing date.
- Suppose the seller did not set a merchandise or service delivery date. In that case, the issuer cannot initiate a dispute for at least 15 calendar days after the initial transaction processing date.
- Likewise, if the buyer returned an item due to late order delivery, the issuer cannot file a dispute for not less than 15 calendar days after the order return date.
- The cash-back portion of a cash-back order is nonrefundable in a chargeback.
With all that clarified, we must also underscore that you should take pre-emptive measures to ensure you don’t open an item not received chargeback fraud floodgate to your business.
Here are some essential steps to take:
- Make your buyers aware of the shipping and delivery dates and stick to that schedule. If anything changes, as they could due to the holiday season, inform your buyers. Obtain their permission to continue the transaction or cancel.
- Have orders ready for pickup at your given times whenever necessary.
- Understand that processing payment before shipping the order might not be a brilliant idea.
- Don’t forget to ship your order with tracking and always obtain order delivery confirmation for expensive merchandise.
- Ensure your goods/services descriptions are accurate.
How to Fight Reason Code 13.1 Chargebacks
As we’ve noted, there’s no way you can stop con artists from forcing their way with Visa reason code 13.1 chargebacks. While that shouldn’t stop you from peddling down on preventive gears, you should also be ready to fight ALL false chargebacks as they come along.
- If you successfully fulfilled the order or delivered it at the pickup point on the agreed date, provide evidence to show the customer received their goods or service.
- The agreed fulfillment date hasn’t elapsed before the cardholder filed a chargeback? Provide evidence showing the agreed order delivery schedule.
- For invalid chargebacks, such as when the order clears the seller’s customs but is yet to pass the customer’s customs agency before the cardholder filed a dispute, provide documentation to that effect.
- If the buyer canceled their transaction due to late delivery, add evidence of a completed refund.
- If you succeeded in convincing the cardholder to drop the case upon reaching out to them, add evidence to show they dropped the case.
Generally, the compelling evidence you need to refute a cardholder's claim includes, but is not limited to:
- Photographs or emails linking the order recipient with the cardholder
- Pictures or emails demonstrating the buyer has received their order in good condition or accessed a digital good.
- Evidence showing you accessed and verified the cardholder’s profile before the transaction.
- Evidence showing the buyer was at the seller’s website on or after the transaction date.
- Proof that someone used a device and card applied in the dispute in a previous non-disputed transaction.
If You sold Digital Goods or Travel & Entertainment:
Assuming you sold digital merchandise or travel and entertainment, and the dispute is valid, provide the following documentation:
- Ancillary evidence of sales, such as a written description of the order downloaded, date and time of download, and the date the cardholder launched the program or accessed the software on their computer.
- You must also add the following in your compelling evidence:
- The cardholder’s IP address and geographical location at purchase date and time;
- Serial number and name of device, if available;
- Cardholder’s name and email address.
Travel & Entertainment
- Ancillary evidence of ticket sales or proof of service delivery.
You must also add the following in your compelling evidence:
- Evidence that the buyer received their travel or concert ticket at their billing address,
- Evidence of ticket or boarding pass scanning at the gate,
- Documentation showing that the cardholder earned or redeemed their frequent flyer miles as part of the transaction,
- Evidence the customer performed more transactions linked to the initial order, like seat bump up or on-board/in-app purchases.
- Proof of Terms and Conditions as shown to the buyer.
You must also add the following in your compelling evidence:
- Evidence to show the buyer earned or redeemed their loyalty program rewards as part of the order,
- Evidence the customer performed more non-disputed transactions linked to the initial order, like seat bump up or on-board/in-app purchases.
Go Above and Beyond With Dispute Automation
Online shoplifters are leveraging the many loopholes in chargeback mediation to game the system.
But you can still gain the upper hand when contesting Visa reason code 13.1 with chargeback automation.
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How can I dispute a charge with Reason Code 13.1?
To dispute a charge with Reason Code 13.1, contact your issuing bank and provide them with evidence that the merchandise/service was not received.
How long does it take for a dispute with Reason Code 13.1 to be resolved?
The time it takes for a Reason Code 13.1 dispute to be resolved varies, but it typically takes a few weeks.
What kind of evidence do I need to provide for a Reason Code 13.1 dispute?
Evidence that may be required for a Reason Code 13.1 dispute include proof of payment, receipts, tracking information, and any correspondence with the merchant.
What is the role of the issuing bank in Reason Code 13.1 disputes?
The issuing bank plays an important role in resolving Reason Code 13.1 disputes by investigating the dispute and determining whether a refund should be issued.
What happens if the dispute with Reason Code 13.1 is ruled in my favor?
If a dispute with Reason Code 13.1 is ruled in your favor, the issuing bank will issue a refund for the disputed amount to your account.