Chargeback Reason Code

American Express Chargeback Reason Code C04: Goods/Services Returned or Refused

General Information about Reason Codes

In 2016, Mastercard chargeback reason codes were condensed and consolidated, in a restructuring that resembled Visa Claims Resolution. Prior to this, Mastercard’s list of reason codes was long, convoluted, and confusing; now there are fewer than ten different reason codes relevant to most merchants. All the old reasons are still there, but they’ve been grouped under more comprehensive “umbrella” codes.

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American Express Chargeback Reason Code C04: Goods/Services Returned or Refused

What is American Express Chargeback Reason Code C04: Goods/Services Returned or Refused?

American Express uses the chargeback reason code C04 to denote chargebacks that involve returned or refused goods that were not refunded. Chargebacks under the code originate as cardholder disputes where the cardholders claim the merchants did not refund them. However, that does not mean that the merchants are always in error for not refunding the customers.

This chargeback reason code may also occur if you refuse to accept returned goods or services. Whichever is the case, the underlying requirement is that you did not process a refund to the cardholder.

You may have forgotten to process the refund or faced challenges while processing it. Either way, some cardholders can grow impatient and file chargeback claims with their issuers.

Returns or rejections are typical in online e-commerce. Hence, businesses set up return policies to ensure that both parties have a good deal. That means the cardholder gets a refund, and the merchant receives the product intact.

Some cardholders can refuse delivery if they cannot cancel the order on time. That could be due to issues with the product’s quality or brand preference. Things like this can easily result in chargebacks under this reason code when not properly addressed.

We understand that you may include non-refund policies with some products or services because of their nature. Notwithstanding, policies like that can still set you up for chargebacks. That happens, especially when cardholders are familiar with return policies from other merchants.

Since chargebacks under this reason code originate mostly from cardholders, you have a small window to prevent them. We won’t rule out cases where the cardholder skips you and goes straight to the issuer. Still, we expect your customer to contact you before escalating the situation.

Issuers may also send inquiry requests to learn more about the disputed amount and your policy. That allows you to prevent an escalation to a chargeback.

Keeping that in mind, we’ll review some of the reasons that lead to chargebacks under this code. Then, you will know the best approach to take when disputing them.


Why Did It Happen?

The primary cause of chargebacks under this reason code is the merchant’s failure to process a refund for the returned or rejected item or service. At least, that will be American Express’s perspective when processing the chargeback. A more detailed overview is as follows:

  • The cardholder returned the item and expected a refund. On getting no credit, the cardholder approached the issuer and filed a complaint.
  • You agreed to refund the cardholder within a timeframe but failed to meet that expectation.
  • The cardholder refused delivery and did not receive the items. A refund will be expected. Failing to do that can result in a chargeback.
  • You promised a replacement, but the cardholder refused it. You may incur chargebacks if that happens.

Miscommunication between you and the cardholder can also result in an escalation of chargebacks. We expect cardholders to be patient and let you do your thing. However, this is seldom the case, as most cardholders expect immediate refunds.

Delays and forgetfulness are no excuses to deny the customer’s expectations for a refund. Still, we understand that unavoidable situations may arise, preventing you from processing the payment.

Processing part payments can still result in chargebacks. However, that will be covered in a different reason code.

Cyber-shoplifting and Fraud

Some cardholders have legitimate intentions of demanding a chargeback. However, we cannot rule out those who hope to profit from these situations. Cyber-shoplifters will receive the items and still demand a chargeback, claiming to have returned your merchandise.

Fraudsters may place orders on a cardholder’s account but cannot change the delivery address. The cardholder will most likely reject the item and demand a refund.

Buyer’s remorse is common in e-commerce operations. Some cardholders will attempt to return the item and demand a refund. However, they may do so while violating your refund policies.

These cardholders will approach their issuers directly to avoid dealing with you. Chargebacks are likely to occur.

How to Fight American Express Chargeback Reason Code C04: Goods/Services Returned or Refused

Cardholders can only file chargeback claims within 120 days of the purchase. You can compare the dates to see if the chargeback occurred after 120 days. That is one way to dispute the chargeback and get a refund.

Besides that, we recommend the following approaches to dispute the chargeback successfully:

  • Provide evidence that the cardholder received and used the merchandise. That makes the buyer ineligible for a chargeback. Hence, American Express will reverse it and refund you.
  • Provide evidence that the buyer is ineligible for a refund under the agreed return policy. You can submit the receipt, which includes the return policy. Ensure the receipt carries the cardholder’s authorization to validate their acceptance of the policy when purchasing the goods or services.
  • Provide evidence that the buyer violated your return policy. This can happen in various ways, depending on your policies. For example, the buyer might return damaged goods, making the purchase ineligible for a refund.
  • Submit evidence that the cardholder took delivery of the items. The proof can be a signed delivery receipt. Use this approach if the cardholder claims they refused delivery of your merchandise.
  • Submit evidence that you processed a refund or delivered a replacement. Include the cardholder’s agreement for a replacement. If a refund was involved, submit a document to show the amount and date.

How to Prevent American Express Chargeback Reason Code C04:  Goods/Services Returned or Refused

Encourage cardholders to contact you for any complaints. That is the best way to deal with issues before they escalate to chargebacks.

With that in mind, here are a few steps to prevent chargebacks under reason code C04:

  • Have clear return policies printed on the receipts or checkout pages.
  • Ensure the words “no refund” are printed on items ineligible for returns.
  • Fulfill all refund promises promptly.
  • Respond to customer complaints as soon as you receive them.
  • Don’t accept returns that violate your return policies.


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