Chargeback Reason Code

American Express Chargeback Reason Code C05: Goods/Services Canceled

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‚Äôs 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‚Äôve been grouped under more comprehensive ‚Äúumbrella‚ÄĚ codes.

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American Express Chargeback Reason Code C05: Goods/Services Canceled

What is American Express Chargeback Reason Code C05?

The AmEx chargeback reason code C05 indicates disputes regarding canceled goods or services. It falls under card member disputes, with American Express initiating the chargeback if a cardholder complains of not getting a refund. This follows a complaint about canceling the order for the goods or services.

Cancellations and returns are nothing new in sales, both online and offline. Hence, we are sure you have a cancellation policy to guide your customers. All cancellations that abide by your guidelines qualify for a refund, and vice versa.

We won’t go into the details of your return or cancellation policy. However, customers who cancel orders for goods or services expect a refund, especially when they’ve not seen them. They can approach their issuer (AmEx) to lay out the complaint if the refund takes too long.

The American Express Dispute Center provides an easily accessible platform to resolve issues with your customers. If you have another means, then we recommend you maximize it. Nevertheless, some cardholders can violate your cancellation policy and still file a dispute with American Express.

Taking too long to respond to American Express’s inquiry will leave the issuer with no choice. While we pray for no chargebacks in your business, you must learn how to fight them effectively. You can do everything right - and still incur chargebacks!

If you’ve received a chargeback under this reason code, you must first understand why it happened. Then, you will know which evidence to present to American Express or your acquirer to fight it and get a reversal.

We’re here to help you do so with our brief guide. You’ll also learn the steps to prevent them in your business. With that in mind, let’s begin with the possible causes of chargebacks under reason code C05.

Why Did It Happen?

Chargebacks with reason code C05 occur when a cardholder files a dispute for a refund after canceling an order for your goods or services. They might present adequate evidence of not receiving the goods or services, validating their cancellation. American Express will contact you to respond to these claims.

The common reasons we identified for chargebacks with reason code C05 include the following:

  • Withholding or delaying credit after the order was canceled: Customers often grow impatient when they don‚Äôt get refunds on canceled orders. You may have encountered challenges in processing the refund or even have a valid reason for withholding it. However, that puts your business at risk of a chargeback for the canceled order.
  • The cancellation violated your policy, and no credit was processed: Informing the cardholder of your cancellation policy violation may not be enough to stop them from filing disputes for a refund. Also, the cardholder may be unaware of your policy and approach American Express for a refund.

You should be the first port of call for any dissatisfied service. However, neglecting customers' complaints about canceled orders for your merchandise or services is counterproductive. They can easily approach American Express with evidence of your negligence.

Miscommunication between you and your customers can cause chargebacks under this code. Failing to inform them of any challenges you encounter while processing their refunds will leave them disgruntled.

What if you did everything by the books and still got the chargeback? Yes, friendly or intentional fraud can cause these chargebacks, although American Express thoroughly investigates all cases.

A cardholder can receive your goods or services and cancel the order instead of confirming the delivery. Fraudsters can also purchase goods and services with stolen cards, leaving the actual owner stuck with the payment.

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How to Fight AmEx Chargeback Reason Code C05: Goods/Services Canceled

Merchants are allowed to fight AmEx chargebacks within 20 days. You must be quick-witted when preparing your defense to reverse chargebacks under this reason code. These are our recommended approaches:

  • If the buyer violated your cancellation policy: You must present clear evidence that the buyer violated the cancellation policy. It could be that they received the goods or used the service. Another cancellation policy could be giving your buyers a fixed time from purchase to cancel their orders.

Present your cancellation policy and evidence that the customer was well-informed at the time of the purchase.

  • If the chargeback does not qualify under the canceled order: Cancellations mainly apply when the cardholder has not received the ordered merchandise. If they have, then it should be classified under the return policy. You can present evidence to this effect.

Documents you can use include delivery receipts that prove that the cardholder received the merchandise. They don’t necessarily have to use your merchandise or service.

  • If a refund was processed after receiving the cancellation request: Submit documents to show your credit transaction. The amount and date should be included.

Reaching an agreement with the cardholder is also possible. If that has happened, you can forward the evidence to American Express. That should invalidate the chargeback and effect a reversal.

How to Prevent AmEx Chargeback Reason Code C05: Goods/Services Canceled

Your cancellation policy should be clear. Also, it should be visible and part of the acknowledgment required before a cardholder purchases your merchandise or service. 

Doing this helps prevent disputes that will cause chargebacks under this reason code. It will also serve as evidence to fight the chargeback if it arises.

Other steps you can take to prevent chargebacks under reason code C05 include the following:

  1. Disclose your cancellation policy on the transaction receipt for all card-present purchases. Keep it close to the signature line.
  2. If the cancellation policy is on a page other than the final signature line, ensure the buyer signs both pages. 
  3. Put a checkbox next to the cancellation policy for online purchases. You can place it on the checkout page before the final payment. Customers should acknowledge the policy before completing the transaction.
  4. Maintain stellar communication with your customers. Address their complaints promptly. If there is a need for a refund, process it quickly.
  5. Some cancellation policies may provide a reduced amount for the refund. Inform your buyer adequately of the deduction.

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