Chargeback Reason Code

American Express Chargeback Reason Code C28: Cancelled Recurring Billing

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, Mastercardā€™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 theyā€™ve been grouped under more comprehensive ā€œumbrellaā€ codes.

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American Express Chargeback Reason Code C28: Cancelled Recurring Billing

What is American Express Chargeback Reason Code C28?

The American Express chargeback reason code C28 indicates that the cardholder canceled recurring billing but was still charged. It falls under cardholder disputes and is prominent in subscription-based services with periodic billings. The transactions can be monthly, quarterly, or yearly, depending on your agreement with the customer.

Cardholders can decide to opt out of recurrent billing at any time. Typically, you must provide an easy route for them to cancel their subscriptions before the subsequent billing cycle. Things can go wrong during this cancellation process, resulting in chargeback claims.

Some cardholders sign up for subscription models without fully grasping the terms and conditions. They might expect to authorize each transaction until they opt out of the subscription. In these cases, recurring billing often surprises them, making them press chargeback claims with their issuers.

We expect cardholders to contact merchants first before contacting their issuers to resolve these cases. However, some escalate the matter quickly, resulting in chargebacks under this code. Issuers do their best to ensure each customer receives fair treatment, but we still expect a few chargebacks to slip through.

The reason code C28 only applies to chargeback claims from cardholders. Issuers cannot generate or process chargebacks without reviewing the customerā€™s complaints. They might contact you with a retrieval request for more details about the transaction.

Retrieval requests provide a small window of opportunity to provide a satisfactory response and prevent chargebacks. However, the issuer might send this less frequently. That leaves you with the task of disputing the chargeback after it has occurred.

An increase in recurring billing due to economic downturns or forex crises can result in dissatisfied customers. Of course, they may want to opt out of the subscription. Any unsuccessful attempt will likely lead to a chargeback when the billing is due. You can expect them to file complaints with their issuers.

Weā€™ve gathered enough experience with chargebacks of this nature to know that they can be tricky to handle. Hence, weā€™ll start by exploring all possible scenarios that can lead to them and the best approaches to handling them.

Why Did It Happen?

Chargebacks with reason code C28 occur when cardholders cancel recurring transactions but still get debited. They stem from their complaints to the issuers.

We can draw a few scenarios from the above, as follows:

  • A cancellation request was not honored or processed on time: In this case, the cardholder sent the cancellation request before the billing date and did not expect to be billed. Delayed processing will result in a disputed charge that can escalate to a chargeback. That will happen if you donā€™t process a credit to offset the charge immediately.
  • The cardholder misunderstood the terms of the agreement: Some cardholders may subscribe to your service and be unaware of the recurring billing. They expect a one-time payment to be billed for the next cycle. This scenario often leads to chargeback complaints with issuers, although we expect customers to contact you for clarification first.
  • The cardholder attempted to cancel the recurring billing: Unsuccessful cancellation attempts will have zero effect on the billing cycle. Hence, the subsequent payment will still occur.

Dissatisfied customers will file chargeback disputes, claiming they attempted to cancel the subscription before the billing date. American Express or the issuer will grant their request if the cancellation timeline precedes the billing date.

  • The charge occurred on an introductory offer.
  • The cancellation occurred after the automatic renewal date: Some cardholders might cancel after the renewal date because they no longer need the services. They might file for a chargeback since they donā€™t intend to use the service for the next cycle.

Thorough investigations would prevent chargebacks of this nature from happening if the cancellation occurred after the new billing. However, some can slip through the cracks, resulting in chargebacks.

Fraudsters can file chargeback claims even when they intend to use your services. Hence, you must investigate all claims thoroughly and prepare your response to counter them and reverse the chargeback.


How to Fight American Express Chargeback Reason Code C28: Cancelled Recurring Billing

We have a few recommended approaches to address chargebacks under reason code C28. Fortunately, American Express has a few additions for cases involving introductory offers. Prepare and send your response within 20 days of receiving the chargeback message.

With that in mind, hereā€™s how to dispute chargebacks under reason code C28:

  • If the cancellation request violated your cancellation policy: Provide a copy of your cancellation policy and explain how the cardholder failed to follow the procedures. You must also prove that the customer knew of the cancellation policy when subscribing to your recurring billing service. A copy of the receipt for the first payment or the checkout page can suffice to show the cardholderā€™s agreement to the cancellation policy.
  • If the cardholder still uses your services: Submit evidence that the cardholder still uses your services for the next billing cycle. You can show when the cardholder accessed your services last and prove that it occurred after the billing date. That should invalidate the cardholderā€™s claim and reverse the chargeback.
  • If you processed a credit refund: Provide proof of the credit transaction and show that the same is for the canceled billing.

For introductory offers

  • Prove that you laid out your terms of service in the introductory offer and that the cardholder knew the cancellation procedure.
  • Prove that the cardholder consented to the charge.
  • Prove that you sent advance notice of the recurring billing before the first payment.

How to Prevent American Express Chargeback Reason Code C28: Cancelled Recurring Billing

Card member disputes are tricky to control because some customers can still lodge complaints even when you are doing nothing wrong. Even so, you must maintain the best business practices.

The following are a few ways to prevent chargebacks under reason code C28:

  • Provide a clear cancellation policy
  • Ensure customers agree to your cancellation policy before processing the first payment.
  • The cancellation should be on the receipt, invoice, or checkout page.
  • Process cancellation requests quickly.
  • Address customer complaints promptly.


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