Discover Chargeback Reason Code AP: Cancelled Recurring Transaction

What is the Discover Chargeback Reason Code AP?

Discover cardholders can dispute unauthorized or cancelled recurring billing, resulting in chargebacks with the reason code AP. The code falls under the “cardholder disputes” subcategory, common in online subscriptions. Offline recurring sales like monthly lawn mowing can also have chargebacks under this code.

Recurring payments are transactions that occur for several months or continuously. They involve the exact monthly or weekly amounts charged on the same date. The latter depends on the service's nature and the cardholder's agreement.

As merchants, you must charge the same amount on the agreed date. However, the cardholder may cancel the recurring billing at any time. It’s up to you to resolve pending charges and process the cancellation request to stop further billing.

Cardholders may contact you if they continue receiving charges after canceling a recurring transaction. That allows you to address the dispute by explaining what the cardholder did wrong or processing a credit to offset the charge. The latter would occur if you discovered merchant errors that led to the chargeback.

Direct contact with cardholders to resolve cases under cancelled recurring transactions may not always be the case. Some buyers will file disputes with Discover, demanding cashback. The card network may process the chargeback if it has significant evidence.

Nevertheless, you can refute the cardholder’s claims and reverse the chargeback. We will show you how to do that in this brief review of the reason code AP. The most vital step is knowing what caused the dispute.

You should review the cardholder’s claims in the chargeback message. Discover will inform you why the chargeback was processed. Failing to address the evidence against you will cause the chargeback to stand.

Why Did It Happen?

Chargebacks with reason code AP occur when a cardholder disputes a recurring billing charge, claiming they cancelled the transaction. That leaves room for two sides to the story. Either you are in error or the cardholder filed false claims.

Discover may send inquiries if it doesn’t have enough evidence to escalate the cardholder’s dispute to a chargeback. Addressing the concerns in these inquiries promptly will prevent chargebacks. Nevertheless, the card network may escalate to a chargeback if it has sufficient evidence disputing the charge.

With that in mind, here are the top reasons for chargebacks under reason code AP:

• You failed to process a cancellation request regarding a recurring transaction.
• You processed the cancellation request after processing payment when the cardholder sent the cancellation request before the payment due date.
• You processed the transaction after the cardholder closed down the payment account.
• You processed the transaction after the cardholder requested the payment be moved to another account.

Cardholders often dispute the payment when it appears on their next account statement. While merchant errors contribute to these chargebacks, they are not the sole cause. Some cardholders may dispute the charge fraudulently.

A cardholder may cancel the subscription after the next billing cycle has started. Depending on your policies, you can still process the payment because the cardholder is already using the service for the next cycle.

Your cancellation policy comes into play in this regard. A cardholder’s cancellation request may not align with your cancellation policy.

You did not process the request, but the cardholder is unaware that their request was out of line with your cancellation policy. That ignorance may cause them to dispute the next charge.

Cardholders who find your cancellation process too complex may skip it and contact their issuer to cancel the recurring transaction.

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How to Fight Discover Chargeback Reason Code AP: Cancelled Recurring Transaction

We recommend reviewing the inquiry thoroughly before preparing your evidence to refute the cardholder’s claims. That will help you address the points the cardholder raised. With sufficient evidence, Discover will reverse the chargeback.

You won’t receive an inquiry in all cases. As mentioned earlier, Discover will escalate to a chargeback if the cardholder presents sufficient evidence against you.

With that in mind, here are our recommendations to fight chargebacks with reason code AP:

• The cardholder cancelled outside of your terms and conditions: Submit evidence to show that the cardholder’s cancellation request did not align with your terms and conditions. Your evidence should also show that the cardholder agreed to the terms of service at the time of purchase.
• The cardholder cancelled within the next billing cycle: Proof that the cardholder was using the service from the disputed charge when the cancellation request was made. Hence, your current charge is valid, and the cancellation was processed for the next payment.
• You did not receive a cancellation request: Submit evidence that you have yet to receive a cancellation request from the cardholder. Mistakes like misspelling your email address could send the request to the wrong address. If that’s the case, you shouldn’t be held liable for the cardholder’s mistakes.
• The cardholder agreed to the charge through a subsequent arrangement: If there was another agreement reached after a cancellation request was made, submit evidence for that. It should back up your claims to the charge.
• You have processed a refund: Submit evidence that shows the processed refund. A payment confirmation, including the transaction date and amount, will suffice.

The applicable step must be implemented within 30 days.

How to Prevent Discover Chargeback Reason Code AP: Cancelled Recurring Transaction

Industry best practices in terms of service and cancellation policies will go a long way in preventing chargebacks under reason code AP. In addition, we recommend having a straightforward cancellation procedure for cardholders to follow.

Miscommunication should also be avoided. For example, promising a refund and not processing it at the agreed date may cause a cardholder to file a dispute with the issuer.

Besides these, here are other steps you can take to prevent chargebacks with reason code AP:

• Process cancellation requests promptly to avoid processing the next payment.
• Ensure buyers are aware of your cancellation policy
• Notify your customers of any increment to the recurring transaction and seek their approval
• Send reminders before a recurring transaction is due
• Be easily accessible to your customers.

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