Chargeback Reason Code

Visa Chargeback Reason Code 13.4: Counterfeit Merchandise

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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Visa Chargeback Reason Code 13.4: Counterfeit Merchandise

What is Visa Chargeback Reason Code 13.4?

The Visa chargeback reason code 13.4 occurs when your merchandise has been identified as counterfeit. Thatā€™s the simple way to put it, although thereā€™s more to the story. Counterfeiting is a serious crime in many regions as regulatory bodies strive to protect consumers.

Modern technology has taken manufacturing from large corporations to cottage industries. These can produce compelling copies of original products and brands, swaying even merchants to resell the counterfeits. Most consumers, except those with in-depth knowledge of the originals, may not recognize these counterfeits.

Footwear, clothing, leather goods, and electrical equipment are among the industries most affected by counterfeiting. Hence, dealing with these products calls for extreme caution to prevent chargebacks under this reason code. One misstep and youā€™ll incur chargebacks and also risk losing credibility.

Sourcing your products from genuine manufacturers or licensed franchises will keep chargebacks under this code away. Still, we understand peopleā€™s drive towards more affordable yet quality merchandise.

Once in a while, a chargeback under this reason code may slip through. That is understandable, given the convincing nature of some counterfeits. However, regular chargebacks under this reason code call for concern.

Besides customers identifying your merchandise as counterfeit, regulatory agencies may be involved. That puts your business in a tight corner as you come under the scrutiny of these regulators. Hence, you should close gaps that may cause these inauthentic copies to slip through.

Weā€™ll take you through the core reasons for this chargeback reason code and ways to fight it. Your due diligence might be all you need to prevent these chargebacks. Notwithstanding, weā€™ll give our take on what you can do to avoid them.

Why Did It Happen?

This reason code occurs when there is a chargeback on a counterfeit product. However, claims of counterfeit merchandise are hefty accusations. Seasoned consumers may differentiate between the fake and original items, but that is not enough for chargebacks under this code.

Under Visa regulations, counterfeit merchandise may be identified by the following individuals for legitimacy:

  • The owner of the intellectual property
  • An authorized representative of the owner of the intellectual property
  • A customs agency
  • A law enforcement officer
  • A governmental agency
  • A third-party expert

Only items identified by any of the above are eligible for chargebacks. So, incurring a chargeback under this reason code most likely shows that your merchandise has passed through these people. This causes a loss of money and a risk of business closure.

Poor verification of merchandise is often the cause of counterfeit products slipping through. However, some merchants can intentionally sell inauthentic items, hoping the cardholder will not tell the difference. This path is dangerous.

While merchant error is a primary cause for chargebacks under this reason code, cyber shoplifting is not ruled out. Some cardholders may falsely claim that expensive merchandise is fake. This happens more in situations where it is challenging for the merchant to prove the productā€™s genuineness.

Cyber Shoplifting represents cases of friendly fraud. Notwithstanding, it can be potent when you donā€™t have the means to prove your product's authenticity.

We would rather avoid chargebacks under this reason code than fight it. Thatā€™s because you may have to bring in third-party experts to prove your case. This additional expense wouldā€™ve been put to better use.

Thereā€™s no cause for alarm if you believe in the genuineness of your merchandise. The following section will outline the best approaches to fighting this chargeback and winning a refund.

How to Fight Visa Chargeback Reason Code 13.4: Counterfeit Merchandise

You may have a starting advantage if the chargeback comes after the allowed dispute period. By Visa standards, that is 120 days of any of the following:

  • The date of the purchase. This time might differ from the delivery date for online orders.
  • The delivery and collection date by the cardholder. However, this approach should be within 540 days of the original transaction date.
  • The day the cardholder verified that the product was counterfeit

Use the approaches below if the chargeback occurs within the dispute period.

  • If the product is original: Provide documentation and invoices to support your claim. This can include order invoices from the manufacturer or supplier. You can also provide test results for the productā€™s authenticity from independent experts, if any. Certificates of authenticity from the manufacturer can also suffice.
  • If the cardholder no longer wishes to dispute the authenticity: letters and emails from the cardholder stating their withdrawal of the dispute will suffice. Chats or phone calls may not be enough to prove the cardholderā€™s withdrawal.
  • If you have already identified the error and processed a chargeback: Show evidence of the chargeback processed, including the amount and the transaction date.

There arenā€™t many ways to fight this chargeback. If you canā€™t prove the authenticity of your merchandise and the cardholder insists, the only option left is to accept the chargeback.


How to Prevent Visa Chargeback Reason Code 13.4: Counterfeit Merchandise

With the high competitiveness in the merchant industry, especially in e-commerce, now is not the time to incur chargebacks. Besides friendly fraud, avoiding chargebacks under Reason Code 13.4 lies with you. Some approaches can be financially demanding, like contracting independent expert agencies.

The following tips will help you avoid these chargebacks in the future:

  • Always procure your merchandise from authentic and verified manufacturers or suppliers.
  • Demand a certificate of authenticity for expensive products.
  • Ensure that your merchandise has stamps of approval from regulators in the manufacturerā€™s or supplierā€™s region.
  • Identify high-risk products and implement extra monitoring and verification procedures.
  • Train your staff on simple verification procedures, like scanning a QR code for authenticity.
  • Provide efficient customer service to catch counterfeit disputes quickly.
  • Process refunds immediately. Inform the cardholder of any anticipated delays.
  • Ensure that product descriptions on your product pages or sales receipts are accurate. Sometimes, misleading information can lead to counterfeit claims from the cardholder.
  • Process requests for replacement or repairs quickly.

Your return policy does not affect disputes under this reason code. Hence, you may experience chargebacks before the products are shipped.


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