Chargeback Reason Code

Visa Chargeback Reason Code 13.7: Canceled Merchandise/Services

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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Visa Chargeback Reason Code 13.7: Canceled Merchandise/Services

What is Visa Chargeback Reason Code 13.7?

The Visa chargeback reason code 13.7 indicates a chargeback for returned merchandise or canceled services yet to be credited. You’ll receive chargebacks with the code if your customer files a complaint that the credit has yet to be processed. Hence, this code is under the “consumer disputes” category and is closely related to reason code 13.6 (credit not processed).

Typically, returned merchandise or canceled services should necessitate a refund to the cardholder. You’d process a credit once you received the returned merchandise or service. However, an oversight from your end and the impatience of the cardholder could result in a chargeback under this code.

We’ve identified several reasons why chargebacks could occur under this reason code, including friendly fraud. You’ll learn about them in the next section. In the meantime, we recommend you remain calm and dig into the root cause before responding.

You might check all the boxes, and the chargeback will still occur at no fault of yours. We know how entangling things can be when dealing with returned merchandise or canceled services. Notwithstanding, it is still possible to fight this chargeback and receive a refund from the issuer.

Miscommunications between you and cardholders can cause this chargeback. That is why return policies are vital to protecting your business from these unwarranted chargebacks. You can use this opportunity to review your return policy while we explore other ways of prevention.

With that in mind, let’s review the possible reasons that could cause chargebacks under this code.

Why Did It Happen?

Chargebacks with reason code 13.7 occur when a cardholder complains of a delayed credit for returned merchandise or canceled services. That doesn’t tell the whole story, as the cardholder could be in error for requesting the refund. It’s left for you to investigate.

We’ve identified several reasons for chargebacks under this reason code, and they include the following:

  • Credit Withheld or delayed after the merchandise was returned or service was canceled: You might have valid reasons for withholding a refund from your customer when merchandise is returned or service is canceled. However, that places you in line to incur a chargeback. Delays from your end can also cause a cardholder to file complaints with the issuer.

The returned merchandise or canceled service will reinforce the cardholder’s claims. Hence, you will most likely incur a chargeback.

  • No credit was processed due to the no-return policy: A cardholder unaware of your no-return policy could file complaints to warrant this chargeback. This occurs if your policy is unclear for easy visibility and comprehension during purchase.
  • Delayed processing of a canceled Timeshare transaction: Timeshare transactions allow 14 days for merchants to process a credit if canceled. Delaying the refund might cause the issuer to process a chargeback for the cardholder. Note that the 14 days start counting from the contract or receipt date.

The above reasons reveal errors or omissions from your end that could cause chargebacks under this reason code. However, an impatient cardholder could hastily file complaints for credit after returning your merchandise or canceling your service.

Besides that, some cardholders could knowingly hold back your merchandise but file complaints for a chargeback. We categorize this as an actual fraud.

Fortunately, that makes things easier for you when fighting the chargeback. Your proof of not receiving the merchandise would suffice.


How to Fight Visa Chargeback Reason Code 13.7: Canceled Merchandise/Services

Visa recognizes several responses from merchants when disputing this chargeback. All but one require documentation to prove an unwarranted chargeback. The only exception is accepting the chargeback if you are in the wrong.

Here is our guide on how to fight chargebacks under this code:

  • You did not take delivery of the returned merchandise: We understand your refusal to process a refund if you have not received the merchandise. Provide evidence that you have yet to receive the merchandise. You can refer to logs from your fulfillment center.
  • The return violated your return policy: You may have rejected a return because the merchandise was damaged or used. Provide documentation to show a violation of your return policy. That will backup your refusal to process a credit to the cardholder.

This approach also applies to canceled services. Provide documentation showing that the cardholder did not cancel according to your policy. Your proof should also show that the customer was fully aware of and agreed to the return policy.

  • The cardholder used the merchandise or service: Using merchandise or services will violate most return policies, except where the package was for testing. Provide evidence to prove that the cardholder used your merchandise or service.
  • Invalid dispute: An illustration of an invalid dispute would be when the cardholder's customs agency holds back goods. The cardholder’s request for a chargeback would be invalid. Provide supporting evidence if this is the case.
  • Withdrawal of dispute: If the cardholder has withdrawn the dispute, provide documentation to prove that. Ensure you have the cardholder’s words on record. Emails, chats, and signed undertakings can suffice.
  • Credit already processed: Processing a credit to the customer should remove you from any chargebacks under this reason code. Provide supporting documents. These should contain the date and amount of the credit transaction.

How to Prevent Visa Chargeback Reason Code 13.7: Canceled Merchandise/Services

We can’t guarantee the complete elimination of chargebacks under this reason code. Friendly fraud might still slide through. Nevertheless, you can take steps today to prevent them.

These are our recommendations for preventing chargebacks under reason code 13.7:

  • Ensure your company’s return/cancellation policy is clearly outlined before the cardholder’s final approval. This should be placed in a visible spot to ensure your customers see it. If necessary, request that your customers agree to it before purchasing.
  • If you have a no-return policy, ensure that the words “No Return” appear on all the transaction receipts.
  • Process credit transactions on time when there is a return or cancellation.
  • Communicate any delays concerning delivery with your cardholder.
  • Ensure that your return channels are easy to manage.


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