Your Acquirer Forwards You a Discover Reason Code RG Chargeback. What Now?

As both an issuer and a card network, Discover features a robust and well-developed chargeback system that employs 26 reason codes across four categories: service, processing error, and fraud disputes, plus reason codes for dispute compliance.

Discover reason code RG is grouped under the service disputes category. In this article, we address what reason code RG chargebacks are, why they occur, and what you can do to combat and prevent these disputes.

What is Discover Reason Code RG?

Discover Reason Code RG is “Non-Receipt of Goods, Services, Cash at Checkout, or Cash Advance.” As the name implies, this code is used when a cardholder claims you charged their Discover card for goods, services, or cash they didn’t receive.

Discover rules state that cardholders filing Code RG may only dispute the portion of the transaction value not received. For example, if a cardholder makes a $100 purchase but only receives $75 worth of merchandise, then they may dispute $25 at most (the difference between the amount charged and the value of goods received).

In most cases, cardholders have up to 120 days from the expected delivery date to file a reason code RG dispute. For transactions without a delivery date, the issuer has between 15 and 120 calendar days from the date of the original transaction to initiate a code RG dispute. That said, cardholders are also required to attempt to work things out with you before filing a chargeback.

What Caused This Dispute?

If you receive a legitimate reason code RG dispute, it’s most likely because you failed to fulfill a purchase, or to deliver cash as requested. For instance, a customer orders 10 shirts, but you only ship and deliver five of them.

Reason Code RG chargebacks can also happen if a cardholder:

purchased a second airline ticket after failing to receive the first one they purchased.
canceled their trip because they did not receive the airline ticket they purchased.
cancelled their airline ticket, but they were charged nonetheless.
purchases a ticket from an airline that went bankrupt or stopped operating.
was billed for a cash advance, but never received the money.
paid for cash at checkout, but never received the money.

There are some special situations, too. For disputes involving an airline that no longer operates, the issuer should “submit a valid, legible assignment letter signed by the [c]ardholder within five…[b]usiness [d]ays” following the initial chargeback claim.

Important!

Not all transactions can be disputed under Code RG. If you are an ATM operator or lender who accepts repayments via debit, and are categorized under merchant category codes 6012 (Quasi Cash-Financial Institution-Merchandise and Services) or 6051 (Non-Financial Institutions-Foreign Currency, Money Orders), you won’t have to worry about chargebacks filed under this reason code.

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How to Respond to Discover Reason Code RG Chargebacks

False chargebacks are not an anomaly; they’re arguably the norm. According to the 2024 Chargeback Field Report, as many as 70% of chargebacks filed against merchants are the result of friendly fraud, meaning a majority of Reason Code RG chargebacks could be bogus.

Merchants who receive invalid Code RG chargebacks can contest them through Discover’s chargeback representment process. This is a time-sensitive process that gives you 20 days from the day you were notified about a chargeback to provide compelling evidence that refutes a cardholder’s claims. For reason code RG disputes, relevant evidence must prove that the cardholder received the goods or services they purchased.

You should also draft a rebuttal letter that summarizes the evidence provided and outlines why the cardholder’s transaction is valid and should be upheld. After you submit your representment package, Discover will make a decision on whether to uphold or reverse the chargeback.

Acceptable Evidence for Discover Reason Code RG Responses

To increase your chances of winning invalid an invalid Reason Code RG chargeback, you should provide evidence that is both compelling and relevant to the reason code, including:

Transaction documentation that shows the cardholder authorized and agreed to make the purchase.
Written correspondence, receipts, work orders, photographs, or delivery confirmations that show that you delivered the goods or services the cardholder purchased.
Transaction documentation that demonstrates the cardholder intended to take out a cash advance or receive cash at checkout, along with evidence that the cardholder received the cash they ordered.
Evidence that the cardholder used the airline ticket they bought.
Proof that the cardholder’s lost ticket application is invalid.
Proof that you or the acquirer previously processed a refund to the cardholder in line with Discover’s Dispute Rules and Operating Regulations.
Proof that the chargeback is invalid because it doesn’t comply with Discover’s regulations.

If the cardholder made a purchase remotely via a card-not-present transaction, you can also provide:

A copy of the cardholder’s signature or ID, which should match the details they provided when they took delivery of their order.
Proof that the cardholder opted to receive electronic delivery of goods or services.
Information about the cardholder’s “e-mail or IP address, date and time of download, description of goods downloaded, or log documenting the receipt of downloaded material on or after the Transaction Date.”

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How to Prevent Discover Reason Code RG Chargebacks

Chargebacks cost merchants significant time and money. According to Cybersource’s 2024 Global eCommerce Payments and Fraud Report, a dispute involving first-party misuse costs merchants an average of $74 to resolve.

Are these chargeback costs inevitable? Not necessarily. You can take proactive steps to prevent reason code RG disputes by:

Providing Accurate & Clear Product Listings

You’ll need to include exceptionally clear product or service descriptions on your website. To reduce the risk of chargebacks filed due to failed deliveries or incomplete orders, you should also provide buyers with up-to-date stock availability information, along with live delivery estimates prior to checkout.

Providing Order Confirmation & Tracking

You should send a digital invoice, receipt, email, and/or SMS confirmation to customers after finalizing a sale. All deliveries should come with shipment tracking information so that customers can monitor the status of their orders. This gives customers clarity about delivery timelines and may prevent them from filing chargebacks due to shipment delays.

Accurately Fulfilling Orders

Take steps to ensure that orders are accurate and complete. Before packaging and shipping an item, make sure that the quantity, type, and condition of your items are in line with the customer’s order. If you provide cash advances or cash at checkout, be sure to double check that the quantity of cash disbursed is identical to the amount charged.

Verifying Customers’ Identities for Cash Advances

Never disburse cash until a customer verifies their identity by providing their full personal details and a form of identification. To make cash advances more secure, implement SMS, email or app-based multi-factor authentication prior to disbursement. Finally, securely store all the transaction records for possible use as evidence during representment.

Having Clear Refund Policies

Draft a clear and fair return and refund policy that encourages customers to resolve their complaints with you before resorting to chargebacks. You can also be proactive about contact; for example, if a customer makes a purchase for a product that’s out of stock, immediately issue a refund, or try to come to another mutually agreeable resolution.

Make it Right

If a customer complains about non-receipt of a product or service, promptly conduct an internal investigation and resolve the claim by delivering the product or issuing a refund. If you find that you were at fault, consider providing the customer with a small discount for future orders.

Understanding why Reason Code RG chargebacks happen can help you prevent them… but only if the dispute is legitimate and filed in good faith.

Unfortunately, the prevalence of invalid chargebacks drastically complicates this picture and makes fighting disputes an inordinately difficult task. Chargebacks911®’s dual-layered prevention and representment solutions help take chargeback worries off your hands so that you can get back to work on what you know best: your business. Get in touch with us for a free, no obligation ROI analysis today.

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