Reason Code 13.1: Merchandise/Services Not Received
Before we take a look at Visa Reason Code 13.1 (Merchandise or Services Not Received), it’s important to understand a couple of key points about chargeback reason codes.
For the sake of simplicity and standardization, card networks like Visa created a breakdown of acceptable causes for a customer to file a chargeback. Each has a designated Visa “reason code,” and banks assign the appropriate code to each case to show the given reason for the chargeback. That sounds simple enough at first glance. The reality, though, is that the given reason for a chargeback may or may not be the true reason.
Plus, each card network has its own set of reason codes. While nearly many are identical in function, there are minute differences that, if ignored, could carry costly consequence. Keeping track of all these codes, along with the best ways to either fight or prevent each one, is challenging.
With that in mind, let’s do a basic rundown on Visa chargeback reason code 13.1, and how to prevent these claims.
What is Visa Reason Code 13.1?
Visa chargeback reason code 13.1 is an updated version of legacy reason code 30, which was phased out under the Visa Claims Resolution initiative. This code applies when customers claim they never received the merchandise or services they purchased.
The implication is that the merchant failed to deliver the goods or services, but this reason code also applies in other situations. For instance, reason code 13.1 could apply if a package is stolen from the cardholder’s porch, or if the cardholder cancels an order that hasn’t arrived by the agreed-upon delivery date.
Merchant Errors That May Result in Reason Code 13.1
Chargebacks of any kind are nothing but trouble for merchants…yet many chargebacks are the direct result of preventable merchant missteps. It’s crucial that you recognize the common merchant errors that might trigger a reason code 13.1 chargeback:
- The merchant failed to ship the merchandise or provide the service as agreed.
- The merchant failed to ship the merchandise by the promised delivery date/time.
- The merchant failed to ship the merchandise to the agreed-upon location.
- The merchant billed for the transaction prior to shipping the merchandise.
- The merchant failed to make the merchandise available for pick-up.
Merchant Rights and Limitations for Reason Code 13.1
As mentioned earlier, the given reason for a chargeback may be far different from the actual reason. A cardholder who knowingly tries to file a chargeback under false pretenses is engaging in a practice called “friendly fraud.”
While banks try to investigate all claims thoroughly before processing a dispute, the meteoric rise in chargeback cases has made this extremely difficult. In many cases, it’s more efficient to simply take the customer’s claim at face value. Fortunately, there are some limitations placed on chargebacks filed under reason code 13.1:
- The cardholder must attempt to resolve the dispute with the merchant, and provide the processor with a statement to this effect.
- The cash-back part of a cash-back transaction will not be refunded in a chargeback.
- If the merchandise arrives late, the customer is required to attempt to return it and must wait 10 days before initiating a chargeback request.
- The processing time limit is 120 calendar days from either the day the transaction was processed, or the last day the cardholder expected delivery (not to exceed 540 days of the original processing date of the transaction).
- Even if the merchant did not set a specific delivery date for the goods/services, the issuer cannot file a dispute for at least 15 calendar days past the original processing date.
- Similarly, if the cardholder returned merchandise because it was delivered late, the issuer cannot file a dispute for at least 15 calendar days past the date the cardholder returned the merchandise.
Preventing Chargeback Reason Code 13.1 Claims
No matter how faithfully you try to follow the rules, there will always be people who attempt to take advantage of the system. However, there are certain steps you can put into place beforehand to mitigate the risk of this specific chargeback type:
- Always provide a specific ship date and delivery date, and abide by that date strictly.
- If applicable, always have merchandise ready for pickup at the time you specified.
- Don’t process a payment prior to shipping the goods.
- Send a notification if a package is going to be late. Let the cardholder decide if the new date is acceptable or if the transaction should be canceled.
- Consider requiring a signed delivery confirmation, especially on larger purchases.
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Disputing a Reason Code 13.1 Chargeback
While preventative measures can significantly lower your dispute volume, some illegitimate chargebacks will slip through the cracks. If you have evidence that refutes a cardholder’s claim, you should challenge the chargeback through Visa’s dispute process. Here are some tactics you can deploy in a few common situations to make the representment process more successful:
|The merchandise was delivered or made available for pickup at agreed-upon time and location||Send evidence of such to the acquirer. This may consist of a delivery receipt, the carrier’s delivery confirmation, or anything that shows the cardholder or another authorized person received the merchandise or services as agreed.|
|The specified delivery date has not yet passed||Provide the acquirer with documentation that supports the expected delivery date, along with evidence that the cardholder is aware of the date.|
|The cardholder cancelled the order prior to the expected delivery date||Provide the acquirer with documentation that proves you were able to provide merchandise or service on time and that the cardholder cancelled prior to the delivery date.|
|The original transaction was a partial payment and there is still a balance due||Provide the acquirer with documentation to support this (payment price, dated receipt, etc.).|
|A credit or refund for the transaction has been processed||Demonstrate this to the acquirer.|
|The merchandise cannot be delivered or the service cannot be provided as agreed for any reason||Notify your card processor that you accept the dispute. Review the transaction to identify missteps that led to the dispute.|
Take a Wider View
You can dispute—and win—against invalid chargebacks from Visa reason code 13.1. That said, it’s much more efficient to take a proactive stance. The same is true of the other chargeback reason code as well. A truly effective chargeback management strategy must encompass prevention as well as disputing cases of friendly fraud.
Chargebacks911® can help your business manage all aspects of Visa’s chargeback reason codes, with proprietary technologies and experience-based expertise. Contact us today for a free ROI analysis to learn how much more you could save.