My Merchant Account Blog

Cancelled or Returned Chargeback Codes

Thursday, November 02, 2006

These chargebacks from Visa can easily be prevented by the merchant as long as the merchant provides timely refunds to the cardholder. If you sell items via the internet, keep the communication open with the consumer to also help prevent chargebacks of this nature.

Reason Code 41: Cancelled Recurring Transaction

This usually happens when the cardholder notifies the issuing bank and tells them the recurring transaction was cancelled but the merchant is still charging the cardholder; transaction amount exceeds the pre-authorized dollar amount range; or the merchant was supposed to notify the cardholder prior to processing each recurring transaction but has not done so.

The most common causes are:

• Cardholder
  • Withdrew permission to charge the account
  • Cancelled payment of a membership fee
  • Cancelled the card account
• Card Issuer
  • Charged back a previous recurring transaction, and the cardholder did not expressly renew
  • Cancelled the card account
• Merchant
  • Received notice before the transaction was processed that the cardholder account was closed
  • Exceeded the pre-authorized dollar amount range and did not notify the cardholder in writing within ten days prior to processing the transaction
  • Notified the cardholder in writing within 10 days of processing the recurring transaction, after which the cardholder notified the merchant not to charge the account

Notified of a Chargeback

If the transaction was cancelled and credit issued for the recurring transaction, notify your merchant bank of the date that the credit was issued. If the transaction was cancelled and a credit was not issued, accept the chargeback. Do not issue a credit since the chargeback has already been processed.

If the transaction was not cancelled or you have no record of the cancellation, accept the chargeback. The cardholder does not have to supply evidence that you received the cancellation notice.

If the customer claimed they were billed for the service after they cancelled, notify your merchant bank that the bill in question covered services used by the customer between the date of the customer's prior billing statement and the date the customer requested cancellation. You might also need to provide proof as well.

Reason Code 53: Not as Described or Defective Merchandise

This can happen when the cardholder notifies the card issuer that the goods and / or services were:

• Not the same as shown and described on the screen for Internet transactions, or as described on the sales receipt or other documentation presented to the cardholder at the time of the transaction
• Not the same as the merchant's verbal description for a telephone transaction
• Shipped to the cardholder and received, but was damaged or defective

Note

Merchants should keep in mind that their return policy has no bearing on disputes that fall under Reason Code 53: Not as Described or Defective Merchandise.

For this reason code, the cardholder must have made a valid attempt to resolve the dispute or return the merchandise. A valid attempt to return may be to request that the merchant come retrieve the goods at their own expense.

The most common causes are:

• The merchant sent the wrong merchandise to the cardholder
• The merchandise was damaged during shipment
• The merchant inaccurately described the merchandise or services
• The merchant did not cancel the services purchased by the cardholder
• The merchant did not perform the services as described
• The merchant did not accept the returned merchandise
• The merchant accepted the returned merchandise but did not credit the cardholder's account

If credit was processed and merchandise was returned or services were cancelled and a credit was processed to the cardholder's account, provide your merchant bank with information or evidence of the credit.

Some Possible Remedies for Chargeback Reason Code 53

• If you have not received the returned merchandise (double-check your incoming shipment records to verify) or the cardholder has not cancelled the service, advise your merchant bank. (The cardholder must make a valid attempt to return merchandise or cancel the service.)
• If the merchandise was as described, provide your merchant bank with specific information and invoices to refute the cardholder's claims.
• If merchandise was returned because it was damaged, provide evidence that it was repaired or replaced.
• If the service performed was as described, provide your merchant bank with as much specific information and documentation as possible refuting the card-holder's claims.. It is recommended that you specifically address each and every point the cardholder makes

If the cardholder's complaint is valid and you received the returned merchandise but have not yet credited the cardholder's account, accept the chargeback. Do not process a credit since the chargeback has performed this function.

To Help Prevent Chargeback Reason Code 53

• Ensure that descriptions of merchandise or services shown in catalogs, on Internet screens and sales receipts, or used in telephone order-taking scripts are accurate, complete, and not unintentionally misleading.
• Regularly review your shipping and handling processes to ensure that orders are being filled accurately.
• Train staff on proper procedures on taking and filling orders, and schedule review sessions at least annually.

Miscellaneous Information on Chargeback Reason Code 53

• Chargeback Amount Is Limited - The chargeback amount is limited to the amount of the merchandise returned or services cancelled . The chargeback may include ship-ping and handling fees for shipment of the defective merchandise.
• Card issuer Waiting Period - If merchandise was returned, the card issuer must wait at least 30 calendar days from the date the cardholder returned the merchandise (to allow sufficient time for you to process a credit to the cardholder's account) before generating a chargeback.
• Quality Disputes - This chargeback code also may be used for quality disputes (for example, a car repair situation).

Reason Code 85: Credit Not Processed

This can happen when the card issuer received a notice from a cardholder acknowledging participation in a transaction for which goods were returned or services cancelled, but the cardholder has not received a written refund acknowledgement or credit voucher from the merchant or the credit has not appeared on the customer's Visa statement.

Some Possible Remedies for Chargeback Reason Code 85

The merchant

• Did not issue a credit
• Issued the credit but did not deposit the credit with its merchant bank in time for it to appear on the cardholder's next statement
• Did not issue a credit because the business does not accept returns, but did not properly disclose its return policy

To Help Prevent Chargeback Reason Code 85

If you never received, or accepted, returned merchandise or a cardholder's cancellation, advise your merchant bank immediately. Proof of cancellation is not required from the cardholders. If the cardholder returns merchandise or cancels services in a manner contrary to your disclosed return or cancellation policy, provide your merchant bank with documentation showing that the cardholder was aware of and agreed to your policy at the time of the transaction. Specifically, the cardholder's signature must appear on a sales receipt or other document stating your return policy.

If your establishment's return policy is on the back of a receipt that has been signed on the front and initialed on the back as required by Visa policy, you must provide your merchant bank with copies of both sides of the receipt. If the return policy is on the back of the receipt and is not signed or initialed, you have not provided evidence of proper disclosure

If a customer returns merchandise or cancels services in accordance with your disclosed return or cancellation policy, and you have already issued a credit, inform your merchant bank of the date that the credit was issued.

If a customer returns merchandise or cancels services in accordance with your disclosed return or cancellation policy, and if you have not already issued a credit, accept the chargeback. Do not process a credit since the chargeback already has performed this function.

Card Not-Present Transactions

Ensure that your establishment's return or refund policy is always clearly stated in your printed advertising materials, catalog and catalog order forms, and, for Internet merchants, on your electronic order screen. Always explain your policy to customers who place orders by phone. Be sure to include refund information with the initial transaction. For Internet transactions, your web site should include a screen with your return or refund policies, which appears automatically during the check-out process (that is, it is not on a separate disclosure screen that the customer has to click to open). The screen should include I Accept or Agree buttons for the customer to click on before completing the transaction, indicating that he or she has read and agrees to your policies.

Describing your return policy in a catalog or verbally on the phone does not constitute proper disclosure unless you also obtain a customer signature indicating disclosure was provided. Such policy descriptions may support your case for having alerted the customer to your policy.

If a cardholder can complete an Internet transaction without clicking an Accept or Agree button to indicate acceptance of your refund, return, or cancellation policy, proper and adequate disclosure has not occurred.

Gift Returns

In cases where a gift recipient has returned a gift ordered by mail, telephone, or Internet, you may provide a cash or check refund, an in-store credit receipt, or another appropriate form of credit to the gift recipient. If the cardholder claims a credit was not issued to his or her account for the gift, provide appropriate documentation or information to your merchant bank that the credit was given to the gift recipient.

For gift returns, if credit is to be used to a charge card, the credit must be issued to the same Visa account number that was used for the original transaction.

No-Return Policy Disclosure

If your business has a limited return policy or does not allow returns at all, the words "no returns" or similar words must be preprinted on all copies of the sales receipts near the cardholder signature line.

Comments

coordlync said...

Your blog keeps getting better and better! Your older articles are not as good as newer ones you have a lot more creativity and originality now. Keep it up!
And according to this article, I totally agree with your opinion, but only this time! :)

2/16/2010

Name
URL
Email	Email address is not published
Remember Me
Comments