Reason Codes are numerical identifiers assigned by the issuing bank indicating the justification for Chargebacks issued. Because the specific codes assigned vary between card schemes and are subject to change, we have summarised the most common reasons codes issued below and provided guidance on how to respond to them.
The information provided is intended for general guidance only and does not constitute legal or compliance advice. Merchants are ultimately responsible for making decisions they deem best for their business interests and compliance obligations.
Services or Merchandise not received
The customer alleges that services or merchandise were not received as promised.
Possible reasons for cardholder claim
The goods were not delivered or received at the agreed delivery address and time.
The goods were unavailable for collection at the agreed location or by the agreed-upon date.
The services were not available or not provided to the customer.
Suggestions on defending against this claim
If the goods / services were provided at the time and location specified in the agreement, provide documentation that show these were received by the cardholder or authorised individual.
If the specified delivery date has not yet arrived, provide evidence of the anticipated delivery date.
In the event of cardholder cancellation prior to the anticipated date, supply documentation demonstrating your capability to provide the merchandise or service and confirming the cardholder's cancellation prior to the delivery date.
Should the transaction represent a partial payment with an outstanding balance, submit documentation supporting any additional payments due.
If a credit or reversal has already been processed for the transaction, provide documentation of the credit or reversal, including the amount and date of processing.
In cases where the customer no longer disputes the transaction, we require a letter or email from the customer affirming the withdrawal of their dispute.
Best practices to avoid this claim in future
If deliveries are delayed, promptly notify customers in writing and provide an estimated delivery date. Also, give customers the option to cancel their order if preferred.
If you're dispatching merchandise without requiring proof of delivery, consider implementing signature and photographic proof of delivery services, as they will allow you to contest alleged non-receipts with documented evidence.
If issuing a credit to the customer, ensure this is made to the same card / account that the transaction was initiated from. This is because transfers / credits made to other cards cannot be linked to defend a Chargeback if received.
Card Absent Fraud
The customer alleges that they did not authorise or participate in a transaction that was conducted in a card-absent environment (e.g. internet, mail order, phone order, etc.).
Possible reasons for cardholder claim
Friendly Fraud
Friendly fraud happens when customers dispute legitimate purchases they made, falsely claiming non-receipt of goods or lack of authorisation.
Although some Friendly Fraud cases involve intentional deception, many occur due to innocent customer confusion regarding transaction details or order status. For instance, customers may genuinely forget about a purchase they made or fail to recognise the name of your business on their statement. Additionally, customers may not understand your refund policy and pursue this route instead.
The customer's payment credential was obtained through fraudulent means.
Suggestions on defending against this claim
Proof indicating that the transaction underwent full secure authentication, with liability falling upon the card issuer.
If a refund was issued, provide documentation demonstrating the credit or reversal, including the amount and date of processing.
If the customer no longer disputes the transaction, provide a letter or email from them affirming the withdrawal of the dispute.
Provide evidence indicating that the item was delivered to the same physical address for which the merchant received an AVS (Address Verification System) match.
Provide a comprehensive description of the merchandise or services acquired for the disputed transactions, alongside details of two preceding transactions made with the same billing and payment details.
Include the date and time of all purchases and highlight any matches between them, e.g. device ID, IP address, login, delivery address, etc.
Provide compelling evidence:
- Photographic evidence of the merchandise being delivered.
- Email correspondence between you and the customer.
- Evidence that shows the customer has utilised the services they paid for.
- Customer signature on the pick-up form (if personally collected).
- Copy of identification presented by the customer (if personally collected).
- Details of identification presented by the customer (if personally collected).
Best practices to avoid this claim in future
The most effective method to prevent fraud chargebacks is processing fully authenticated transactions. If this is not possible, capturing accurate customer data and archiving relevant records can provide vital evidence in the event a charge is disputed.
If issuing a credit to the customer, ensure this is made to the same card / account that the transaction was initiated from. This is because transfers / credits made to other cards cannot be linked to defend a Chargeback if received.
Recurring transaction has been cancelled
The customer alleges they were billed for a recurring transaction despite revoking authorisation.
Possible reasons for cardholder claim
The customer or their bank terminated their card account.
The transaction was processed subsequent to receiving notification of the closure of the customer's account.
Suggestions on defending against this claim
If the customer claims that they were billed after they cancelled their subscription with you, provide evidence demonstrating that the amount billed pertains to services utilised by the customer before they cancelled.
If a credit or reversal has already been processed for the disputed transaction, submit documentation showing the amount and processing date of the credit or reversal.
If the customer rescinded a previous dispute regarding the transaction, provide a letter or email from the customer confirming the withdrawal of this dispute.
Best practices to avoid this claim in future
Ensure timely responses to customer inquiries concerning the renewal or termination of recurring transactions.
Notify the customer when closing their recurring payment account. In cases where a balance remains outstanding for services already rendered, request an alternative form of payment from the customer.
If issuing a credit to the customer, ensure this is made to the same card / account that the transaction was initiated from. This is because transfers / credits made to other cards cannot be linked to defend a Chargeback if received.
Services or Merchandise is not as described
The customer alleges that the merchandise or services received did not correspond to the description provided on the transaction receipt or any other documentation presented during the purchase.
Possible reasons for cardholder claim
The merchandise arrived in a damaged or defective condition.
The customer contests the quality of the merchandise or services received.
Incorrect merchandise was delivered to the customer.
The service provided did not include the features promised at time of purchase.
Suggestions on defending against this claim
Provide precise details or documentation (such as an invoice or contract) to counter the customer's assertions. It is advisable to directly address each point raised by the customer.
If returned goods were not received or services were not cancelled, you can advise that you have not received the goods and the claimant never attempted to return or cancel.
In certain situations, it may be necessary to seek a neutral third-party opinion to support your position against the cardholder. It is advised to supply comprehensive specific information and documentation to counter the customer's assertions.
Provide evidence that replacement or repair of the merchandise was undertaken:
- Show that the customer consented to either repair or replacement.
- Show that the repair or replacement has been received.
- Show that there has been no dispute regarding the repair or replacement.
If a credit or reversal has already been processed for the disputed transaction, submit documentation showing the amount and processing date of the credit or reversal.
If the customer rescinded a previous dispute regarding the transaction, provide a letter or email from the customer confirming the withdrawal of this dispute.
Best practices to avoid this claim in future
Verify that the depiction of merchandise or services in advertisements, online platforms, transaction receipts, or telephone order scripts is precise, comprehensive, and devoid of misleading information.
As the merchant of record in the transaction, avoid redirecting customers to manufacturers when issues arise. Regardless of supply chain logistics, the merchant of record bears ultimate responsibility for resolving customer issues and serving as the primary point of contact.
If issuing a credit to the customer, ensure this is made to the same card / account that the transaction was initiated from. This is because transfers / credits made to other cards cannot be linked to defend a Chargeback if received.
Be aware that refusing to accept returned items may impede your success rate when defending Chargebacks.
Please note that merchant return policies do not influence disputes "Not As Described".
Misrepresentation of terms
The customer alleges that the terms of sale were misrepresented.
Possible reasons for cardholder claim
Selling timeshares or charging a timeshare reseller fee without proper disclosure.
Offering financial services such as debt consolidation, credit repair/counselling, mortgage modification/counselling, foreclosure relief, or credit card interest rate reduction, with misleading terms or adjustments.
Selling technical services/support or computer software through inaccurate advertisements or containing malicious software downloads.
Promising income generation or suggesting additional purchases for income generation.
Misleadingly claiming funds can be recovered.
Engaging in outbound telemarketing.
Offering investment products like binary options without allowing withdrawal of available balances.
Not clearly disclosing ongoing billing in trial periods/one-off purchases.
Suggestions on defending against this claim
Submit documentation demonstrating that the terms of sale were accurately represented, or for investment transactions, present evidence confirming the absence of funds available or withdrawal.
For transactions conducted in a Card-Absent Environment where goods were purchased during a trial period, promotional offer, introductory offer, or as a one-time purchase, provide evidence indicating the cardholder's explicit consent to future transactions and documentation proving that notification of such future transactions was provided to the cardholder at least 7 days prior to the transaction date.
Furnish documentation detailing the credited or reversed amount along with the date of processing.
Provide a letter or email from the cardholder affirming the withdrawal of their dispute regarding the transaction.
Best practices to avoid this claim in future
Verify that the depiction of merchandise or services in advertisements, online platforms, transaction receipts, or telephone order scripts is precise, comprehensive, and devoid of misleading information.
If issuing a credit to the customer, ensure this is made to the same card / account that the transaction was initiated from. This is because transfers / credits made to other cards cannot be linked to defend a Chargeback if received.
Be aware that your return policy does not influence disputes falling within this dispute condition.
Credit due not processed
The customer alleges they were not credited.
Possible reasons for cardholder claim
The customer claims that they are due a credit or voided transaction receipt but this has not been processed.
Suggestions on defending against this claim
To contest the documentation provided by the customer's bank, submit evidence confirming the validity of the transaction and asserting that no refund is warranted.
If a credit or reversal has already been processed for the disputed transaction, submit documentation showing the amount and processing date of the credit or reversal.
If the customer rescinded a previous dispute regarding the transaction, provide a letter or email from the customer confirming the withdrawal of this dispute.
Best practices to avoid this claim in future
Ensure that credits/reversals are processed promptly and accurately.
If issuing a credit to the customer, ensure this is made to the same card / account that the transaction was initiated from. This is because transfers / credits made to other cards cannot be linked to defend a Chargeback if received.
Merchandise or Services Cancelled
The customer alleges they were not credited despite returning merchandise or cancelling their services.
Possible reasons for cardholder claim
No credit has been issued or processed because your business does not accept returns, but the return policy was not clearly conveyed to the customer.
A booked reservation was cancelled without sufficient notice, resulting in the customer being charged a "No-Show" fee.
The cancellation of a timeshare was not executed within 14 days of the contract or receipt date.
Suggestions on defending against this claim
Provide documentation demonstrating that your restricted return / cancellation policy was adequately disclosed and consented to during the sale.
Provide evidence of the customer failing to adhere to the disclosed return / cancellation policy.
If the customer continued to utilise services or failed to return merchandise despite, present evidence to corroborate this.
If a credit or reversal has already been processed for the disputed transaction, submit documentation showing the amount and processing date of the credit or reversal.
If the customer rescinded a previous dispute regarding the transaction, provide a letter or email from the customer confirming the withdrawal of this dispute.
Best practices to avoid this claim in future
If your business employs a restricted return policy or prohibits returns entirely, the phrase "No returns" or similar wording should be clearly displayed on all copies of transaction receipts and provided to the customer for agreement before finalising the transaction.
Your website must clearly convey the refund policy to the customer, requiring them to acknowledge the policy through a "Click to accept" button or equivalent. The terms and conditions of the purchase must be readily visible on the same view as the checkout page displaying the total purchase amount, or within the sequence of website pages accessed during the checkout process.
Be aware that refusing to accept returned items may impede your success rate when defending Chargebacks.
