13.3 – Not as Described or Defective Merchandise/Services

DESCRIPTION

Why did I receive a chargeback with reason code 13.3?

You received this chargeback because one of three things happened:

• The merchandise or services the cardholder received did not match what was promised.
• The merchandise the cardholder received was damaged or defective.
• The quality of the merchandise or services was not satisfactory.

If you are a travel agent, you can also receive this chargeback if the T&E merchant you work with failed to honor the contractual agreement or the services provided were not as described.

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CLASSIFICATION

How does Visa classify this dispute?

Visa reason codes are divided into four categories: fraud, authorisation errors, processing errors, and consumer disputes.

Reason codes that start with 13 are for a consumer dispute.

ISSUER TIME LIMIT

How long can the issuer wait to file a chargeback with reason code 13.3?

Before the issuer can initiate a chargeback, the cardholder must return — or attempt to return — the merchandise. Visa recognizes that you need time to receive the merchandise and issue a refund, so the issuer must pause the dispute process for 15 days after the merchandise return date. But if you haven’t resolved the customer’s complaint in that time period, the issuer can proceed with a chargeback.

Chargebacks must be filed within 120 days of either the transaction processing date or the date the cardholder received the merchandise or services.

But Visa does grant an extension if the cardholder and merchant attempt to resolve the issue themselves.

When a cardholder contacts the issuer to file a chargeback, the issuer has to check if the cardholder has attempted to resolve the issue with the merchant directly. If that effort hasn’t been made, the issuer must ask the cardholder to negotiate with the merchant. If the negotiations began within 120 days of the transaction processing date, the cardholder has an additional 60 days to reach a resolution with the merchant. If there isn’t an agreement, the issuer can continue with a chargeback.

However, none of these delays can push the chargeback time limit beyond 540 days of the original transaction processing date.

VALIDITY

What would make a 13.3 chargeback invalid?

The issuer is not allowed to use Visa reason code 13.3 if any of the following characteristics are applicable:

• The transaction was an ATM cash disbursement.
• The transaction used straight-through processing.
• The transaction was unauthorised and a fraud reason code should be used instead.
• The transaction was initiated at an automated fuel dispenser (AFD).
• The dispute relates to the value-added tax (VAT).
• The dispute is for the cash-back portion of a transaction.
• The dispute relates to the quality of food received at a restaurant.
• The dispute is raised because the purchased non-fiat currency or non-fungible tokens do not increase in resale value as expected.
• The dispute relates to a price discrepancy.
• The returned merchandise is being held by a customs agency outside your own country.
• You are only liable for merchandise held by a customs agency in your country.

SUPPORTING DOCUMENTS

Can I fight a chargeback with reason code 13.3?

Yes. You can fight a 13.3 chargeback as long as you have the required supporting documents.

• Evidence that the chargeback is invalid. (Note: Your acquirer’s technology should catch these errors and automatically respond on your behalf. If your acquirer doesn’t automatically respond and you receive a chargeback notice, you can challenge the chargeback yourself.)
• Evidence that you refunded the transaction before the chargeback was filed.
• Evidence that the cardholder no longer disputes the transaction.
• Evidence that the goods or services provided matched the description you gave or proof that the items were not damaged or defective.
• Evidence that the cardholder did not attempt to return the merchandise or proof you have not received the merchandise.
• Evidence that the T&E merchant complied with the contractual agreement.

WORKFLOW

Does a 13.3 chargeback use allocation or collaboration?

Visa reason code 13.3 is managed with the collaboration workflow.

To challenge this type of chargeback, you’ll need to submit a dispute response. Collect your supporting documents, write a rebuttal letter to explain your case, and submit your package for review.

ACQUIRER TIME LIMIT

How quickly do I need to file a chargeback response?

Your acquirer must submit your chargeback response within 30 calendar days of the chargeback filing date.

NOTE: This is the acquirer time limit. The amount of time you, the merchant, have to prepare and submit your response will be much less. Usually, merchant time limits are about 3-20 days. Make sure you know how much time your acquirer allows.

ADVANCING THE CASE

Can the issuer file pre-arbitration after a 13.3 dispute response?

Yes. An issuer can file pre-arbitration for any collaboration dispute — including 13.3 chargebacks.

Pre-arbitration allows the issuer to address information or evidence provided in your dispute response.

After receiving a collaboration dispute response, the issuer can make a pre-arbitration attempt for any of the following reasons.

• The issuer can provide new documents or information about the original dispute.
• The issuer changes the reason code because of information or documents provided in the dispute response. (The issuer can only change the reason code if the original chargeback was valid.)
• If your dispute response included a claim that the cardholder no longer wants to dispute the transaction, the issuer must prove that the cardholder does, in fact, want to continue the dispute.
• If you provided the required supporting documents and disputed the cardholder’s claim, the issuer must review the evidence with the cardholder and provide an explanation of why the cardholder continues to dispute the transaction.
• If you refunded the cardholder after the chargeback was filed, but the issuer suffered a financial loss because of the exchange rate, the issuer can advance the case to pre-arbitration.

There are additional considerations that are specific to 13.3 cases.

• If you claim the cardholder didn’t return — or attempt to return — the merchandise, the issuer must provide evidence that the merchandise was returned and you received it.
• If you claim the merchandise or services that were provided matched the description, the issuer must present evidence from a third party to support the cardholder’s claim.
• If you are a moving company and you refute the cost to repair or replace a damaged item, the issuer must provide evidence of the estimated repair or replacement cost.

PREVENT

How can I avoid chargebacks like this in the future?

Here are tips to help prevent 13.3 chargebacks from happening.

• Make sure all service and merchandise descriptions are complete, accurate, and not misleading. Elaborate on features like size, weight, materials, colors, etc.
• Include photos of the goods or services in your online description. Take photos from different angles, and zoom in on important features.
• Use the correct size boxes and sufficient packing material so items won’t break in transit.
• Make sure your fulfillment department is familiar with your merchandise, has a complete understanding of what has been purchased, and knows what to ship.
• Train your customer service team to promptly and professionally resolve customer complaints.
• If returned merchandise doesn’t qualify for a refund, refuse its delivery. If you accept delivery, you may be held liable.

For a full list of chargeback prevention tips, visit our detailed guide.