13.5 – Misrepresentation

DESCRIPTION

Why did I receive a chargeback with reason code 13.5?

You received this chargeback because the cardholder claims you misrepresented the terms of the sale.

NOTE

“Misrepresentation” is a subjective term.

Visa provides several examples of what is considered to be “misrepresentation”. And all the examples are fairly obvious attempts to scam and deceive cardholders. Here are a few:

• Merchandise or digital goods were purchased through a trial period, promotional period, or introductory offer, and the cardholder was not clearly notified about additional transactions after the initial purchase.
• Technical services, technical support, or computer software was sold with malicious software downloads.
• Business opportunities entice cardholders by over-promising on income-generating offers.
• Timeshare resale offers are made by someone other than the property owner.
• Financial solutions promise to recover the cardholder’s funds but fail to provide the service.
• Investment schemes forbid the cardholder from withdrawing available balances.

However, the interpretation and implementation of 13.5 guidelines is left to the issuer. And issuers might use this reason code for situations that — to you — may seem like an innocent mistake or simple misunderstanding.

The primary requirement for using this reason code is to provide an explanation of how the merchant’s representations do not match the terms that the cardholder agreed to.

Therefore, it is important to prioritize a positive customer experience to reduce the risk of chargebacks with this ambiguous definition.

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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 apply to consumer disputes.

ISSUER TIME LIMIT

How long can the issuer wait to file a chargeback with reason code 13.5?

Chargebacks with reason code 13.5 must be filed within 120 days of either the transaction processing date or the date the cardholder received the merchandise or services.

However, before an issuer can file a 13.5 chargeback, the cardholder is required to reach out to the merchant directly in an attempt to resolve the issue. And Visa will grant a deadline extension for this process.

If the negotiations begin within 120 days of the transaction processing date, the cardholder can delay the chargeback process by an additional 60 days. If you and the cardholder don’t come to an agreement during that time period, 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 13.5 chargeback invalid?

An issuer is not allowed to use reason code 13.5 if any of the following characteristics are applicable:

• The transaction used straight-through processing.
• The dispute relates to the value-added tax (VAT).
• The dispute is for the cash-back portion of a transaction.
• The dispute only challenges the quality of the goods or services provided.

SUPPORTING DOCUMENTS

Can I fight a chargeback with reason code 13.5?

Yes. You can fight 13.5 chargebacks with the following 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 terms of the sale were not misrepresented.
• Evidence that you correctly managed a trial period, promotional period, or introductory offer. That means providing evidence that the cardholder expressly agreed to future transactions and you notified the cardholder of upcoming transactions at least 7 days before charging the card.

WORKFLOW

What process do I use to respond to a chargeback with reason code 13.5?

Visa reason code 13.5 is managed with the collaboration workflow.

If you want to challenge a claim of misrepresentation, you’ll need to submit a dispute response. Your dispute response should consist of the required supporting documents and a rebuttal letter explaining your case.

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 13.5 dispute response?

Yes. An issuer can file pre-arbitration for any collaboration dispute — including disputes with reason code 13.5.

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.

PREVENT

How can I avoid chargebacks like this in the future?

Here are steps you can take to avoid reason code 13.5 in the future.

• Make sure all descriptions of your services or merchandise are complete, accurate, and not misleading.
• Clearly and concisely communicate your terms of service, and make it easy for customers to find the information. Ask for cardholder consent before completing the transaction.
• Fully comply with all of Visa’s requirements for free trials, introductory offers, and upsells.
• Provide prompt, professional, and helpful customer service.

Want to learn more about building a comprehensive chargeback management strategy? Visit our detailed guide.