Visa uses Reason Code 53 to designate chargebacks initiated when an issuer is notified by one of its cardholders that the merchandise or services that were received were not the same as described at the time of the purchase or the goods received were damaged or defective.
In this article I will provide an overview of the reasons, conditions, limitations and processing requirements applicable to Reason Code 53 and will outline strategies for preventing this type of chargeback, as well as possible remedial actions you can take in response to it.
What Causes Reason Code 53
Typically, Reason Code 53 is initiated when a cardholder states to her issuer that she received merchandise or services that were:
- Damaged, defective, or unsuitable for the purpose sold or
- Not the same as described verbally by the merchant (for a telephone transaction) or on the sales receipt or other document presented at the time of the purchase.
In order for the issuer to be initiate the chargeback process, the cardholder must have made an attempt to resolve the dispute, cancel the services or return the merchandise.
Reason Code 53 Rights and Limitations
All of the following conditions apply to this chargeback type:
- The chargeback amount is limited to one of the following:
- The portion of the products returned or services cancelled.
- The damaged or defective portion of the merchandise.
- The disputed products or services that were not as described.
- The chargeback amount can include:
- The shipping and handling fees charged by the merchant.
- Any convenience fee or surcharge assessed in connection with the disputed transaction.
- The cardholder must state that she attempted to resolve the dispute with the merchant, before a chargeback is initiated.
- A chargeback is invalid for the cash-back portion of a cash-back transaction.
Reason Code 53 Processing Requirements
The time limit for Reason Code 53 is 120 calendar days from one of the following dates:
- 120 calendar days from:
- The posting date of the transaction or
- The date the cardholder received or expected to receive the goods or services, if purchased on or before the posting date.
- 60 calender days from the date the issuer received the cardholder notification of the dispute, if there is evidence in the notification of previous negotiations between the cardholder and the merchant to resolve the dispute.
Reason Code 53 Re-presentment Conditions
Reason Code 53 chargeback can be re-presented in one of the following circumstances:
- The chargeback is invalid or a credit was processed.
- The merchant did not receive any returned merchandise.
- The merchandise was as described or was not defective.
Reason Code 53 re-presentments must be processed within 45 calendar days from the chargeback settlement day.
How to Respond to Reason Code 53
Your actions to respond to a Reason Code 53 chargeback will depend on the particular circumstances, as follows:
|The merchandise was returned or services were cancelled and a credit was processed.||Send evidence of the credit to the cardholder’s account to your processor.|
|You have not received the returned merchandise or the cardholder has not cancelled the service.||Inform your processor. Remember that for this chargeback to be valid, your customer must make a genuine attempt to return the merchandise or cancel the service.|
|The dispute is valid and you received the returned merchandise, but have not yet issued a credit.||Accept the chargeback, but do not process a credit as the chargeback has already done this for you.|
|The merchandise was as described.||Provide your processor with specific information and invoices to refute the cardholder’s claims.|
|The merchandise was returned because it was damaged.||Provide your processor with evidence that the merchandise was repaired or replaced (if either was requested by the cardholder).|
|The cardholder cancelled the service but you have not yet credited her account.||Accept the chargeback, but do not process a credit as the chargeback has already done this.|
|The service was performed as described or before it was cancelled.||Provide your processor with specific information and documentation to refute the cardholder’s claims. Attempt to address each individual point the cardholder makes in her dispute.|
How to Prevent Reason Code 53
As always, your goal should be to prevent Reason Code 53 from occurring in the first place. Here is what you can do:
- Accurately describe your merchandise or services. It sounds obvious, but it is not always the case. Make sure that all descriptions of your products and services in catalogs, on your website and on sales receipts, as well as in verbal communications are accurate and complete.
- Ship the correct merchandise. Another obvious advice, but you should regularly review your shipping and handling procedures to ensure that orders are filled accurately.
- Train your staff. Perhaps the best preventive strategy is training your staff on proper procedures for taking and fulfilling orders and reviewing their performance on a regular basis.
Reason Code 53 should be seen as an indicator that you have not done a good enough job in either describing what you sell or do or in actually delivering it. You should react to such a chargeback by first identifying its cause and then making adjustments in the way you present or deliver your products or services, as needed.
Also, make sure you communicate to your customers your willingness to work out any product- or service-related issues, so that when they have a legitimate complaint, you are notified before the card issuer, giving you a chance to avoid a chargeback.
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