How to Manage ‘Not as Described or Defective Merchandise’ Chargebacks

Both Visa and MasterCard use special Reason Codes to designate chargebacks resulting when a card issuer receives a written claim from the cardholder, stating that a product or service purchased was not the same as described. For the chargeback to be valid, the cardholder must have made an attempt to either resolve the dispute with the merchant or return the merchandise. Visa uses Reason Code 53 and its MasterCard’s equivalent is 4853.

What causes these chargebacks? Chargeback Reason Codes 53 and 4853 may be issued for one of the following reasons:

• The merchant sent the wrong merchandise to the customer.
• The product or service did not match its description. For example:
  • The cardholder states that the quality of the product is not as described.
  • The cardholder states that the specified color, size, or quantity is not as described.
  • The cardholder states that the merchant did not perform the services as described.
• The merchant did not cancel the services purchased by the cardholder, as requested.
• The merchant did not accept the returned merchandise or accepted it, but did not credit the cardholder’s account.
• When delivered, the products arrived broken or could not be used for the intended purpose. For example, the cardholder received concert tickets after the date of the concert.

How to manage such chargebacks? The time frame to respond to Reason Codes 53 and 4853 is 120 days. Your response will depend on the particular transaction circumstances and the actions you have taken (or not) so far:

• Credit was processed. If merchandise was returned and a credit was processed, provide your processing bank with supporting evidence.
• Returned merchandise was not received or services were not canceled. If neither the merchandise was returned nor the service canceled, contact your processor and explain the situation. Remember that the customer must make a valid attempt to return the product or cancel the service.
• Returned merchandise was received, but credit was not processed. If the customer returned the merchandise or canceled the service, but you did not issue a credit, there is no remedy and you should accept the chargeback. Do not process a credit at this time, as the chargeback has already done it for you.
• Merchandise was as described. If your merchandise was just as described, provide your processor with supporting evidence.
• Service was performed as described. If you performed the service as you described it in your advertisement or sales pitch, provide your processor with specific supporting documentation and address, in detail, your customer’s objections.

How to prevent chargeback Reason Codes 53 and 4853? While there will always be disputes about the quality of your products or services, you can minimize the resulting chargebacks by implementing the following best practices:

• Provide accurate descriptions of merchandise and services. We have written on how to improve a service or product description before and will not go into great detail here. Be as accurate as you can and provide the complete manufacturer product sheet, both in all promotional materials and on the sales receipts.
• Provide product photos and images, if applicable. Use high-quality images and provide shots from various angles of the product.
• Honor returns cancellation requests. If a product was returned or a service canceled in accordance with your return policy, accept your customer’s decision and immediately issue a refund.

The chargeback amount for Reason Code 53 and 4853 chargebacks is limited to the amount of the returned merchandise or canceled service and it may include shipping and handling fees. The card issuer must wait at least 30 calendar days from the date the cardholder returned the merchandise, before charging back the transaction.

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