Visa Chargeback Reason Code 13.2: Cancelled Recurring

What is Visa Chargeback Reason Code 13.2?

This chargeback reason code occurs when a customer disputes a recurring transaction. The shortcode description, “Cancelled Recurring Transactions,” shows that it does not apply to one-time payments. Subscription-based services are susceptible to this chargeback code when a customer disputes one of the payments, usually the second one.

Cardholders may have several reasons for disputing a recurring transaction, primarily because they did not authorize it. We expect this chargeback to occur for payments where you added your card details online. Services where this chargeback can occur include the following:

• Software subscription
• Cable TV subscription
• Monthly utility bills
• Magazine subscriptions (soft and hard copy)
• Gym membership

These transactions require the cardholder to enter their card details once and agree on a specified recurring billing date. However, we’ll see that disputes may arise on the cardholder’s end.

You can process a recurrent transaction before processing a cancellation request. Such an oversight can cause the cardholder to dispute the payment and request a refund. The issuer will file the chargeback with this reason code.

Some customers will sign up for a recurring transaction without knowing what it fully requires or entails. Hence, they may later dispute the payments and win the chargeback.

This reason code can occur due to errors on both ends: the cardholder and you (the merchant). We’ll address both and give you the best approach to fighting or preventing them. Now, let us see the reasons for this chargeback.

Why Did It Happen?

Cardholder disputes in recurring transactions are the primary cause of this chargeback. However, we must trace the origin of the actual error. For this, the cardholder could be in error, or you could be.

There’s another reason for this chargeback that links back to the issuer, but let’s see the common reasons for this dispute. They include the following:

• Permission withdrawn: The cardholder withdrew the authorization to charge the card for the recurring transaction. That can be done through the procedures you laid out for the cancellation.
• Canceled Account: The cardholder canceled the account linked to the card. An example is blocking an account after an attempted hack to prevent loss of funds. As such, the account shouldn’t be charged for the recurring subscription.
• Issuer Cancellation: The issuer can cancel the account linked to the card. That should prevent a debit transaction on the card. If one slips through, the issuer will process a chargeback.
• Late processing of a cancellation request: Cardholders should be able to cancel a subscription when they wish. Processing a recurring payment when the customer has sent a cancellation request will cause this chargeback. Of course, they’ll reiterate not authorizing the transaction.

The notice for cancellation depends on your set cancellation procedure. Even if they are seconds apart, processing the payment before the cancellation will cause a chargeback. Nevertheless, there are other causes we’d love to address to keep you informed.

• A cardholder may be unaware that the subscription is recurring, or the customer might not want a recurring transaction. A dispute to this effect can cause a chargeback from your account.
• A cardholder fraudulently disputes a recurring transaction. Friendly fraud is something you should watch out for as a merchant.

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How to Fight Visa Chargeback Reason Code 13.2: Cancelled Recurring

The key to fighting this chargeback is addressing its cause. The following are the steps to take, depending on the specific situation:

• Service usage after cancellation: If the cardholder is still using your services after canceling, you can dispute the chargeback and receive a refund. This approach can apply to recurring payments involving physical goods. We encourage you to submit proof that the customer received and used the items or service, hence the debit transaction.
• Charge for service before cancellation: You must send proof that the cardholder used your service or product between the previous billing and the current transaction date. That excludes you from bearing the liability of chargebacks after cancellation. Instead, the payment covers the services or products already used.
• Reversal processed: If the customer contacted you or the mistake was resolved and a reversal processed, you can dispute the chargeback. Send proof of the refund, including the amount and date of the transaction. The amount should match the recurring transaction.

Cardholders may withdraw their dispute and accept the recurring transaction after a chargeback. Provide evidence for this withdrawal to enable Visa to process a refund. A signed letter or email from the customer can serve this purpose.

Important Notice

Visa has updated its guidelines for recurring transactions. Incurring a chargeback for recurring billing that does not follow these guidelines shifts the liability to you. That means you’ll be responsible for the chargeback.

We recommend reviewing the guidelines to avoid chargebacks under reason code 13.2. It is essential to know them and watch for updates from Visa.

How to Prevent Visa Chargeback Reason Code 13.2: Cancelled Recurring

The following are things you can do to prevent this chargeback:

• Use the security features in your transactions, whether online or offline. Security features include CVV (card verification values), CVC (card verification code), etc.
• Use account updater services to automatically update a customer's card data for a recurring transaction. Cardholders may get new cards and forget to update the new card for your subscription service.
• Flag transactions with different amounts than the previous recurring billings. Unless you agree to increase the charge, these transactions should be flagged and the cardholder notified. We recommend informing the cardholders of any upward review of the charge ten days before the billing date.
• Review customer logs as often as possible to process credits and cancellation requests. Prompt action will keep these chargebacks away.
• Alert customers when they close their recurring transaction accounts linked to the cards you processed. Request a new payment method if they have outstanding payments.
• Inform the cardholder when you process a reversal. You can also update customers on the pending refund and the transaction date. This approach should keep them from filing a dispute for a chargeback.
• If you have a team, train them on the proper procedures to address account closures, upward reviews of the previous billing, etc.
  

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