Understanding American Express Chargeback Reason Code C32: Goods/Services Damaged or Defective

Reason Code C32 applies when a cardholder claims goods or services arrived damaged, defective, or faulty. It often follows failed attempts to obtain a repair, replacement, or refund. Merchants have limited time to respond. Clear policies, quick customer support, and strong evidence help protect revenue and reduce disputes.

Key Takeaways

• What it means: A dispute involving goods or services that arrived damaged, defective, or unacceptably faulty.
• Causes: Defects or shipping damage. Policy confusion. Delays issuing refunds or replacements.
• How to respond: Gather proof of condition, returns activity, policy acceptance, repairs, replacements, or credits.
• How to prevent: Improve packaging, product checks, clear policies, fast support, and use chargeback alerts.

What is an American Express Reason Code C32 Chargeback?

Reason Code C32 is used when a cardholder claims that the goods or services supplied were damaged, defective, or arrived in a condition that did not match what was promised at the point of sale. In these cases, the customer says the item was not fit for purpose or was unacceptable on receipt. 

This typically occurs after failed attempts to resolve the issue directly with the merchant. If a refund, repair, or replacement is not provided within a reasonable timeframe, the cardholder may ask their issuer to intervene. The code applies to both e-commerce and face-to-face transactions. C32 can also cover part of an order. If only one item in a multi‑line shipment is damaged, the dispute may be for a partial amount.

Primary Causes for a Code C32 Chargeback

There are various triggers for code C32, most of them avoidable. The most common is goods being damaged in transit. This is usually due to either mishandling by couriers or insufficient packaging. Even minor cosmetic flaws such as stains or scratches can prompt a claim, as the item is not exactly as described at the time of purchase, and the customer is unhappy. If the goods were defective before being dispatched, then the cause is usually a fault in the merchant's quality control process. 

Policy confusion often fuels disputes. If return instructions are buried or written in complex language, consumers may bypass the merchant and call the issuer. Refund delays give cardholders another reason to escalate. Finally, friendly fraud appears when a customer receives a sound product but claims otherwise to avoid paying. Understanding these causes helps merchants improve processes and protect revenue.

Time Limit for Disputing an American Express Reason Code C32 Chargeback

The time limit to contest a C32 chargeback is short. American Express typically allows the acquirer or merchant 20 days to submit a response package. That window includes the time your acquirer needs to pass the notice to you and forward your materials back to American Express. In practical terms, your internal deadline will be earlier. 

Plan to act within a few days of receipt. First, acknowledge the case and assign an owner. Then, decide your position. If you agree with the customer, issue a credit and provide proof. If you dispute the claim, compile evidence that the item was supplied as described or that you attempted a repair or replacement. Gather all relevant records. Include order details, product page copy, and pre-shipping photos. Packing scans, courier tracking, and delivery confirmation are also useful proof. 

Missing the response window usually means the chargeback stands. Late or incomplete submissions weaken your defence and can harm recovery rates. Build a simple playbook that sets out who does what on day one, day two, and so on. Fast, structured responses improve outcomes and help protect revenue across your dispute portfolio.

What C32 Means for Consumers & Issuers

For consumers, Reason Code C32 is a way to seek a fair outcome when an item or service is faulty or in an unacceptable condition. It gives the cardholder a way forward if attempts to resolve the issue with the merchant stall. Cardholders should document what arrived, keep packaging, respond to requests to return goods, and provide clear photos or notes. Following the merchant’s return process often speeds up a replacement or refund.

For issuers, C32 requires careful review. The bank evaluates the claim against merchant evidence, delivery data, and any previous contact. Issuers balance consumer protection with the need to limit friendly fraud. They assess if the customer gave the merchant a reasonable chance to put things right, and if the merchant acted within stated policies and the card scheme’s rules.

What it means in practice is that issuers encourage early resolution between buyer and seller. However, they will support a chargeback if the item appears damaged or defective and no remedy is offered.

What C32 Means for Merchants

For merchants, C32 disputes affect cash flow, stock, operations, and brand trust. Each case is subject to a refund or reversal, along with potential additional fees and handling time. If the buyer does not return the item, you may lose both goods and funds. Repeated claims also risk higher dispute ratios and more scrutiny from your acquirer.

Merchants should therefore treat this type of dispute as a learning opportunity. It's a prompt to review your whole sales flow: product pages, returns policy, and fulfilment steps. Identify any bottlenecks or failures, and apply the necessary fixes. These habits help protect revenue, reduce loss on returns, and improve win rates when you need to fight an invalid claim.

How to Respond to a Code C32 Chargeback

Decide your position, then build a clear, concise rebuttal. If you dispute the claim, submit proof that the goods or services were not damaged or defective on delivery. For in‑store sales, include signed receipts noting the condition or that the customer agreed to “sold as seen”.

If the customer did not return the item, show your return policy, the buyer’s acceptance at checkout, and messages requesting return or RMA use. If you offered or completed a repair or replacement, include dates, tracking numbers, and correspondence. If you have already issued a credit, provide the credit memo, amount, and posting date.

Write a short cover letter that links each document to the claim. Avoid emotion; state facts. Submit within the time limit and keep a copy. Consistent record-keeping, combined with fast triage, will increase your representation success and help protect revenue over time.

Proactive Prevention: The Ultimate Defence

Preventing C32 disputes starts before dispatch. Strengthen packaging, pick the right box size, and use protective fillers. Add a thorough, detailed quality control check for condition and completeness, including taking pre-shipping photos for high‑risk items. Keep product pages accurate and avoid overstating condition. Make return and refund terms easy to find and require acceptance at checkout.

Offer quick, human support. Approve returns promptly when the claim is valid, and give clear next steps. Provide prepaid labels where appropriate and confirm expected timelines for replacements or credits. Add shipment tracking and delivery confirmation to catch issues early. Finally, add real‑time dispute tools. Try out chargeback alerts to help you intercept complaints before they become chargebacks. Early warning reduces risk, improves customer satisfaction, and lowers the cost of disputes.