Reason Code 13.7 is one of the codes within Visa's "Consumer Disputes" group. It applies in situations where a cardholder claims they cancelled a service or returned goods, but did not receive a credit. These types of disputes are most often due to policy misunderstandings or late processing. Understanding the causes and the process for responding helps merchants protect their payment processor.

Understanding Visa Chargeback Reason Code 13.7: Cancelled Merchandise/Services

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Reason Code 13.7 is one of the codes within Visa's "Consumer Disputes" group. It applies in situations where a cardholder claims they cancelled a service or returned goods, but did not receive a credit. These types of disputes are most often due to policy misunderstandings or late processing. Understanding the causes and the process for responding helps merchants protect their payment processor.

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Key Takeaways

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• What it means: A credit for returned goods or cancelled services has not shown up, so the issuer temporarily reverses the sale.
• Causes: Late or withheld refunds. Unclear no-return terms. Timeshare or reservation rules ignored. Friendly fraud.
• How to respond: Show proof of a processed credit. Prove the goods were never returned. Show documentation that the customer broke the stated policy.
• How to prevent: Display clear refund rules. Process credits quickly. Use chargeback alerts. Keep full delivery records.

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What is a Visa Reason Code 13.7 Chargeback?

A Visa Reason Code 13.7 chargeback arises when the cardholder believes they should not pay for an order that was later cancelled or returned. In plain terms, the buyer thinks the sale should have been reversed, but the statement still lists the original debit. Visa treats this as a consumer dispute. It provisionally shifts the money back to the cardholder, leaving the merchant to justify the original transaction.

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The claim may involve a single-item return from an e-commerce shop, a cancelled gym membership, or a timeshare withdrawal. In each case, the dispute hinges on one question: did the merchant fulfil the promised credit within the agreed timeframe? If the answer is no, the issuer has grounds to raise Reason Code 13.7. When the merchant did issue the credit, or the customer failed to follow the policy, the claim can be fought and reversed. If successful, this results in restoring the sale amount to the merchant’s account.

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Primary Causes for a Code 13.7 Chargeback

Most Code 13.7 disputes start with a gap between expectation and reality. The most common trigger is issuing no credit at all after a legitimate return. Other causes are delaying the credit past the next statement cycle or refusing a return when a clear “no returns” policy was never shown. 13.7 can also be triggered by breaking rules such as the 14-day window for cancelling a timeshare agreement. 

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A no-show fee on a guaranteed hotel booking can also prompt this code if the guest cancelled on time, yet was still charged. In other cases, the cardholder might file friendly fraud, keeping the merchandise yet claiming a refund. Issuing banks often rely on the customer’s word. Merchants who lack documented evidence are therefore more exposed. Each cause links back to communication: unclear terms, missing proof, or slow internal processes.

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Time Limit for Disputing a Visa Reason Code 13.7 Chargeback

Visa allows issuers up to 120 calendar days from either the transaction date or the date the customer received the goods (not exceeding 540 days from purchase) to lodge a Code 13.7 dispute. 

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Once raised, the acquirer has 30 days to send its reply on behalf of the merchant. Merchants therefore need to act fast: gather receipts, shipping logs, cancellation timestamps, and any credit memos immediately. Waiting until day 25 to start compiling evidence is risky; processors often require files several days before the Visa deadline. Knowing this time limit and preparing standard document packs in advance gives merchants a head start and reduces the chance of an automatic loss.

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What 13.7 Means for Consumers & Issuers

For consumers, Code 13.7 offers reassurance that they will not pay for something they sent back or services they cancelled. The provisional credit appears quickly, which keeps the cardholder’s balance accurate and improves trust in their bank. 

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For issuers, the code is a mechanism to enforce Visa rules around fair refunds. Issuers must verify the claim fits the Code 13.7 criteria and file within the set time limit. They also bear the administrative cost of managing evidence from both sides. Repeated claims from the same cardholder may signal friendly fraud, prompting issuers to review account behaviour closely.

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What 13.7 Means for Merchants

Merchants carry the financial risk if they cannot disprove the claim. Fees add up: the lost sale, chargeback handling costs, and possible network monitoring penalties if dispute ratios climb. A pattern of late credits can harm processing relationships. But Reason Code 13.7 also offers merchants a fair chance to fight back. 

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By holding courier confirmation, showing the buyer used the service after cancelling, or highlighting an accepted “no returns” checkbox, the merchant can overturn the dispute and retain revenue. The process encourages businesses to tighten refund workflows, post clear policies, and maintain accessible records.

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How to Respond to a Code 13.7 Chargeback

Start by matching the dispute reason with your records. If the credit has already gone through, send the acquirer the refund receipt, including the amount and date. If no merchandise came back, provide warehouse logs or carrier tracking proving non-delivery. Where the customer broke your timeframe, such as returning goods after the 30-day window, supply a copy of the policy plus a timestamp showing the late attempt. 

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For cancelled services, present the original contract terms alongside evidence that the buyer continued to use the service after the supposed cancellation. Should the customer retract the complaint, forward their email or signed statement. Only accept the chargeback when you truly owe the refund. Always reply within the 30-day time limit to prevent automatic loss. Structured, factual evidence turns the dispute into a winnable case and protects cash flow.

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Proactive Prevention: The Ultimate Defence

Fast, clear communication is the best way to stop Code 13.7 disputes before they begin. Display refund and cancellation terms prominently on checkout pages, contracts, and receipts. Add a mandatory tick box online or ask for initials next to the policy in store. Process refunds as soon as the goods arrive. 

Send automatic emails confirming the credit and expected posting date. Keep signed delivery notes or carrier tracking for returned items. Finally, sign up for early-warning tools. Try out chargeback alerts to catch disputes during the inquiry phase and issue a credit before they escalate to a formal chargeback.