Visa reason code 13.7: what it means and how to respond

What Visa code 13.7 means and when it applies

Visa code 13.7, “Cancelled Merchandise/Services,” covers a cancellation or return that should have resulted in a credit but did not. The central issue is not the quality of the purchase. It is the merchant’s failure to refund the amount after the cardholder canceled or returned the purchase under the applicable rule.

For a dispute to qualify as 13.7, all of these requirements must occur together:

1. The cardholder canceled or returned the purchase. This includes returning or canceling merchandise, canceling a service, a timeshareA vacation-property arrangement, including vacation clubs. Visa has specific rules for its cancellation., or a Guaranteed ReservationA hotel or rental reservation guaranteed with a card. If the customer does not show up and does not cancel under the policy, the merchant may charge a No-Show fee..
2. The merchant did not refund the amount owed. It did not process the credit or a voided Transaction ReceiptA receipt the merchant issues to record the transaction. When marked void or canceled, it documents that the sale should not proceed to billing..
3. There is a policy failure or a regional right. At least one of these conditions must apply: the merchant did not properly disclose its limited return or cancellation policy; it disclosed the policy but did not apply it; or, in Europe, the purchase came from an off-premises or distance-selling contract subject to a 14-day cancellation period.

Source for the requirements: Visa Core Rules §11.10.8.1, Table 11-128 (ID# 0030349).

Before the issuer files the case, the cardholder must try to resolve the problem with the merchant or the merchant’s liquidator. If the merchandise was shipped before cancellation and reached the cardholder, the cardholder must return it. The disputed amount is limited to the unused portion of the service or the value of the returned merchandise.

Some cases have their own conditions. For a timeshare, one of these situations is enough: the transaction was processed with an incorrect MCCMerchant Category Code identifies the merchant’s line of business. For a timeshare, an incorrect MCC may support a 13.7 dispute.; or the cardholder canceled within 14 calendar days of the contract date or of receiving the contract and related documents. After that period, the cancellation must follow the limited policy the merchant properly disclosed.

For a Guaranteed Reservation, one of these three situations is enough: the cardholder canceled under the policy but received a No-ShowA charge made when the customer does not arrive for a guaranteed reservation and does not cancel under the disclosed terms. charge; the No-Show charge covered more than one day of accommodation or rental, plus applicable taxes; or the cardholder tried to cancel within 24 hours of receiving the confirmation and was still charged.

In Europe, the 14-day cancellation right for off-premises or distance-selling contracts does not apply when at least one of these exceptions applies: the price depends on financial-market fluctuations; the goods are made to order; the goods are perishable; sealed goods are subject to health and safety restrictions; the goods are not received in physical form, such as a software download; the transaction is for travel and entertainment; or the merchant outlet is in Israel, Switzerland, or Türkiye. In that region, the cancellation itself counts as an attempt to resolve the matter.

Source for the rights, limits, and special cases: Visa Core Rules §11.10.8.2, Table 11-129 (ID# 0030350).

When the problem is different, use the corresponding code: 13.6 for a credit or voided receipt that was already issued but not processed; 13.3 for a quality or defect claim; 13.2 for a recurring charge processed after cancellation; and a Category 10 code when the cardholder says the transaction was not authorized.

Who files the dispute and what happens next

The issuer, the bank that issued the card, files the 13.7 dispute for the cardholder in VROLVisa Resolve Online is Visa’s system where the issuer files the dispute and the acquirer submits the response and case documents.. The merchant does not respond directly to Visa. It gives its records to the acquirer, the institution that represents it on the Visa network.

When the issuer files the case, it charges the transaction back to the acquirer and disputes the corresponding amount. If the acquirer accepts the claim, it may debit the merchant. If there is a defense ground, the merchant gives its records to the acquirer, which responds to Visa.

Source for the effect of the dispute: Visa Dispute Management Guidelines for Visa Merchants, pp. 5–6.

When filing the dispute, the issuer must provide all documents applicable to the case:

1. For a standard cancellation or return: a detailed description of the merchandise or service, the date the cardholder received or expected to receive it, and the cancellation or return date. The description is not required when the Clearing RecordThe record sent after a purchase to present the transaction and calculate settlement among the participants. already contains sufficient Enhanced Data.
2. If the merchandise was returned and the cardholder tried to resolve the issue with the merchant: the carrier’s name, invoice or tracking number, and the date the merchant received the merchandise. If the merchant refused the return or told the cardholder not to return it, the issuer certifies that fact and states where the merchandise remained.
3. For a timeshare: the cancellation date and, when applicable, the date the cardholder received the contract.
4. For a Guaranteed Reservation: confirmation of the No-Show charge, the expected service date, and the fact supporting the dispute: the date of a proper cancellation, the date of an attempted cancellation within 24 hours of the confirmation, or an indication that the charge covered more than one day.
5. For an off-premises or distance-selling contract in Europe: the contract start date and proof that the cancellation occurred within 14 days.

Source for the filing documents: Visa Core Rules §11.10.8.5, Table 11-132 (ID# 0030353).

The issuer normally must wait 15 calendar days from the return or cancellation before filing 13.7. The wait does not apply if it would cause the case to exceed the filing deadline or if the merchant refuses the cancellation or return. After that, the issuer has up to 120 calendar days from the Transaction Processing Date or the date the cardholder received or expected to receive the merchandise or service. When the second date is used, filing may never occur more than 540 days after the Transaction Processing Date. For an Adjustment to a PIN-Authenticated Visa Debit Transaction, the clock starts on the Adjustment date.

Source for the filing deadlines: Visa Core Rules §11.10.8.4, Table 11-131 (ID# 0030352).

Code 13.7 follows the CollaborationThe dispute flow for Categories 12 and 13. In this flow, the acquirer may respond before the issuer attempts pre-arbitration. process. The acquirer has 30 calendar days from the Dispute Processing Date to submit a Dispute ResponseThe acquirer’s formal response in VROL. It contests the dispute with at least one ground Visa allows.. If the issuer rejects the response, it has 30 days to start pre-arbitrationThe stage where the issuer addresses the acquirer’s evidence and explains why the cardholder still disputes the transaction before asking Visa to decide.. The acquirer has another 30 days to respond. If the parties do not agree, the issuer may take the case to Visa arbitration within 10 days.

Source for the flow and response deadlines: Visa Core Rules §11.2.3, Table 11-2 (ID# 0030213), and §11.10.8.7, Table 11-134 (ID# 0031087).

How to reduce the risk of this code

Visa recommends four controls that make the policy visible and the credit decision traceable:

1. Show the policy before completing the sale. For a card-present sale, place the text near the signature on the Transaction Receipt or contract. If it appears on the back, obtain a signature on the front and initials beside the policy on the back. If returns are not accepted, state that on every copy before the customer confirms the sale by signature or PIN.
2. Record acceptance at checkout. In e-commerce, show the policy on the same screen as the total, within the checkout sequence, or beside the submit button. Require a click, checkbox, or electronic signature. A separate link qualifies only when it is part of that acceptance and points to the return, refund, or cancellation policy.
3. Apply the policy that was disclosed. Record the date, method, and content of the cancellation or return request. If the request does not follow the disclosed time limit or method, preserve evidence of that difference.
4. Process the credit promptly. Keep the amount, date, and identifier linking the credit or reversal to the original transaction.

Source for the prevention measures: Visa Dispute Management Guidelines for Visa Merchants, Condition 13.7, pp. 46–47, and Visa Core Rules §11.10.8.6, Table 11-133 (ID# 0030354).