When a customer cancels an order or service, most merchants think that's the end of the transaction. But even when you do everything right — cancel the order, issue a refund, follow your policy — you can still end up dealing with a chargeback.
Visa's reason code 13.7, "Cancelled Merchandise/Services," is a common headache. It covers situations where a customer says they cancelled but got charged anyway. If you've ever been blindsided by one of these disputes, you're not alone.
In this guide, we'll walk through how to protect yourself, what records to keep, how to respond if a dispute happens, and how to avoid these chargebacks in the first place.
What Visa's "Cancelled Merchandise/Services" Code Really Covers
Reason code 13.7 applies when a cardholder claims they cancelled a transaction but still saw the charge on their statement. It shows up in cases like:
- Orders cancelled before they shipped
- Cancelled appointments or services
- Early terminations with cancellation fees
- Refunds that took too long to process
These chargebacks usually come down to timing issues, unclear policies, or billing that continued after a cancellation. Sometimes, it's friendly fraud. The customer received the product or a refun, but filed a dispute anyway.
For Mastercard, the comparable code is 4853 under "Cardholder Disputes a Transaction." With American Express, it's "C14: Cancelled Recurring Billing."
What to Do Right After a Cancellation
A cancellation isn't just a customer service task. It's a moment where things can go wrong. To prevent problems later, take these steps right away:
1. Send a Confirmation
Follow up with an email that spells out:
- The date of cancellation
- What was cancelled
- When the refund will be processed (and any applicable fees)
Make sure this email is timestamped and saved.
2. Process Refunds Quickly
Card networks expect refunds within 5 to 7 business days. If you wait too long, the customer might go straight to their bank.
3. Save Transaction and Refund Details
Keep the original charge info and the refund confirmation. You'll need those if a chargeback is filed.
4. Turn Off Future Billing
For subscriptions or ongoing services, double-check that auto-renewal is turned off. Many chargebacks under this reason code happen when billing continues after the customer thinks it has stopped.
If You're Hit With a 13.7 Chargeback, Here's What to Show
You'll need to prove one of three things:
- The customer never cancelled
- The customer got a refund
- The customer agreed to the cancellation terms (including any fees)
Your evidence package should include the following:
1. Your Cancellation Policy
Show that the customer agreed to it. This could include a checkbox during checkout, a signed agreement, or an email with a link to your policy.
2. Refund Proof
If a refund was issued, provide the refund date, amount, card details, and transaction ID.
3. Customer Communications
Include any emails or messages showing the customer:
- Confirmed the cancellation
- Asked about a refund
- Acknowledged receiving the refund or terms
4. Service Usage (If Partial Delivery Applies)
If they used the service before canceling, include delivery logs, access timestamps, or screenshots to show what was already provided.
How to Prevent Cancelled Merchandise Chargebacks
Winning a chargeback is possible, but it costs time and effort. Your best move is to avoid these disputes altogether. Here's how:
- Make cancellation policies easy to find and understand
- Clearly display cancellation terms before and after purchase
- Confirm cancellations with detailed emails
- Offer customers a self-service way to cancel subscriptions
- Refund fast, ideally within a few business days
- Stop billing as soon as a cancellation is confirmed
- If a refund will take longer, let the customer know in writing
Conclusion
Cancelled merchandise chargebacks often catch merchants off guard. You may think you followed the process, but if a customer feels misinformed or if the timing doesn't line up, you could still lose the sale.
Be clear with your policies. Document everything. Move quickly when cancellations come in. And if a dispute does happen, show the proof upfront.
With the right systems in place, you can handle these disputes quickly or avoid them entirely.
FAQ: Cancelled Merchandise Services
What is Visa reason code 13.7?
It refers to a situation where a customer says they cancelled merchandise or services, but the charge still went through. It's commonly tied to refunds that weren't processed fast enough or confusion around cancellation terms.
How long do I have to issue a refund after cancellation?
You should aim to issue the refund within 5 to 7 business days. Anything longer can raise red flags and prompt a dispute, especially if the customer doesn't get a confirmation.
Can I still get a chargeback after giving a refund?
Yes. If the customer doesn't see the refund in time or doesn't recognize it on their statement, they might file a dispute anyway. That's why it helps to send a detailed refund confirmation with date, amount, and card info.
What if I charged a cancellation fee?
As long as the customer agrees to it during checkout or in a contract, you can provide that documentation. It's often enough to help you win the dispute.
What if the customer used part of the service before canceling?
You can provide service logs, timestamps, or access data to show what was delivered. If your terms allow for partial payment after usage, that documentation can help defend the charge.
Keep Cancellation Disputes from Costing You
Cancelled orders and services are part of doing business. Chargebacks do not have to be. With Chargeblast, you have the tools to stay on top of refund timing, track communication, and gather the evidence banks expect to see. Whether it's one-time orders or recurring services, we help you prevent disputes before they start.
Explore how Chargeblast makes chargeback defense simple and effective by booking a demo below.
