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13.1: Merchandise/Services Not Received
Customers who pay for something and never receive what they ordered have the right to file a dispute under Visa’s reason code 13.1 – this code covers situations where somebody paid for merchandise or a service but never actually got it delivered. Out of all the different chargeback reasons out there, it’s probably the simplest to work with.
Reason code 13.1 disputes are purely about delivery failure and nothing else. These aren’t quality complaints or damage claims. Customers are frustrated because they got nothing at all – even though they paid for it. These disputes can turn into expensive problems fast for merchants who get stuck with them.
Every time a customer files this dispute, you’re going to lose the original sale amount and you’ll get stuck with extra chargeback fees. Chargeback fees usually range anywhere from $20 to $100 per incident, depending on your payment processor. Too many of these disputes mean payment processors will start labeling your business as high risk. Once that happens you’re looking at much higher processing fees across the board or in the worst-case scenario they might even terminate your merchant account altogether.
This whole situation is particularly frustrating because most of these chargebacks are completely preventable. They usually happen because of basic oversights in either fulfillment or customer communication. Maybe a package gets lost somewhere in transit and nobody follows up on it. Or maybe an email confirmation never gets sent out to let the customer know their order is on the way. Sometimes a service appointment just gets forgotten about completely. These seemingly small mistakes can cost merchants thousands of dollars each month.
A complete investigation into reason code 13.1 disputes will show you where your shipping and delivery operations aren’t working and you’ll find these issues long before they turn into expensive recurring problems that cut back on your profits month after month.
How It Works
A customer files a dispute because they claim they never received what they paid for. It all starts with just one phone call to their bank. They tell their bank that they paid for something but never got it and the bank reaches out to your payment processor – that’s usually how you first hear about any problem.
Notifications typically come through your merchant account dashboard or by email that includes all the info about the sale along with the reason for the dispute. Most merchants get about seven to ten days to respond with evidence showing that the customer actually did receive what they bought.
These disputes can spring up for plenty of other reasons like packages that never show up. Sometimes a customer receives only part of their order and disputes the entire transaction. Other times they’ll cancel a service but the merchant keeps charging them anyway. Even delayed shipments can spark disputes if customers get fed up and figure that they’ve waited long enough.
Your type of business can shape how these disputes play out. Online services face completely different challenges than shops that sell physical products. Downloadable content providers need to prove that the customer actually accessed it. Physical merchants need delivery confirmation and tracking numbers. Service providers have to show that they performed the work just as it was promised.
Keep an eye on customer complaints about delivery times or missing items. These are usually the first warning signs that a dispute could be heading your way. Customers who reach out with problems need fast replies to steer clear of formal disputes altogether.
How it Affects Chargeback Prevention
Chargebacks can hurt your business. That’s also the case with the “item not received” type. You lose the original sale revenue and get hit with extra fees from your payment processor. Financial damage can add up fast and the time you spend grabbing evidence and fighting these disputes just makes it worse.
You could spend endless hours grabbing paperwork and fighting each chargeback as it comes in or you could put the systems in place that stop most problems before they start.
Delivery confirmation should be standard practice for any item that leaves your warehouse – this basic step prevents the majority of “item not received” disputes from ever happening. Customers have a much harder time claiming they never got their package when you have proof of delivery in your records. Higher-value orders benefit from shipping services that give you full tracking information and need signatures upon delivery.
Customer communication plays a big part in preventing these disputes as well. Send tracking numbers to customers right after their orders ship. If any delays or backorders happen, contact them before they start asking where their package is. Just a quick email about a shipping delay can stop a chargeback from appearing three weeks later.
COVID taught us an important lesson about customer expectations and how they relate to dispute rates. Shipping delays went from minor inconveniences to customer service problems almost overnight and chargeback rates climbed steadily alongside them. External problems are just a part of running any business – bad weather disrupts shipping routes, carriers have their own issues and supply-chain problems can appear without warning.
Communication made all the difference between merchants who handled the crisis well and those that struggled. Businesses that took the time to proactively update their customers about shipping delays ended up with far fewer chargebacks than the ones who left customers without updates about their order status.
Example Scenarios
One possible explanation is that the delivery driver left the package at the wrong address by mistake. Somebody could have swiped it right off the porch before the customer got home. Or the customer basically forgot they had already received it (it happens more than you’d expect). Without proof of delivery to the right address you’re almost sure to lose that chargeback dispute.
Another equally frustrating situation involves running a home repair service instead of selling physical products. A customer books an appointment for Thursday at 2 p.m. and your technician shows up right on time. Nobody answers when the technician knocks on the door. After about fifteen minutes the technician finally has to leave. Later that day the customer calls, furious because they took time off from work for the visit. They insist that nobody ever showed up.
Without documentation that proves your technician was there at the scheduled time you have a problem on your hands. A chargeback gets filed and suddenly you’re out of the service fee and whatever the dispute process costs you.
Scenarios like these happen every day to merchants in all kinds of industries. Most of these disputes could have been completely avoided with just a few little changes and that makes it even more frustrating. A signature requirement for that laptop delivery would have changed the outcome. A photo of your technician at the customer’s door with a timestamp would have saved you from losing that service appointment dispute.
Requirements and Timeframes
Once a customer decides to file a chargeback because they say they never got their merchandise or services, you’re on the clock that starts instantly. Your payment processor will let you know about the dispute and from that point you have a full 30 days to put your response together. Missing that deadline means the dispute is over before it even begins – even if you have proof of delivery tucked away in a filing cabinet.
Customers actually have more time to open a dispute. They can wait 120 days from the expected delivery date before they call their bank. That window gives them plenty of time to wait for late shipments before they act. It changes a bit if your original transaction didn’t list a delivery date though. Customers only get 15 days from the date of the transaction to file their dispute in those situations.
A strong response means you need records if you want any chance of winning. A tracking number alone in your records isn’t nearly enough. You need delivery confirmation most – something that obviously shows that the package reached the customer’s exact address. Without this paperwork you’re just asking the bank to take your word for it.
Returns add another wrinkle to these disputes. Once customers send the items back they get an extra 15 days from the return date to file a chargeback. That longer window applies even if they got the original shipment without any problems. Your team needs to track return shipments with the same care and detail as you do your outbound orders.
Frequently Asked Questions
What evidence do I need to fight a 13.1 chargeback?
Chargeback disputes for undelivered merchandise can be challenging. There's actually a way to manage them effectively. Your strongest defense will always be strong proof that the delivery took place. A tracking number with delivery proof works pretty well. An actual signature from the customer when they receive their package is even better.
Tracking numbers and signatures are absolute gold in chargeback disputes. Just one delivery signature carries more weight than a dozen customer emails mentioning the product. A single signature can shut down the dispute quickly.
Customer messages confirming the receipt are also worth keeping in your back pocket. An email where they thank you or ask questions about the product after the delivery can help strengthen your case. Service completion paperwork follows the same idea - any paperwork that proves you finished the work can be helpful evidence.
Online products obviously call for a different plan since you can't get the customer to sign for a download. In that case look at the IP logs, download timestamps and login records - anything that shows the customer actually got what they purchased.
Your best bet is always to lead with your strongest evidence rather than drown the reviewer in paperwork. Three strong pieces of paperwork will serve you much better than fifty mediocre ones. Lead with delivery proof or signatures and add any customer messages from your files and then round it out with supporting paperwork that directly proves the customer received their order.
How do government restrictions affect 13.1 liability?
Every once in a while merchants get hit with situations that are completely outside of their control. During the COVID-19 pandemic, a lot of businesses suddenly couldn't give customers what they had already paid for all because of the sudden government restrictions. This created a massive wave ofchargebacksthat caught everyone off guard.
In situations like this merchants need to prove two main points if they want to dispute these chargebacks successfully. They first need to show that a government order actually prevented them from delivering what the customers paid for. They also have to show that they offered fair alternatives to the customers once the problem occurred.
Just claiming that "the government made us close" won't be enough with most card businesses or banks. Business owners need to prove that they actually made an effort to resolve problems with their customers earlier. That could mean that they offered store credit for future purchases or maybe that they proactively contacted customers to reschedule services once the restrictions were lifted.
Documentation matters very much in these situations! Keep copies of any government orders that directly affected the business operations. Save the emails with alternative options that were sent to the affected customers. Business owners should also screenshot the website if notices about temporary closures or service delays were posted. These separate pieces of evidence can decide the outcome during chargeback disputes.
What's the difference between late delivery and non-delivery?
Most merchants get confused about if late deliveries and no-shows should be treated the same way when customers filechargebacksbecause they claim their items never arrived. These two situations can actually qualify forreason code 13.1. Each case's exact facts will matter though.
A package that shows up three weeks late can still trigger a completely valid chargeback. Customers have every right to dispute those charges when their orders arrive way past the normal delivery windows and this especially applies to the promised delivery dates that you just couldn't meet.
You have a strong defense against future chargebacks if customers agree to wait for the delayed orders. Save those email exchanges and customer replies because they become your proof that the buyer accepted the new timeline.
Managing this whole situation requires being open and honest about delivery times right from the start. Have candid conversations with your customers about when they can actually expect their orders and always build in some extra buffer time for possible delays or unexpected little snags. Nobody wants angry customers who thought that their package would show up on Tuesday but they're waiting around until the following week. I see merchants make this exact same mistake over and over - and the entire mess could have been avoided with just some honest and open communication.
Can customers file 13.1 chargebacks for partial shipments?
Partial shipment chargebacks are tough situations that catch merchants off guard. A customer places an order for multiple items. They only get part of what they paid for. Whatever's missing turns into a reason for a chargeback underreason code 13.1and the dispute only covers what never showed up.
A shopper orders three shirts from your store. They receive a package with only two of them inside. That customer can dispute the charge for the third shirt they never received. They can't go after the entire order but just the part that went missing and makes sense from their point of view.
This turns into a total paperwork headache for merchants. Basic tracking info that shows a package got delivered won't cut it anymore. You need proof that you actually shipped each item the customer ordered. That proof includes packing slips that list every product and photos of your packed orders while you put everything together. Some merchants even use extra tracking where each product gets its own scan code.
Partial shipment disputes pop up more than most business owners know. Sometimes a warehouse worker just forgets to put an item in the box. Other times the products can slide around or fall out while the package is in transit. No matter how it happened, you need strong evidence to fight these chargebacks and the job to prove that you sent everything falls completely on you.
How can I prevent 13.1 chargebacks during peak seasons?
You can get ahead of delivery disputes and solve customer problems before they start, instead of rushing around to fix problems after everything goes wrong. Extra customer service staff during busy periods and proactive delay notifications both help to build long-term customer loyalty and satisfaction.
One strategy that tends to work well is to make small adjustments to the fulfillment process instead of rushing to undo the commitments you've already made to customers. Pushing delivery estimates out a bit may seem too careful - but this actually gives you the extra time you need to beat customer expectations instead of always missing them. Premium shipping options for the time-sensitive orders will cost more.
These proactive strategies pay for themselves quickly through fewer chargebacks and customers who stay because they trust that your business delivers on what it says it will. Reliable fulfillment processes combined with proactive communication and responsive customer service create a system that works well even during the busiest peak seasons. Tools and support make all the difference as you turn these strategies into smooth, steady operations that improve your business.
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