Merchants who receive a chargeback for a transaction placed with an American Express card may encounter reason code C18, which indicates a disputed transaction that the cardholder does not believe they should be responsible for paying. The actual underlying cause of this chargeback is usually either friendly fraud or merchant error. Merchants who believe they have received an invalid chargeback under reason code C18 may be able to represent the transaction and reverse the chargeback with the right compelling evidence.
What is American Express Chargeback Reason Code C18?
American Express chargeback reason code C18 falls under the “Card Member Disputes” category. The shorthand description is “’No Show’ or CARDeposit Canceled.”
This reason code means that the cardholder claims that they were billed for lodging services that they had already canceled.
CARDeposit is a long-running American Express program that allows travelers to place a single deposit to cover various travel and lodging-related expenses, with a relatively painless cancellation and refund policy. While online travel companies and the increasing prevalence of electronic payments have made some of CARDeposit’s features less unique than they were decades ago when it was first launched, the program is still in use, and merchants who submit a CARDeposit charge that was canceled in accordance with American Express’s policies are subject to this chargeback.
Most hospitality merchants have a policy where the customer is charged a “no show” fee if they don’t check in at the appointed time or ask to change their reservation date within a certain amount of days before their scheduled check-in. This chargeback reason code can also be used when such merchants charge a “no show” fee inappropriately.
What Scenarios Might Lead to This Chargeback?
The typical example of this chargeback would be when a customer reserves a room at a hotel using the American Express CARDeposit feature, then decides to cancel it. They submit their cancellation on time and through the appropriate channels, but the merchant charges the deposit anyway. In a case like this, the customer is entitled to a chargeback.
Another example would be when a customer shows up two hours late for a reservation, and the hotel charges them a “no show” fee despite their own policy stating that such fees are only charged if the customer is more than 12 hours late to check in.
Some customers may engage in friendly fraud by trying to obtain this chargeback when they were in violation of the CARDeposit policy or the hotel’s own window of time for no-charge reservation modifications. They may feel that the hotel’s policy is unfair or excessively punitive—even though they agreed to it—and will convince themselves that they are entitled to get their deposit back.
What are the Important Timeframes?
The acquirer and/or merchant have 20 days to respond to this chargeback after it is filed. No special timeframes apply to the cardholder.
How Can Merchants Fight this Chargeback Code?
If the cardholder’s claims are baseless, a merchant can fight and win against this chargeback. The response must include one of the following:
- Documentation that supports the validity of the “no show” fees or CARDeposit charge.
- Proof that a credit which directly offsets the disputed charge has already been processed.
How Can Merchants Prevent this Chargeback Code?
No-shows and late cancellations can be incredibly frustrating for hospitality merchants, but you must always be careful to abide by your own policies and those of programs that you choose to honor, such as CARDeposit.
A flexible cancellation policy and a forgiving attitude toward genuinely extenuating circumstances can help you maintain customer goodwill while helping you avoid chargebacks related to these issues.
The following bits of advice can also serve you well:
- Always inform the cardholder of your cancellation policy at the time of the reservation.
- Log all confirmation and cancellation numbers as required by the CARDeposit programs.
About American Express Chargeback Reason Codes
Reason codes are alphanumeric codes that provide the justification for granting a chargeback. Pursuant to the Fair Credit Billing Act of 1974, cardholders have the right to dispute unauthorized or erroneous charges and issuing banks must reverse a disputed transaction of the cardholder’s claim is valid.
When a cardholder contacts their issuing bank to dispute a transaction and receive a chargeback, the dispute is assigned a reason code that most closely matches the substance of the cardholder’s claims. The reason code provides the merchant and other stakeholders in the dispute with a concise explanation for why a chargeback has been granted.
Each card network—Visa, Mastercard, American Express, and Discover—defines and maintains their own unique set of reason codes, which are applied to disputes by the banks that issue credit and debit cards under their brands.
As both a card network and an issuer, American Express specifies 34 reason codes under the categories of Fraud, Authorization, Processing Errors, Card Member Disputes, and Inquiry/Miscellaneous. Each American Express reason code consists of one or more letters, indicating the category, and a number that identifies the specific dispute reason.
Understanding chargeback reason codes is one of the most essential parts of effective chargeback management. Identifying the chargeback reason code and the evidence required to fight it is the first step in chargeback representment, and analyzing your chargeback reason codes can provide you with insights into what types of disputes are causing you the most trouble. With this information, you can determine the root causes of your chargebacks and take action to prevent them from reoccurring.