Discover Chargeback Reason Code AP: Services

Table of Contents

1. What is Discover chargeback reason code AP?
2. What causes code AP chargebacks?
3. What's the time limit to respond to code AP chargebacks?
4. How can merchants fight code AP chargebacks?
5. How can merchants prevent code AP chargebacks?
6. About Discover chargeback reason codes

Merchants who receive a chargeback for a transaction placed with a Discover card may encounter reason code AP, which indicates an improperly authorized 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 AP may be able to represent the transaction and reverse the chargeback with the right compelling evidence.

What is Discover chargeback reason code AP?

Discover chargeback reason code AP falls under the “Services” category. The shorthand description is “Recurring Payments.” This reason code is used when a cardholder claims that they are being charged for a recurring transaction that they had previously canceled.

Recurring billing transactions can be a frequent source of conflict and disputes for subscription-based merchants and their customers. No matter which party is actually at fault, these situations often lead to chargebacks.

Customers who feel that the merchant has ignored their request to cancel a recurring payment will often go directly to their bank to remedy the situation, believing that there is no point in trying to resolve things with an unresponsive merchant.

What causes code AP chargebacks?

Code AP chargebacks are often caused by a merchant failing to process a cancellation request from a customer or by a customer forgetting to cancel a subscription before the payment date and filing a false dispute with their bank.

When these chargebacks are legitimate, merchant error is usually the cause. One example would be when a customer sends an email or submits a form to request cancellation of a subscription or service and the merchant neglects to process the request on time, charging them again after they canceled.

These chargebacks can also occur when a merchant processes a transaction after the cardholder closes their account, or when they raise the price on a recurring payment without adequately notifying the customer ahead of time.

However, these chargebacks are not always legitimate and may be used for friendly fraud as well. Customers who do not cancel their subscriptions in accordance with the terms and services agreement they signed with the merchant often dispute the final recurring billing payment. Customers who find it too difficult or confusing to cancel a subscription may give up and go straight to their bank to cancel via dispute instead.

What's the time limit to respond to code AP chargebacks?

The acquirer or merchant has 30 days to respond to a chargeback filed under reason code AP.

How can merchants fight code AP chargebacks?

Merchants can fight code AP chargebacks if they have evidence that the customer didn't request cancellation in accordance with the terms they agreed to.

Your chargeback response may include the following items:

• Proof that the cardholder did not cancel the recurring payments in accordance with the terms of the policy they agreed to.
• Proof that the cardholder did not cancel the recurring payments at least 15 calendar days prior to the day the disputed transaction was posted.
• Copies of your terms and conditions and any payment plan agreements signed by the customer that confirms your right to charge the customer for the disputed amount.
• Proof that the customer continued to use the service after the date they claimed they canceled.

How can merchants prevent code AP chargebacks?

Merchants can prevent code AP chargebacks by processing cancellation requests promptly, making it easy for customers to cancel, and notifying customers each time a recurring charge is about to be processed, giving them the opportunity to cancel beforehand.

Some merchants deliberately make it hard for customers to cancel subscriptions—this is a terrible idea that often leads to chargebacks.

The easier you make it for customers to cancel, the less chance there is they’ll end up filing a dispute. They may even resubscribe someday!

The following best practices can help you avoid this kind of chargeback:

• When a customer cancels a subscription, process the request immediately and do not charge them again.
• Offer a no-strings-attached cancellation policy.
• When you must raise the price of a subscription or any other recurring payments, notify the customer ahead of time in accordance with the operating rules of the card network.
• Don’t process recurring payments prematurely.
• Send advance notice and reminders of any upcoming billings via the customer’s preferred contact method.

About Discover 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 if 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, Discover specifies 26 reason codes under the categories of Fraud, Not Classified, Authorization, Expired, Processing Errors, Services, and Dispute Compliance. Most of Discover’s reason codes are a two-letter abbreviation of the dispute description.

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.

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