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We have our iATS Payment Settings failure count settings set to 3. In general this causes a failed donation to run for 2 consecutive days after the initial failed attempt. This would be 3 failed attempts in total. After the third failed attempt, Civi sets the next scheduled date to the following month.

However, if the transaction fails with a REJ:25 Card lost or stolen code, the transaction does not attempt to re-run the transaction at all set the next scheduled date to the following month.

Is this a core feature of civi or is this a bug in our set up?

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That's intentional. If the Card is lost or stolen REJ: 25 - you don't want to be transacting it as it can result in charge backs (and even fines). So the idea is we push the next_scheduled_date one month into the future and give you a chance to connect with the donor to update their card details. A REJ:15 is often a temporary problem so that one we would try again tomorrow [as you indicated in your iATS Payments Settings].

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