diff --git a/packages/core/src/agent/Dispatcher.ts b/packages/core/src/agent/Dispatcher.ts
index 070b2b42ea..4d5eeb5c44 100644
--- a/packages/core/src/agent/Dispatcher.ts
+++ b/packages/core/src/agent/Dispatcher.ts
@@ -10,6 +10,7 @@ import { Lifecycle, scoped } from 'tsyringe'
 import { AgentConfig } from '../agent/AgentConfig'
 import { AriesFrameworkError } from '../error/AriesFrameworkError'
 
+import { ProblemReportMessage } from './../modules/problem-reports/messages/ProblemReportMessage'
 import { EventEmitter } from './EventEmitter'
 import { AgentEventTypes } from './Events'
 import { MessageSender } from './MessageSender'
@@ -45,15 +46,27 @@ class Dispatcher {
     try {
       outboundMessage = await handler.handle(messageContext)
     } catch (error) {
-      this.logger.error(`Error handling message with type ${message.type}`, {
-        message: message.toJSON(),
-        error,
-        senderVerkey: messageContext.senderVerkey,
-        recipientVerkey: messageContext.recipientVerkey,
-        connectionId: messageContext.connection?.id,
-      })
-
-      throw error
+      const problemReportMessage = error.problemReport
+
+      if (problemReportMessage instanceof ProblemReportMessage && messageContext.connection) {
+        problemReportMessage.setThread({
+          threadId: messageContext.message.threadId,
+        })
+        outboundMessage = {
+          payload: problemReportMessage,
+          connection: messageContext.connection,
+        }
+      } else {
+        this.logger.error(`Error handling message with type ${message.type}`, {
+          message: message.toJSON(),
+          error,
+          senderVerkey: messageContext.senderVerkey,
+          recipientVerkey: messageContext.recipientVerkey,
+          connectionId: messageContext.connection?.id,
+        })
+
+        throw error
+      }
     }
 
     if (outboundMessage && isOutboundServiceMessage(outboundMessage)) {
diff --git a/packages/core/src/agent/MessageReceiver.ts b/packages/core/src/agent/MessageReceiver.ts
index 30ec17290e..b5ff07cc0b 100644
--- a/packages/core/src/agent/MessageReceiver.ts
+++ b/packages/core/src/agent/MessageReceiver.ts
@@ -9,21 +9,29 @@ import { Lifecycle, scoped } from 'tsyringe'
 
 import { AriesFrameworkError } from '../error'
 import { ConnectionService } from '../modules/connections/services/ConnectionService'
+import { ProblemReportError, ProblemReportMessage } from '../modules/problem-reports'
 import { JsonTransformer } from '../utils/JsonTransformer'
 import { MessageValidator } from '../utils/MessageValidator'
 import { replaceLegacyDidSovPrefixOnMessage } from '../utils/messageType'
 
+import { CommonMessageType } from './../modules/common/messages/CommonMessageType'
 import { AgentConfig } from './AgentConfig'
 import { Dispatcher } from './Dispatcher'
 import { EnvelopeService } from './EnvelopeService'
+import { MessageSender } from './MessageSender'
 import { TransportService } from './TransportService'
+import { createOutboundMessage } from './helpers'
 import { InboundMessageContext } from './models/InboundMessageContext'
 
+export enum ProblemReportReason {
+  MessageParseFailure = 'message-parse-failure',
+}
 @scoped(Lifecycle.ContainerScoped)
 export class MessageReceiver {
   private config: AgentConfig
   private envelopeService: EnvelopeService
   private transportService: TransportService
+  private messageSender: MessageSender
   private connectionService: ConnectionService
   private dispatcher: Dispatcher
   private logger: Logger
@@ -33,12 +41,14 @@ export class MessageReceiver {
     config: AgentConfig,
     envelopeService: EnvelopeService,
     transportService: TransportService,
+    messageSender: MessageSender,
     connectionService: ConnectionService,
     dispatcher: Dispatcher
   ) {
     this.config = config
     this.envelopeService = envelopeService
     this.transportService = transportService
+    this.messageSender = messageSender
     this.connectionService = connectionService
     this.dispatcher = dispatcher
     this.logger = this.config.logger
@@ -84,15 +94,12 @@ export class MessageReceiver {
       unpackedMessage.message
     )
 
-    const message = await this.transformMessage(unpackedMessage)
+    let message: AgentMessage | null = null
     try {
-      await MessageValidator.validate(message)
+      message = await this.transformMessage(unpackedMessage)
+      await this.validateMessage(message)
     } catch (error) {
-      this.logger.error(`Error validating message ${message.type}`, {
-        errors: error,
-        message: message.toJSON(),
-      })
-
+      if (connection) await this.sendProblemReportMessage(error.message, connection, unpackedMessage)
       throw error
     }
 
@@ -174,7 +181,9 @@ export class MessageReceiver {
     const MessageClass = this.dispatcher.getMessageClassForType(messageType)
 
     if (!MessageClass) {
-      throw new AriesFrameworkError(`No message class found for message type "${messageType}"`)
+      throw new ProblemReportError(`No message class found for message type "${messageType}"`, {
+        problemCode: ProblemReportReason.MessageParseFailure,
+      })
     }
 
     // Cast the plain JSON object to specific instance of Message extended from AgentMessage
@@ -182,4 +191,51 @@ export class MessageReceiver {
 
     return message
   }
+
+  /**
+   * Validate an AgentMessage instance.
+   * @param message agent message to validate
+   */
+  private async validateMessage(message: AgentMessage) {
+    try {
+      await MessageValidator.validate(message)
+    } catch (error) {
+      this.logger.error(`Error validating message ${message.type}`, {
+        errors: error,
+        message: message.toJSON(),
+      })
+      throw new ProblemReportError(`Error validating message ${message.type}`, {
+        problemCode: ProblemReportReason.MessageParseFailure,
+      })
+    }
+  }
+
+  /**
+   * Send the problem report message (https://didcomm.org/notification/1.0/problem-report) to the recipient.
+   * @param message error message to send
+   * @param connection connection to send the message to
+   * @param unpackedMessage received unpackedMessage
+   */
+  private async sendProblemReportMessage(
+    message: string,
+    connection: ConnectionRecord,
+    unpackedMessage: UnpackedMessageContext
+  ) {
+    if (unpackedMessage.message['@type'] === CommonMessageType.ProblemReport) {
+      throw new AriesFrameworkError(message)
+    }
+    const problemReportMessage = new ProblemReportMessage({
+      description: {
+        en: message,
+        code: ProblemReportReason.MessageParseFailure,
+      },
+    })
+    problemReportMessage.setThread({
+      threadId: unpackedMessage.message['@id'],
+    })
+    const outboundMessage = createOutboundMessage(connection, problemReportMessage)
+    if (outboundMessage) {
+      await this.messageSender.sendMessage(outboundMessage)
+    }
+  }
 }
diff --git a/packages/core/src/decorators/signature/SignatureDecoratorUtils.test.ts b/packages/core/src/decorators/signature/SignatureDecoratorUtils.test.ts
index df9b57a013..8f6ee60073 100644
--- a/packages/core/src/decorators/signature/SignatureDecoratorUtils.test.ts
+++ b/packages/core/src/decorators/signature/SignatureDecoratorUtils.test.ts
@@ -76,7 +76,7 @@ describe('Decorators | Signature | SignatureDecoratorUtils', () => {
     try {
       await unpackAndVerifySignatureDecorator(wronglySignedData, wallet)
     } catch (error) {
-      expect(error.message).toEqual('Signature is not valid!')
+      expect(error.message).toEqual('Signature is not valid')
     }
   })
 })
diff --git a/packages/core/src/decorators/signature/SignatureDecoratorUtils.ts b/packages/core/src/decorators/signature/SignatureDecoratorUtils.ts
index 536da0b71e..54a603b10e 100644
--- a/packages/core/src/decorators/signature/SignatureDecoratorUtils.ts
+++ b/packages/core/src/decorators/signature/SignatureDecoratorUtils.ts
@@ -1,6 +1,6 @@
 import type { Wallet } from '../../wallet/Wallet'
 
-import { AriesFrameworkError } from '../../error'
+import { ConnectionProblemReportError, ConnectionProblemReportReason } from '../../modules/connections/errors'
 import { BufferEncoder } from '../../utils/BufferEncoder'
 import { JsonEncoder } from '../../utils/JsonEncoder'
 import { Buffer } from '../../utils/buffer'
@@ -29,7 +29,9 @@ export async function unpackAndVerifySignatureDecorator(
   const isValid = await wallet.verify(signerVerkey, signedData, signature)
 
   if (!isValid) {
-    throw new AriesFrameworkError('Signature is not valid!')
+    throw new ConnectionProblemReportError('Signature is not valid', {
+      problemCode: ConnectionProblemReportReason.RequestProcessingError,
+    })
   }
 
   // TODO: return Connection instance instead of raw json
diff --git a/packages/core/src/modules/common/messages/CommonMessageType.ts b/packages/core/src/modules/common/messages/CommonMessageType.ts
index 0aba02a8dc..d0b36d2d37 100644
--- a/packages/core/src/modules/common/messages/CommonMessageType.ts
+++ b/packages/core/src/modules/common/messages/CommonMessageType.ts
@@ -1,3 +1,4 @@
 export enum CommonMessageType {
   Ack = 'https://didcomm.org/notification/1.0/ack',
+  ProblemReport = 'https://didcomm.org/notification/1.0/problem-report',
 }
diff --git a/packages/core/src/modules/connections/errors/ConnectionProblemReportError.ts b/packages/core/src/modules/connections/errors/ConnectionProblemReportError.ts
new file mode 100644
index 0000000000..d58d1bd14f
--- /dev/null
+++ b/packages/core/src/modules/connections/errors/ConnectionProblemReportError.ts
@@ -0,0 +1,22 @@
+import type { ConnectionProblemReportReason } from '.'
+import type { ProblemReportErrorOptions } from '../../problem-reports'
+
+import { ProblemReportError } from '../../problem-reports'
+import { ConnectionProblemReportMessage } from '../messages'
+
+interface ConnectionProblemReportErrorOptions extends ProblemReportErrorOptions {
+  problemCode: ConnectionProblemReportReason
+}
+export class ConnectionProblemReportError extends ProblemReportError {
+  public problemReport: ConnectionProblemReportMessage
+
+  public constructor(public message: string, { problemCode }: ConnectionProblemReportErrorOptions) {
+    super(message, { problemCode })
+    this.problemReport = new ConnectionProblemReportMessage({
+      description: {
+        en: message,
+        code: problemCode,
+      },
+    })
+  }
+}
diff --git a/packages/core/src/modules/connections/errors/ConnectionProblemReportReason.ts b/packages/core/src/modules/connections/errors/ConnectionProblemReportReason.ts
new file mode 100644
index 0000000000..06f81b83c3
--- /dev/null
+++ b/packages/core/src/modules/connections/errors/ConnectionProblemReportReason.ts
@@ -0,0 +1,11 @@
+/**
+ * Connection error code in RFC 160.
+ *
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0160-connection-protocol/README.md#errors
+ */
+export enum ConnectionProblemReportReason {
+  RequestNotAccepted = 'request_not_accepted',
+  RequestProcessingError = 'request_processing_error',
+  ResponseNotAccepted = 'response_not_accepted',
+  ResponseProcessingError = 'response_processing_error',
+}
diff --git a/packages/core/src/modules/connections/errors/index.ts b/packages/core/src/modules/connections/errors/index.ts
new file mode 100644
index 0000000000..09f2c7a53a
--- /dev/null
+++ b/packages/core/src/modules/connections/errors/index.ts
@@ -0,0 +1,2 @@
+export * from './ConnectionProblemReportError'
+export * from './ConnectionProblemReportReason'
diff --git a/packages/core/src/modules/connections/handlers/ConnectionProblemReportHandler.ts b/packages/core/src/modules/connections/handlers/ConnectionProblemReportHandler.ts
new file mode 100644
index 0000000000..b1b5896017
--- /dev/null
+++ b/packages/core/src/modules/connections/handlers/ConnectionProblemReportHandler.ts
@@ -0,0 +1,17 @@
+import type { Handler, HandlerInboundMessage } from '../../../agent/Handler'
+import type { ConnectionService } from '../services'
+
+import { ConnectionProblemReportMessage } from '../messages'
+
+export class ConnectionProblemReportHandler implements Handler {
+  private connectionService: ConnectionService
+  public supportedMessages = [ConnectionProblemReportMessage]
+
+  public constructor(connectionService: ConnectionService) {
+    this.connectionService = connectionService
+  }
+
+  public async handle(messageContext: HandlerInboundMessage<ConnectionProblemReportHandler>) {
+    await this.connectionService.processProblemReport(messageContext)
+  }
+}
diff --git a/packages/core/src/modules/connections/messages/ConnectionProblemReportMessage.ts b/packages/core/src/modules/connections/messages/ConnectionProblemReportMessage.ts
new file mode 100644
index 0000000000..2f2f747219
--- /dev/null
+++ b/packages/core/src/modules/connections/messages/ConnectionProblemReportMessage.ts
@@ -0,0 +1,24 @@
+import type { ProblemReportMessageOptions } from '../../problem-reports/messages/ProblemReportMessage'
+
+import { Equals } from 'class-validator'
+
+import { ProblemReportMessage } from '../../problem-reports/messages/ProblemReportMessage'
+
+export type ConnectionProblemReportMessageOptions = ProblemReportMessageOptions
+
+/**
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0035-report-problem/README.md
+ */
+export class ConnectionProblemReportMessage extends ProblemReportMessage {
+  /**
+   * Create new ConnectionProblemReportMessage instance.
+   * @param options
+   */
+  public constructor(options: ConnectionProblemReportMessageOptions) {
+    super(options)
+  }
+
+  @Equals(ConnectionProblemReportMessage.type)
+  public readonly type = ConnectionProblemReportMessage.type
+  public static readonly type = 'https://didcomm.org/connection/1.0/problem-report'
+}
diff --git a/packages/core/src/modules/connections/messages/index.ts b/packages/core/src/modules/connections/messages/index.ts
index 6cb3241a61..2c3e27b80d 100644
--- a/packages/core/src/modules/connections/messages/index.ts
+++ b/packages/core/src/modules/connections/messages/index.ts
@@ -3,3 +3,4 @@ export * from './ConnectionRequestMessage'
 export * from './ConnectionResponseMessage'
 export * from './TrustPingMessage'
 export * from './TrustPingResponseMessage'
+export * from './ConnectionProblemReportMessage'
diff --git a/packages/core/src/modules/connections/models/ConnectionState.ts b/packages/core/src/modules/connections/models/ConnectionState.ts
index 15071c2623..5b8c79ca48 100644
--- a/packages/core/src/modules/connections/models/ConnectionState.ts
+++ b/packages/core/src/modules/connections/models/ConnectionState.ts
@@ -10,4 +10,5 @@ export enum ConnectionState {
   Requested = 'requested',
   Responded = 'responded',
   Complete = 'complete',
+  None = 'none',
 }
diff --git a/packages/core/src/modules/connections/repository/ConnectionRecord.ts b/packages/core/src/modules/connections/repository/ConnectionRecord.ts
index bb56d18ed8..da0187197f 100644
--- a/packages/core/src/modules/connections/repository/ConnectionRecord.ts
+++ b/packages/core/src/modules/connections/repository/ConnectionRecord.ts
@@ -29,6 +29,7 @@ export interface ConnectionRecordProps {
   imageUrl?: string
   multiUseInvitation: boolean
   mediatorId?: string
+  errorMsg?: string
 }
 
 export type CustomConnectionTags = TagsBase
@@ -68,6 +69,7 @@ export class ConnectionRecord
 
   public threadId?: string
   public mediatorId?: string
+  public errorMsg?: string
 
   public static readonly type = 'ConnectionRecord'
   public readonly type = ConnectionRecord.type
@@ -94,6 +96,7 @@ export class ConnectionRecord
       this.imageUrl = props.imageUrl
       this.multiUseInvitation = props.multiUseInvitation
       this.mediatorId = props.mediatorId
+      this.errorMsg = props.errorMsg
     }
   }
 
diff --git a/packages/core/src/modules/connections/services/ConnectionService.ts b/packages/core/src/modules/connections/services/ConnectionService.ts
index 333def2a95..cf284df513 100644
--- a/packages/core/src/modules/connections/services/ConnectionService.ts
+++ b/packages/core/src/modules/connections/services/ConnectionService.ts
@@ -3,6 +3,7 @@ import type { InboundMessageContext } from '../../../agent/models/InboundMessage
 import type { Logger } from '../../../logger'
 import type { AckMessage } from '../../common'
 import type { ConnectionStateChangedEvent } from '../ConnectionEvents'
+import type { ConnectionProblemReportMessage } from '../messages'
 import type { CustomConnectionTags } from '../repository/ConnectionRecord'
 
 import { firstValueFrom, ReplaySubject } from 'rxjs'
@@ -18,6 +19,7 @@ import { JsonTransformer } from '../../../utils/JsonTransformer'
 import { MessageValidator } from '../../../utils/MessageValidator'
 import { Wallet } from '../../../wallet/Wallet'
 import { ConnectionEventTypes } from '../ConnectionEvents'
+import { ConnectionProblemReportError, ConnectionProblemReportReason } from '../errors'
 import {
   ConnectionInvitationMessage,
   ConnectionRequestMessage,
@@ -81,7 +83,6 @@ export class ConnectionService {
       autoAcceptConnection: config?.autoAcceptConnection,
       multiUseInvitation: config.multiUseInvitation ?? false,
     })
-
     const { didDoc } = connectionRecord
     const [service] = didDoc.didCommServices
     const invitation = new ConnectionInvitationMessage({
@@ -213,7 +214,9 @@ export class ConnectionService {
     connectionRecord.assertRole(ConnectionRole.Inviter)
 
     if (!message.connection.didDoc) {
-      throw new AriesFrameworkError('Public DIDs are not supported yet')
+      throw new ConnectionProblemReportError('Public DIDs are not supported yet', {
+        problemCode: ConnectionProblemReportReason.RequestNotAccepted,
+      })
     }
 
     // Create new connection if using a multi use invitation
@@ -330,8 +333,9 @@ export class ConnectionService {
     const signerVerkey = message.connectionSig.signer
     const invitationKey = connectionRecord.getTags().invitationKey
     if (signerVerkey !== invitationKey) {
-      throw new AriesFrameworkError(
-        `Connection object in connection response message is not signed with same key as recipient key in invitation expected='${invitationKey}' received='${signerVerkey}'`
+      throw new ConnectionProblemReportError(
+        `Connection object in connection response message is not signed with same key as recipient key in invitation expected='${invitationKey}' received='${signerVerkey}'`,
+        { problemCode: ConnectionProblemReportReason.ResponseNotAccepted }
       )
     }
 
@@ -403,6 +407,37 @@ export class ConnectionService {
     return connection
   }
 
+  /**
+   * Process a received {@link ProblemReportMessage}.
+   *
+   * @param messageContext The message context containing a connection problem report message
+   * @returns connection record associated with the connection problem report message
+   *
+   */
+  public async processProblemReport(
+    messageContext: InboundMessageContext<ConnectionProblemReportMessage>
+  ): Promise<ConnectionRecord> {
+    const { message: connectionProblemReportMessage, recipientVerkey } = messageContext
+
+    this.logger.debug(`Processing connection problem report for verkey ${recipientVerkey}`)
+
+    if (!recipientVerkey) {
+      throw new AriesFrameworkError('Unable to process connection problem report without recipientVerkey')
+    }
+
+    const connectionRecord = await this.findByVerkey(recipientVerkey)
+
+    if (!connectionRecord) {
+      throw new AriesFrameworkError(
+        `Unable to process connection problem report: connection for verkey ${recipientVerkey} not found`
+      )
+    }
+
+    connectionRecord.errorMsg = `${connectionProblemReportMessage.description.code} : ${connectionProblemReportMessage.description.en}`
+    await this.updateState(connectionRecord, ConnectionState.None)
+    return connectionRecord
+  }
+
   /**
    * Assert that an inbound message either has a connection associated with it,
    * or has everything correctly set up for connection-less exchange.
diff --git a/packages/core/src/modules/credentials/CredentialState.ts b/packages/core/src/modules/credentials/CredentialState.ts
index 9e6c4c6000..dc306efb57 100644
--- a/packages/core/src/modules/credentials/CredentialState.ts
+++ b/packages/core/src/modules/credentials/CredentialState.ts
@@ -14,4 +14,5 @@ export enum CredentialState {
   CredentialIssued = 'credential-issued',
   CredentialReceived = 'credential-received',
   Done = 'done',
+  None = 'none',
 }
diff --git a/packages/core/src/modules/credentials/CredentialsModule.ts b/packages/core/src/modules/credentials/CredentialsModule.ts
index 5e1fab906e..dc779afe23 100644
--- a/packages/core/src/modules/credentials/CredentialsModule.ts
+++ b/packages/core/src/modules/credentials/CredentialsModule.ts
@@ -16,13 +16,16 @@ import { ConnectionService } from '../connections/services/ConnectionService'
 import { MediationRecipientService } from '../routing'
 
 import { CredentialResponseCoordinator } from './CredentialResponseCoordinator'
+import { CredentialProblemReportReason } from './errors'
 import {
   CredentialAckHandler,
   IssueCredentialHandler,
   OfferCredentialHandler,
   ProposeCredentialHandler,
   RequestCredentialHandler,
+  CredentialProblemReportHandler,
 } from './handlers'
+import { CredentialProblemReportMessage } from './messages'
 import { CredentialService } from './services'
 
 @scoped(Lifecycle.ContainerScoped)
@@ -441,6 +444,33 @@ export class CredentialsModule {
     return credentialRecord
   }
 
+  /**
+   * Send problem report message for a credential record
+   * @param credentialRecordId  The id of the credential record for which to send problem report
+   * @param message message to send
+   * @returns credential record associated with credential problem report message
+   */
+  public async sendProblemReport(credentialRecordId: string, message: string) {
+    const record = await this.credentialService.getById(credentialRecordId)
+    if (!record.connectionId) {
+      throw new AriesFrameworkError(`No connectionId found for credential record '${record.id}'.`)
+    }
+    const connection = await this.connectionService.getById(record.connectionId)
+    const credentialProblemReportMessage = new CredentialProblemReportMessage({
+      description: {
+        en: message,
+        code: CredentialProblemReportReason.IssuanceAbandoned,
+      },
+    })
+    credentialProblemReportMessage.setThread({
+      threadId: record.threadId,
+    })
+    const outboundMessage = createOutboundMessage(connection, credentialProblemReportMessage)
+    await this.messageSender.sendMessage(outboundMessage)
+
+    return record
+  }
+
   /**
    * Retrieve all credential records
    *
@@ -500,5 +530,6 @@ export class CredentialsModule {
       new IssueCredentialHandler(this.credentialService, this.agentConfig, this.credentialResponseCoordinator)
     )
     dispatcher.registerHandler(new CredentialAckHandler(this.credentialService))
+    dispatcher.registerHandler(new CredentialProblemReportHandler(this.credentialService))
   }
 }
diff --git a/packages/core/src/modules/credentials/__tests__/CredentialService.test.ts b/packages/core/src/modules/credentials/__tests__/CredentialService.test.ts
index f0ca2f12fb..c7eba091c2 100644
--- a/packages/core/src/modules/credentials/__tests__/CredentialService.test.ts
+++ b/packages/core/src/modules/credentials/__tests__/CredentialService.test.ts
@@ -20,6 +20,7 @@ import { IndyLedgerService } from '../../ledger/services'
 import { CredentialEventTypes } from '../CredentialEvents'
 import { CredentialState } from '../CredentialState'
 import { CredentialUtils } from '../CredentialUtils'
+import { CredentialProblemReportReason } from '../errors/CredentialProblemReportReason'
 import {
   CredentialAckMessage,
   CredentialPreview,
@@ -34,6 +35,7 @@ import { CredentialRecord } from '../repository/CredentialRecord'
 import { CredentialRepository } from '../repository/CredentialRepository'
 import { CredentialService } from '../services'
 
+import { CredentialProblemReportMessage } from './../messages/CredentialProblemReportMessage'
 import { credDef, credOffer, credReq } from './fixtures'
 
 // Mock classes
@@ -922,6 +924,109 @@ describe('CredentialService', () => {
     })
   })
 
+  describe('createProblemReport', () => {
+    const threadId = 'fd9c5ddb-ec11-4acd-bc32-540736249746'
+    let credential: CredentialRecord
+
+    beforeEach(() => {
+      credential = mockCredentialRecord({
+        state: CredentialState.OfferReceived,
+        threadId,
+        connectionId: 'b1e2f039-aa39-40be-8643-6ce2797b5190',
+      })
+    })
+
+    test('returns problem report message base once get error', async () => {
+      // given
+      mockFunction(credentialRepository.getById).mockReturnValue(Promise.resolve(credential))
+
+      // when
+      const credentialProblemReportMessage = await new CredentialProblemReportMessage({
+        description: {
+          en: 'Indy error',
+          code: CredentialProblemReportReason.IssuanceAbandoned,
+        },
+      })
+
+      credentialProblemReportMessage.setThread({ threadId })
+      // then
+      expect(credentialProblemReportMessage.toJSON()).toMatchObject({
+        '@id': expect.any(String),
+        '@type': 'https://didcomm.org/issue-credential/1.0/problem-report',
+        '~thread': {
+          thid: 'fd9c5ddb-ec11-4acd-bc32-540736249746',
+        },
+      })
+    })
+  })
+
+  describe('processProblemReport', () => {
+    let credential: CredentialRecord
+    let messageContext: InboundMessageContext<CredentialProblemReportMessage>
+
+    beforeEach(() => {
+      credential = mockCredentialRecord({
+        state: CredentialState.OfferReceived,
+      })
+
+      const credentialProblemReportMessage = new CredentialProblemReportMessage({
+        description: {
+          en: 'Indy error',
+          code: CredentialProblemReportReason.IssuanceAbandoned,
+        },
+      })
+      credentialProblemReportMessage.setThread({ threadId: 'somethreadid' })
+      messageContext = new InboundMessageContext(credentialProblemReportMessage, {
+        connection,
+      })
+    })
+
+    test(`updates state to ${CredentialState.None} and returns credential record`, async () => {
+      const repositoryUpdateSpy = jest.spyOn(credentialRepository, 'update')
+
+      // given
+      mockFunction(credentialRepository.getSingleByQuery).mockReturnValue(Promise.resolve(credential))
+
+      // when
+      const returnedCredentialRecord = await credentialService.processProblemReport(messageContext)
+
+      // then
+      const expectedCredentialRecord = {
+        state: CredentialState.None,
+      }
+      expect(credentialRepository.getSingleByQuery).toHaveBeenNthCalledWith(1, {
+        threadId: 'somethreadid',
+        connectionId: connection.id,
+      })
+      expect(repositoryUpdateSpy).toHaveBeenCalledTimes(1)
+      const [[updatedCredentialRecord]] = repositoryUpdateSpy.mock.calls
+      expect(updatedCredentialRecord).toMatchObject(expectedCredentialRecord)
+      expect(returnedCredentialRecord).toMatchObject(expectedCredentialRecord)
+    })
+
+    test(`emits stateChange event from ${CredentialState.OfferReceived} to ${CredentialState.None}`, async () => {
+      const eventListenerMock = jest.fn()
+      eventEmitter.on<CredentialStateChangedEvent>(CredentialEventTypes.CredentialStateChanged, eventListenerMock)
+
+      // given
+      mockFunction(credentialRepository.getSingleByQuery).mockReturnValue(Promise.resolve(credential))
+
+      // when
+      await credentialService.processProblemReport(messageContext)
+
+      // then
+      expect(eventListenerMock).toHaveBeenCalledWith({
+        type: 'CredentialStateChanged',
+        payload: {
+          previousState: CredentialState.OfferReceived,
+          credentialRecord: expect.objectContaining({
+            state: CredentialState.None,
+          }),
+        },
+      })
+    })
+  })
+
   describe('repository methods', () => {
     it('getById should return value from credentialRepository.getById', async () => {
       const expected = mockCredentialRecord()
diff --git a/packages/core/src/modules/credentials/errors/CredentialProblemReportError.ts b/packages/core/src/modules/credentials/errors/CredentialProblemReportError.ts
new file mode 100644
index 0000000000..4b10c3fa2c
--- /dev/null
+++ b/packages/core/src/modules/credentials/errors/CredentialProblemReportError.ts
@@ -0,0 +1,23 @@
+import type { ProblemReportErrorOptions } from '../../problem-reports'
+import type { CredentialProblemReportReason } from './CredentialProblemReportReason'
+
+import { CredentialProblemReportMessage } from '../messages'
+
+import { ProblemReportError } from './../../problem-reports/errors/ProblemReportError'
+
+interface CredentialProblemReportErrorOptions extends ProblemReportErrorOptions {
+  problemCode: CredentialProblemReportReason
+}
+export class CredentialProblemReportError extends ProblemReportError {
+  public problemReport: CredentialProblemReportMessage
+
+  public constructor(message: string, { problemCode }: CredentialProblemReportErrorOptions) {
+    super(message, { problemCode })
+    this.problemReport = new CredentialProblemReportMessage({
+      description: {
+        en: message,
+        code: problemCode,
+      },
+    })
+  }
+}
diff --git a/packages/core/src/modules/credentials/errors/CredentialProblemReportReason.ts b/packages/core/src/modules/credentials/errors/CredentialProblemReportReason.ts
new file mode 100644
index 0000000000..cf8bdb95bf
--- /dev/null
+++ b/packages/core/src/modules/credentials/errors/CredentialProblemReportReason.ts
@@ -0,0 +1,8 @@
+/**
+ * Credential error code in RFC 0036.
+ *
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0036-issue-credential/README.md
+ */
+export enum CredentialProblemReportReason {
+  IssuanceAbandoned = 'issuance-abandoned',
+}
diff --git a/packages/core/src/modules/credentials/errors/index.ts b/packages/core/src/modules/credentials/errors/index.ts
new file mode 100644
index 0000000000..3d5c266524
--- /dev/null
+++ b/packages/core/src/modules/credentials/errors/index.ts
@@ -0,0 +1,2 @@
+export * from './CredentialProblemReportError'
+export * from './CredentialProblemReportReason'
diff --git a/packages/core/src/modules/credentials/handlers/CredentialProblemReportHandler.ts b/packages/core/src/modules/credentials/handlers/CredentialProblemReportHandler.ts
new file mode 100644
index 0000000000..b89a620d07
--- /dev/null
+++ b/packages/core/src/modules/credentials/handlers/CredentialProblemReportHandler.ts
@@ -0,0 +1,17 @@
+import type { Handler, HandlerInboundMessage } from '../../../agent/Handler'
+import type { CredentialService } from '../services'
+
+import { CredentialProblemReportMessage } from '../messages'
+
+export class CredentialProblemReportHandler implements Handler {
+  private credentialService: CredentialService
+  public supportedMessages = [CredentialProblemReportMessage]
+
+  public constructor(credentialService: CredentialService) {
+    this.credentialService = credentialService
+  }
+
+  public async handle(messageContext: HandlerInboundMessage<CredentialProblemReportHandler>) {
+    await this.credentialService.processProblemReport(messageContext)
+  }
+}
diff --git a/packages/core/src/modules/credentials/handlers/RequestCredentialHandler.ts b/packages/core/src/modules/credentials/handlers/RequestCredentialHandler.ts
index c4a4d449c4..7043ddaea1 100644
--- a/packages/core/src/modules/credentials/handlers/RequestCredentialHandler.ts
+++ b/packages/core/src/modules/credentials/handlers/RequestCredentialHandler.ts
@@ -39,7 +39,6 @@ export class RequestCredentialHandler implements Handler {
     )
 
     const { message, credentialRecord } = await this.credentialService.createCredential(record)
-
     if (messageContext.connection) {
       return createOutboundMessage(messageContext.connection, message)
     } else if (credentialRecord.requestMessage?.service && credentialRecord.offerMessage?.service) {
@@ -57,7 +56,6 @@ export class RequestCredentialHandler implements Handler {
         senderKey: ourService.recipientKeys[0],
       })
     }
-
     this.agentConfig.logger.error(`Could not automatically create credential request`)
   }
 }
diff --git a/packages/core/src/modules/credentials/handlers/index.ts b/packages/core/src/modules/credentials/handlers/index.ts
index fefbf8d9ad..6f732d6413 100644
--- a/packages/core/src/modules/credentials/handlers/index.ts
+++ b/packages/core/src/modules/credentials/handlers/index.ts
@@ -3,3 +3,4 @@ export * from './IssueCredentialHandler'
 export * from './OfferCredentialHandler'
 export * from './ProposeCredentialHandler'
 export * from './RequestCredentialHandler'
+export * from './CredentialProblemReportHandler'
diff --git a/packages/core/src/modules/credentials/messages/CredentialProblemReportMessage.ts b/packages/core/src/modules/credentials/messages/CredentialProblemReportMessage.ts
new file mode 100644
index 0000000000..2ceec3d788
--- /dev/null
+++ b/packages/core/src/modules/credentials/messages/CredentialProblemReportMessage.ts
@@ -0,0 +1,24 @@
+import type { ProblemReportMessageOptions } from '../../problem-reports/messages/ProblemReportMessage'
+
+import { Equals } from 'class-validator'
+
+import { ProblemReportMessage } from '../../problem-reports/messages/ProblemReportMessage'
+
+export type CredentialProblemReportMessageOptions = ProblemReportMessageOptions
+
+/**
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0035-report-problem/README.md
+ */
+export class CredentialProblemReportMessage extends ProblemReportMessage {
+  /**
+   * Create new CredentialProblemReportMessage instance.
+   * @param options
+   */
+  public constructor(options: CredentialProblemReportMessageOptions) {
+    super(options)
+  }
+
+  @Equals(CredentialProblemReportMessage.type)
+  public readonly type = CredentialProblemReportMessage.type
+  public static readonly type = 'https://didcomm.org/issue-credential/1.0/problem-report'
+}
diff --git a/packages/core/src/modules/credentials/messages/index.ts b/packages/core/src/modules/credentials/messages/index.ts
index 2979876a4a..60e1acf335 100644
--- a/packages/core/src/modules/credentials/messages/index.ts
+++ b/packages/core/src/modules/credentials/messages/index.ts
@@ -4,3 +4,4 @@ export * from './RequestCredentialMessage'
 export * from './IssueCredentialMessage'
 export * from './OfferCredentialMessage'
 export * from './ProposeCredentialMessage'
+export * from './CredentialProblemReportMessage'
diff --git a/packages/core/src/modules/credentials/repository/CredentialRecord.ts b/packages/core/src/modules/credentials/repository/CredentialRecord.ts
index 159a854469..ee35a523bd 100644
--- a/packages/core/src/modules/credentials/repository/CredentialRecord.ts
+++ b/packages/core/src/modules/credentials/repository/CredentialRecord.ts
@@ -33,6 +33,7 @@ export interface CredentialRecordProps {
   credentialAttributes?: CredentialPreviewAttribute[]
   autoAcceptCredential?: AutoAcceptCredential
   linkedAttachments?: Attachment[]
+  errorMsg?: string
 }
 
 export type CustomCredentialTags = TagsBase
@@ -49,6 +50,7 @@ export class CredentialRecord extends BaseRecord<DefaultCredentialTags, CustomCr
   public credentialId?: string
   public state!: CredentialState
   public autoAcceptCredential?: AutoAcceptCredential
+  public errorMsg?: string
 
   // message data
   @Type(() => ProposeCredentialMessage)
@@ -88,6 +90,7 @@ export class CredentialRecord extends BaseRecord<DefaultCredentialTags, CustomCr
       this.credentialAttributes = props.credentialAttributes
       this.autoAcceptCredential = props.autoAcceptCredential
       this.linkedAttachments = props.linkedAttachments
+      this.errorMsg = props.errorMsg
     }
   }
 
diff --git a/packages/core/src/modules/credentials/services/CredentialService.ts b/packages/core/src/modules/credentials/services/CredentialService.ts
index 8270a33bae..6537c1a266 100644
--- a/packages/core/src/modules/credentials/services/CredentialService.ts
+++ b/packages/core/src/modules/credentials/services/CredentialService.ts
@@ -5,7 +5,7 @@ import type { LinkedAttachment } from '../../../utils/LinkedAttachment'
 import type { ConnectionRecord } from '../../connections'
 import type { AutoAcceptCredential } from '../CredentialAutoAcceptType'
 import type { CredentialStateChangedEvent } from '../CredentialEvents'
-import type { ProposeCredentialMessageOptions } from '../messages'
+import type { CredentialProblemReportMessage, ProposeCredentialMessageOptions } from '../messages'
 import type { CredReqMetadata } from 'indy-sdk'
 
 import { scoped, Lifecycle } from 'tsyringe'
@@ -24,6 +24,7 @@ import { IndyLedgerService } from '../../ledger/services/IndyLedgerService'
 import { CredentialEventTypes } from '../CredentialEvents'
 import { CredentialState } from '../CredentialState'
 import { CredentialUtils } from '../CredentialUtils'
+import { CredentialProblemReportError, CredentialProblemReportReason } from '../errors'
 import {
   INDY_CREDENTIAL_OFFER_ATTACHMENT_ID,
   INDY_CREDENTIAL_REQUEST_ATTACHMENT_ID,
@@ -213,7 +214,6 @@ export class CredentialService {
         },
       })
     }
-
     return credentialRecord
   }
 
@@ -356,8 +356,9 @@ export class CredentialService {
 
     const indyCredentialOffer = credentialOfferMessage.indyCredentialOffer
     if (!indyCredentialOffer) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for credential offer with thread id ${credentialOfferMessage.threadId}`
+      throw new CredentialProblemReportError(
+        `Missing required base64 encoded attachment data for credential offer with thread id ${credentialOfferMessage.threadId}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
@@ -431,8 +432,9 @@ export class CredentialService {
     const credentialOffer = credentialRecord.offerMessage?.indyCredentialOffer
 
     if (!credentialOffer) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for credential offer with thread id ${credentialRecord.threadId}`
+      throw new CredentialProblemReportError(
+        `Missing required base64 encoded attachment data for credential offer with thread id ${credentialRecord.threadId}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
@@ -491,8 +493,9 @@ export class CredentialService {
     const indyCredentialRequest = credentialRequestMessage?.indyCredentialRequest
 
     if (!indyCredentialRequest) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for credential request with thread id ${credentialRequestMessage.threadId}`
+      throw new CredentialProblemReportError(
+        `Missing required base64 encoded attachment data for credential request with thread id ${credentialRequestMessage.threadId}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
@@ -541,24 +544,27 @@ export class CredentialService {
     // Assert credential attributes
     const credentialAttributes = credentialRecord.credentialAttributes
     if (!credentialAttributes) {
-      throw new Error(
-        `Missing required credential attribute values on credential record with id ${credentialRecord.id}`
+      throw new CredentialProblemReportError(
+        `Missing required credential attribute values on credential record with id ${credentialRecord.id}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
     // Assert Indy offer
     const indyCredentialOffer = offerMessage?.indyCredentialOffer
     if (!indyCredentialOffer) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for credential offer with thread id ${credentialRecord.threadId}`
+      throw new CredentialProblemReportError(
+        `Missing required base64 encoded attachment data for credential offer with thread id ${credentialRecord.threadId}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
     // Assert Indy request
     const indyCredentialRequest = requestMessage?.indyCredentialRequest
     if (!indyCredentialRequest) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for credential request with thread id ${credentialRecord.threadId}`
+      throw new CredentialProblemReportError(
+        `Missing required base64 encoded attachment data for credential request with thread id ${credentialRecord.threadId}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
@@ -626,13 +632,17 @@ export class CredentialService {
     const credentialRequestMetadata = credentialRecord.metadata.get<CredReqMetadata>('_internal/indyRequest')
 
     if (!credentialRequestMetadata) {
-      throw new AriesFrameworkError(`Missing required request metadata for credential with id ${credentialRecord.id}`)
+      throw new CredentialProblemReportError(
+        `Missing required request metadata for credential with id ${credentialRecord.id}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
+      )
     }
 
     const indyCredential = issueCredentialMessage.indyCredential
     if (!indyCredential) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for credential with thread id ${issueCredentialMessage.threadId}`
+      throw new CredentialProblemReportError(
+        `Missing required base64 encoded attachment data for credential with thread id ${issueCredentialMessage.threadId}`,
+        { problemCode: CredentialProblemReportReason.IssuanceAbandoned }
       )
     }
 
@@ -713,6 +723,31 @@ export class CredentialService {
     return credentialRecord
   }
 
+  /**
+   * Process a received {@link ProblemReportMessage}.
+   *
+   * @param messageContext The message context containing a credential problem report message
+   * @returns credential record associated with the credential problem report message
+   *
+   */
+  public async processProblemReport(
+    messageContext: InboundMessageContext<CredentialProblemReportMessage>
+  ): Promise<CredentialRecord> {
+    const { message: credentialProblemReportMessage, connection } = messageContext
+
+    this.logger.debug(`Processing problem report with id ${credentialProblemReportMessage.id}`)
+
+    const credentialRecord = await this.getByThreadAndConnectionId(
+      credentialProblemReportMessage.threadId,
+      connection?.id
+    )
+
+    // Update record
+    credentialRecord.errorMsg = `${credentialProblemReportMessage.description.code}: ${credentialProblemReportMessage.description.en}`
+    await this.updateState(credentialRecord, CredentialState.None)
+    return credentialRecord
+  }
+
   /**
    * Retrieve all credential records
    *
diff --git a/packages/core/src/modules/problem-reports/errors/ProblemReportError.ts b/packages/core/src/modules/problem-reports/errors/ProblemReportError.ts
new file mode 100644
index 0000000000..708e694d59
--- /dev/null
+++ b/packages/core/src/modules/problem-reports/errors/ProblemReportError.ts
@@ -0,0 +1,20 @@
+import { AriesFrameworkError } from '../../../error/AriesFrameworkError'
+import { ProblemReportMessage } from '../messages/ProblemReportMessage'
+
+export interface ProblemReportErrorOptions {
+  problemCode: string
+}
+
+export class ProblemReportError extends AriesFrameworkError {
+  public problemReport: ProblemReportMessage
+
+  public constructor(message: string, { problemCode }: ProblemReportErrorOptions) {
+    super(message)
+    this.problemReport = new ProblemReportMessage({
+      description: {
+        en: message,
+        code: problemCode,
+      },
+    })
+  }
+}
diff --git a/packages/core/src/modules/problem-reports/errors/index.ts b/packages/core/src/modules/problem-reports/errors/index.ts
new file mode 100644
index 0000000000..1eb23b7c6b
--- /dev/null
+++ b/packages/core/src/modules/problem-reports/errors/index.ts
@@ -0,0 +1 @@
+export * from './ProblemReportError'
diff --git a/packages/core/src/modules/problem-reports/index.ts b/packages/core/src/modules/problem-reports/index.ts
new file mode 100644
index 0000000000..52cb42ded3
--- /dev/null
+++ b/packages/core/src/modules/problem-reports/index.ts
@@ -0,0 +1,2 @@
+export * from './errors'
+export * from './messages'
diff --git a/packages/core/src/modules/problem-reports/messages/ProblemReportMessage.ts b/packages/core/src/modules/problem-reports/messages/ProblemReportMessage.ts
new file mode 100644
index 0000000000..db62673913
--- /dev/null
+++ b/packages/core/src/modules/problem-reports/messages/ProblemReportMessage.ts
@@ -0,0 +1,122 @@
+// Create a base ProblemReportMessage message class and add it to the messages directory
+import { Expose } from 'class-transformer'
+import { Equals, IsEnum, IsOptional, IsString } from 'class-validator'
+
+import { AgentMessage } from '../../../agent/AgentMessage'
+import { CommonMessageType } from '../../common/messages/CommonMessageType'
+
+export enum WhoRetriesStatus {
+  You = 'YOU',
+  Me = 'ME',
+  Both = 'BOTH',
+  None = 'NONE',
+}
+
+export enum ImpactStatus {
+  Message = 'MESSAGE',
+  Thread = 'THREAD',
+  Connection = 'CONNECTION',
+}
+
+export enum WhereStatus {
+  Cloud = 'CLOUD',
+  Edge = 'EDGE',
+  Wire = 'WIRE',
+  Agency = 'AGENCY',
+}
+
+export enum OtherStatus {
+  You = 'YOU',
+  Me = 'ME',
+  Other = 'OTHER',
+}
+
+export interface DescriptionOptions {
+  en: string
+  code: string
+}
+
+export interface FixHintOptions {
+  en: string
+}
+
+export interface ProblemReportMessageOptions {
+  id?: string
+  description: DescriptionOptions
+  problemItems?: string[]
+  whoRetries?: WhoRetriesStatus
+  fixHint?: FixHintOptions
+  impact?: ImpactStatus
+  where?: WhereStatus
+  noticedTime?: string
+  trackingUri?: string
+  escalationUri?: string
+}
+
+/**
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0035-report-problem/README.md
+ */
+export class ProblemReportMessage extends AgentMessage {
+  /**
+   * Create new ReportProblem instance.
+   * @param options
+   */
+  public constructor(options: ProblemReportMessageOptions) {
+    super()
+
+    if (options) {
+      this.id = options.id || this.generateId()
+      this.description = options.description
+      this.problemItems = options.problemItems
+      this.whoRetries = options.whoRetries
+      this.fixHint = options.fixHint
+      this.impact = options.impact
+      this.where = options.where
+      this.noticedTime = options.noticedTime
+      this.trackingUri = options.trackingUri
+      this.escalationUri = options.escalationUri
+    }
+  }
+
+  @Equals(ProblemReportMessage.type)
+  public readonly type: string = ProblemReportMessage.type
+  public static readonly type: string = CommonMessageType.ProblemReport
+
+  public description!: DescriptionOptions
+
+  @IsOptional()
+  @Expose({ name: 'problem_items' })
+  public problemItems?: string[]
+
+  @IsOptional()
+  @IsEnum(WhoRetriesStatus)
+  @Expose({ name: 'who_retries' })
+  public whoRetries?: WhoRetriesStatus
+
+  @IsOptional()
+  @Expose({ name: 'fix_hint' })
+  public fixHint?: FixHintOptions
+
+  @IsOptional()
+  @IsEnum(WhereStatus)
+  public where?: WhereStatus
+
+  @IsOptional()
+  @IsEnum(ImpactStatus)
+  public impact?: ImpactStatus
+
+  @IsOptional()
+  @IsString()
+  @Expose({ name: 'noticed_time' })
+  public noticedTime?: string
+
+  @IsOptional()
+  @IsString()
+  @Expose({ name: 'tracking_uri' })
+  public trackingUri?: string
+
+  @IsOptional()
+  @IsString()
+  @Expose({ name: 'escalation_uri' })
+  public escalationUri?: string
+}
diff --git a/packages/core/src/modules/problem-reports/messages/index.ts b/packages/core/src/modules/problem-reports/messages/index.ts
new file mode 100644
index 0000000000..57670e5421
--- /dev/null
+++ b/packages/core/src/modules/problem-reports/messages/index.ts
@@ -0,0 +1 @@
+export * from './ProblemReportMessage'
diff --git a/packages/core/src/modules/proofs/ProofState.ts b/packages/core/src/modules/proofs/ProofState.ts
index 73869e80aa..95c32dffaa 100644
--- a/packages/core/src/modules/proofs/ProofState.ts
+++ b/packages/core/src/modules/proofs/ProofState.ts
@@ -12,4 +12,5 @@ export enum ProofState {
   PresentationReceived = 'presentation-received',
   Declined = 'declined',
   Done = 'done',
+  None = 'none',
 }
diff --git a/packages/core/src/modules/proofs/ProofsModule.ts b/packages/core/src/modules/proofs/ProofsModule.ts
index 92e59a4944..2a3b0d395f 100644
--- a/packages/core/src/modules/proofs/ProofsModule.ts
+++ b/packages/core/src/modules/proofs/ProofsModule.ts
@@ -16,12 +16,15 @@ import { ConnectionService } from '../connections/services/ConnectionService'
 import { MediationRecipientService } from '../routing/services/MediationRecipientService'
 
 import { ProofResponseCoordinator } from './ProofResponseCoordinator'
+import { PresentationProblemReportReason } from './errors'
 import {
   ProposePresentationHandler,
   RequestPresentationHandler,
   PresentationAckHandler,
   PresentationHandler,
+  PresentationProblemReportHandler,
 } from './handlers'
+import { PresentationProblemReportMessage } from './messages/PresentationProblemReportMessage'
 import { ProofRequest } from './models/ProofRequest'
 import { ProofService } from './services'
 
@@ -368,6 +371,33 @@ export class ProofsModule {
     return this.proofService.autoSelectCredentialsForProofRequest(retrievedCredentials)
   }
 
+  /**
+   * Send problem report message for a proof record
+   * @param proofRecordId  The id of the proof record for which to send problem report
+   * @param message message to send
+   * @returns proof record associated with the proof problem report message
+   */
+  public async sendProblemReport(proofRecordId: string, message: string) {
+    const record = await this.proofService.getById(proofRecordId)
+    if (!record.connectionId) {
+      throw new AriesFrameworkError(`No connectionId found for proof record '${record.id}'.`)
+    }
+    const connection = await this.connectionService.getById(record.connectionId)
+    const presentationProblemReportMessage = new PresentationProblemReportMessage({
+      description: {
+        en: message,
+        code: PresentationProblemReportReason.abandoned,
+      },
+    })
+    presentationProblemReportMessage.setThread({
+      threadId: record.threadId,
+    })
+    const outboundMessage = createOutboundMessage(connection, presentationProblemReportMessage)
+    await this.messageSender.sendMessage(outboundMessage)
+
+    return record
+  }
+
   /**
    * Retrieve all proof records
    *
@@ -426,6 +456,7 @@ export class ProofsModule {
       new PresentationHandler(this.proofService, this.agentConfig, this.proofResponseCoordinator)
     )
     dispatcher.registerHandler(new PresentationAckHandler(this.proofService))
+    dispatcher.registerHandler(new PresentationProblemReportHandler(this.proofService))
   }
 }
 
diff --git a/packages/core/src/modules/proofs/__tests__/ProofService.test.ts b/packages/core/src/modules/proofs/__tests__/ProofService.test.ts
new file mode 100644
index 0000000000..e7b8f02ea6
--- /dev/null
+++ b/packages/core/src/modules/proofs/__tests__/ProofService.test.ts
@@ -0,0 +1,281 @@
+import type { Wallet } from '../../../wallet/Wallet'
+import type { CredentialRepository } from '../../credentials/repository'
+import type { ProofStateChangedEvent } from '../ProofEvents'
+import type { CustomProofTags } from './../repository/ProofRecord'
+
+import { getAgentConfig, getMockConnection, mockFunction } from '../../../../tests/helpers'
+import { EventEmitter } from '../../../agent/EventEmitter'
+import { InboundMessageContext } from '../../../agent/models/InboundMessageContext'
+import { Attachment, AttachmentData } from '../../../decorators/attachment/Attachment'
+import { ConnectionService, ConnectionState } from '../../connections'
+import { IndyHolderService } from '../../indy/services/IndyHolderService'
+import { IndyLedgerService } from '../../ledger/services'
+import { ProofEventTypes } from '../ProofEvents'
+import { ProofState } from '../ProofState'
+import { PresentationProblemReportReason } from '../errors/PresentationProblemReportReason'
+import { INDY_PROOF_REQUEST_ATTACHMENT_ID } from '../messages'
+import { ProofRecord } from '../repository/ProofRecord'
+import { ProofRepository } from '../repository/ProofRepository'
+import { ProofService } from '../services'
+
+import { IndyVerifierService } from './../../indy/services/IndyVerifierService'
+import { PresentationProblemReportMessage } from './../messages/PresentationProblemReportMessage'
+import { RequestPresentationMessage } from './../messages/RequestPresentationMessage'
+import { credDef } from './fixtures'
+
+// Mock classes
+jest.mock('../repository/ProofRepository')
+jest.mock('../../../modules/ledger/services/IndyLedgerService')
+jest.mock('../../indy/services/IndyHolderService')
+jest.mock('../../indy/services/IndyIssuerService')
+jest.mock('../../indy/services/IndyVerifierService')
+jest.mock('../../connections/services/ConnectionService')
+
+// Mock typed object
+const ProofRepositoryMock = ProofRepository as jest.Mock<ProofRepository>
+const IndyLedgerServiceMock = IndyLedgerService as jest.Mock<IndyLedgerService>
+const IndyHolderServiceMock = IndyHolderService as jest.Mock<IndyHolderService>
+const IndyVerifierServiceMock = IndyVerifierService as jest.Mock<IndyVerifierService>
+const connectionServiceMock = ConnectionService as jest.Mock<ConnectionService>
+
+const connection = getMockConnection({
+  id: '123',
+  state: ConnectionState.Complete,
+})
+
+const requestAttachment = new Attachment({
+  id: INDY_PROOF_REQUEST_ATTACHMENT_ID,
+  mimeType: 'application/json',
+  data: new AttachmentData({
+    base64:
+      'eyJuYW1lIjogIlByb29mIHJlcXVlc3QiLCAibm9uX3Jldm9rZWQiOiB7ImZyb20iOiAxNjQwOTk1MTk5LCAidG8iOiAxNjQwOTk1MTk5fSwgIm5vbmNlIjogIjEiLCAicmVxdWVzdGVkX2F0dHJpYnV0ZXMiOiB7ImFkZGl0aW9uYWxQcm9wMSI6IHsibmFtZSI6ICJmYXZvdXJpdGVEcmluayIsICJub25fcmV2b2tlZCI6IHsiZnJvbSI6IDE2NDA5OTUxOTksICJ0byI6IDE2NDA5OTUxOTl9LCAicmVzdHJpY3Rpb25zIjogW3siY3JlZF9kZWZfaWQiOiAiV2dXeHF6dHJOb29HOTJSWHZ4U1RXdjozOkNMOjIwOnRhZyJ9XX19LCAicmVxdWVzdGVkX3ByZWRpY2F0ZXMiOiB7fSwgInZlcnNpb24iOiAiMS4wIn0=',
+  }),
+})
+
+// A record is deserialized to JSON when it's stored into the storage. We want to simulate this behaviour for `offer`
+// object to test our service would behave correctly. We use type assertion for `offer` attribute to `any`.
+const mockProofRecord = ({
+  state,
+  requestMessage,
+  threadId,
+  connectionId,
+  tags,
+  id,
+}: {
+  state?: ProofState
+  requestMessage?: RequestPresentationMessage
+  tags?: CustomProofTags
+  threadId?: string
+  connectionId?: string
+  id?: string
+} = {}) => {
+  const requestPresentationMessage = new RequestPresentationMessage({
+    comment: 'some comment',
+    requestPresentationAttachments: [requestAttachment],
+  })
+
+  const proofRecord = new ProofRecord({
+    requestMessage,
+    id,
+    state: state || ProofState.RequestSent,
+    threadId: threadId ?? requestPresentationMessage.id,
+    connectionId: connectionId ?? '123',
+    tags,
+  })
+
+  return proofRecord
+}
+
+describe('ProofService', () => {
+  let proofRepository: ProofRepository
+  let proofService: ProofService
+  let ledgerService: IndyLedgerService
+  let wallet: Wallet
+  let indyVerifierService: IndyVerifierService
+  let indyHolderService: IndyHolderService
+  let eventEmitter: EventEmitter
+  let credentialRepository: CredentialRepository
+  let connectionService: ConnectionService
+
+  beforeEach(() => {
+    const agentConfig = getAgentConfig('ProofServiceTest')
+    proofRepository = new ProofRepositoryMock()
+    indyVerifierService = new IndyVerifierServiceMock()
+    indyHolderService = new IndyHolderServiceMock()
+    ledgerService = new IndyLedgerServiceMock()
+    eventEmitter = new EventEmitter(agentConfig)
+    connectionService = new connectionServiceMock()
+
+    proofService = new ProofService(
+      proofRepository,
+      ledgerService,
+      wallet,
+      agentConfig,
+      indyHolderService,
+      indyVerifierService,
+      connectionService,
+      eventEmitter,
+      credentialRepository
+    )
+
+    mockFunction(ledgerService.getCredentialDefinition).mockReturnValue(Promise.resolve(credDef))
+  })
+
+  describe('processProofRequest', () => {
+    let presentationRequest: RequestPresentationMessage
+    let messageContext: InboundMessageContext<RequestPresentationMessage>
+
+    beforeEach(() => {
+      presentationRequest = new RequestPresentationMessage({
+        comment: 'abcd',
+        requestPresentationAttachments: [requestAttachment],
+      })
+      messageContext = new InboundMessageContext(presentationRequest, {
+        connection,
+      })
+    })
+
+    test(`creates and return proof record in ${ProofState.PresentationReceived} state with offer, without thread ID`, async () => {
+      const repositorySaveSpy = jest.spyOn(proofRepository, 'save')
+
+      // when
+      const returnedProofRecord = await proofService.processRequest(messageContext)
+
+      // then
+      const expectedProofRecord = {
+        type: ProofRecord.name,
+        id: expect.any(String),
+        createdAt: expect.any(Date),
+        state: ProofState.RequestReceived,
+        threadId: presentationRequest.id,
+        connectionId: connection.id,
+      }
+      expect(repositorySaveSpy).toHaveBeenCalledTimes(1)
+      const [[createdProofRecord]] = repositorySaveSpy.mock.calls
+      expect(createdProofRecord).toMatchObject(expectedProofRecord)
+      expect(returnedProofRecord).toMatchObject(expectedProofRecord)
+    })
+
+    test(`emits stateChange event with ${ProofState.RequestReceived}`, async () => {
+      const eventListenerMock = jest.fn()
+      eventEmitter.on<ProofStateChangedEvent>(ProofEventTypes.ProofStateChanged, eventListenerMock)
+
+      // when
+      await proofService.processRequest(messageContext)
+
+      // then
+      expect(eventListenerMock).toHaveBeenCalledWith({
+        type: 'ProofStateChanged',
+        payload: {
+          previousState: null,
+          proofRecord: expect.objectContaining({
+            state: ProofState.RequestReceived,
+          }),
+        },
+      })
+    })
+  })
+
+  describe('createProblemReport', () => {
+    const threadId = 'fd9c5ddb-ec11-4acd-bc32-540736249746'
+    let proof: ProofRecord
+
+    beforeEach(() => {
+      proof = mockProofRecord({
+        state: ProofState.RequestReceived,
+        threadId,
+        connectionId: 'b1e2f039-aa39-40be-8643-6ce2797b5190',
+      })
+    })
+
+    test('returns problem report message base once get error', async () => {
+      // given
+      mockFunction(proofRepository.getById).mockReturnValue(Promise.resolve(proof))
+
+      // when
+      const presentationProblemReportMessage = await new PresentationProblemReportMessage({
+        description: {
+          en: 'Indy error',
+          code: PresentationProblemReportReason.abandoned,
+        },
+      })
+
+      presentationProblemReportMessage.setThread({ threadId })
+      // then
+      expect(presentationProblemReportMessage.toJSON()).toMatchObject({
+        '@id': expect.any(String),
+        '@type': 'https://didcomm.org/present-proof/1.0/problem-report',
+        '~thread': {
+          thid: 'fd9c5ddb-ec11-4acd-bc32-540736249746',
+        },
+      })
+    })
+  })
+
+  describe('processProblemReport', () => {
+    let proof: ProofRecord
+    let messageContext: InboundMessageContext<PresentationProblemReportMessage>
+
+    beforeEach(() => {
+      proof = mockProofRecord({
+        state: ProofState.RequestReceived,
+      })
+
+      const presentationProblemReportMessage = new PresentationProblemReportMessage({
+        description: {
+          en: 'Indy error',
+          code: PresentationProblemReportReason.abandoned,
+        },
+      })
+      presentationProblemReportMessage.setThread({ threadId: 'somethreadid' })
+      messageContext = new InboundMessageContext(presentationProblemReportMessage, {
+        connection,
+      })
+    })
+
+    test(`updates state to ${ProofState.None} and returns proof record`, async () => {
+      const repositoryUpdateSpy = jest.spyOn(proofRepository, 'update')
+
+      // given
+      mockFunction(proofRepository.getSingleByQuery).mockReturnValue(Promise.resolve(proof))
+
+      // when
+      const returnedCredentialRecord = await proofService.processProblemReport(messageContext)
+
+      // then
+      const expectedCredentialRecord = {
+        state: ProofState.None,
+      }
+      expect(proofRepository.getSingleByQuery).toHaveBeenNthCalledWith(1, {
+        threadId: 'somethreadid',
+        connectionId: connection.id,
+      })
+      expect(repositoryUpdateSpy).toHaveBeenCalledTimes(1)
+      const [[updatedCredentialRecord]] = repositoryUpdateSpy.mock.calls
+      expect(updatedCredentialRecord).toMatchObject(expectedCredentialRecord)
+      expect(returnedCredentialRecord).toMatchObject(expectedCredentialRecord)
+    })
+
+    test(`emits stateChange event from ${ProofState.RequestReceived} to ${ProofState.None}`, async () => {
+      const eventListenerMock = jest.fn()
+      eventEmitter.on<ProofStateChangedEvent>(ProofEventTypes.ProofStateChanged, eventListenerMock)
+
+      // given
+      mockFunction(proofRepository.getSingleByQuery).mockReturnValue(Promise.resolve(proof))
+
+      // when
+      await proofService.processProblemReport(messageContext)
+
+      // then
+      expect(eventListenerMock).toHaveBeenCalledWith({
+        type: 'ProofStateChanged',
+        payload: {
+          previousState: ProofState.RequestReceived,
+          proofRecord: expect.objectContaining({
+            state: ProofState.None,
+          }),
+        },
+      })
+    })
+  })
+})
diff --git a/packages/core/src/modules/proofs/__tests__/fixtures.ts b/packages/core/src/modules/proofs/__tests__/fixtures.ts
new file mode 100644
index 0000000000..10606073b8
--- /dev/null
+++ b/packages/core/src/modules/proofs/__tests__/fixtures.ts
@@ -0,0 +1,17 @@
+export const credDef = {
+  ver: '1.0',
+  id: 'TL1EaPFCZ8Si5aUrqScBDt:3:CL:16:TAG',
+  schemaId: '16',
+  type: 'CL',
+  tag: 'TAG',
+  value: {
+    primary: {
+      n: '92498022445845202032348897620554299694896009176315493627722439892023558526259875239808280186111059586069456394012963552956574651629517633396592827947162983189649269173220440607665417484696688946624963596710652063849006738050417440697782608643095591808084344059908523401576738321329706597491345875134180790935098782801918369980296355919072827164363500681884641551147645504164254206270541724042784184712124576190438261715948768681331862924634233043594086219221089373455065715714369325926959533971768008691000560918594972006312159600845441063618991760512232714992293187779673708252226326233136573974603552763615191259713',
+      s: '10526250116244590830801226936689232818708299684432892622156345407187391699799320507237066062806731083222465421809988887959680863378202697458984451550048737847231343182195679453915452156726746705017249911605739136361885518044604626564286545453132948801604882107628140153824106426249153436206037648809856342458324897885659120708767794055147846459394129610878181859361616754832462886951623882371283575513182530118220334228417923423365966593298195040550255217053655606887026300020680355874881473255854564974899509540795154002250551880061649183753819902391970912501350100175974791776321455551753882483918632271326727061054',
+      r: [Object],
+      rctxt:
+        '46370806529776888197599056685386177334629311939451963919411093310852010284763705864375085256873240323432329015015526097014834809926159013231804170844321552080493355339505872140068998254185756917091385820365193200970156007391350745837300010513687490459142965515562285631984769068796922482977754955668569724352923519618227464510753980134744424528043503232724934196990461197793822566137436901258663918660818511283047475389958180983391173176526879694302021471636017119966755980327241734084462963412467297412455580500138233383229217300797768907396564522366006433982511590491966618857814545264741708965590546773466047139517',
+      z: '84153935869396527029518633753040092509512111365149323230260584738724940130382637900926220255597132853379358675015222072417404334537543844616589463419189203852221375511010886284448841979468767444910003114007224993233448170299654815710399828255375084265247114471334540928216537567325499206413940771681156686116516158907421215752364889506967984343660576422672840921988126699885304325384925457260272972771547695861942114712679509318179363715259460727275178310181122162544785290813713205047589943947592273130618286905125194410421355167030389500160371886870735704712739886223342214864760968555566496288314800410716250791012',
+    },
+  },
+}
diff --git a/packages/core/src/modules/proofs/errors/PresentationProblemReportError.ts b/packages/core/src/modules/proofs/errors/PresentationProblemReportError.ts
new file mode 100644
index 0000000000..2869a026d5
--- /dev/null
+++ b/packages/core/src/modules/proofs/errors/PresentationProblemReportError.ts
@@ -0,0 +1,24 @@
+import type { ProblemReportErrorOptions } from '../../problem-reports'
+import type { PresentationProblemReportReason } from './PresentationProblemReportReason'
+
+import { PresentationProblemReportMessage } from '../messages'
+
+import { ProblemReportError } from './../../problem-reports/errors/ProblemReportError'
+
+interface PresentationProblemReportErrorOptions extends ProblemReportErrorOptions {
+  problemCode: PresentationProblemReportReason
+}
+
+export class PresentationProblemReportError extends ProblemReportError {
+  public problemReport: PresentationProblemReportMessage
+
+  public constructor(public message: string, { problemCode }: PresentationProblemReportErrorOptions) {
+    super(message, { problemCode })
+    this.problemReport = new PresentationProblemReportMessage({
+      description: {
+        en: message,
+        code: problemCode,
+      },
+    })
+  }
+}
diff --git a/packages/core/src/modules/proofs/errors/PresentationProblemReportReason.ts b/packages/core/src/modules/proofs/errors/PresentationProblemReportReason.ts
new file mode 100644
index 0000000000..c216ee6776
--- /dev/null
+++ b/packages/core/src/modules/proofs/errors/PresentationProblemReportReason.ts
@@ -0,0 +1,8 @@
+/**
+ * Presentation error code in RFC 0037.
+ *
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0037-present-proof/README.md
+ */
+export enum PresentationProblemReportReason {
+  abandoned = 'abandoned',
+}
diff --git a/packages/core/src/modules/proofs/errors/index.ts b/packages/core/src/modules/proofs/errors/index.ts
new file mode 100644
index 0000000000..5e0ca1453b
--- /dev/null
+++ b/packages/core/src/modules/proofs/errors/index.ts
@@ -0,0 +1,2 @@
+export * from './PresentationProblemReportError'
+export * from './PresentationProblemReportReason'
diff --git a/packages/core/src/modules/proofs/handlers/PresentationProblemReportHandler.ts b/packages/core/src/modules/proofs/handlers/PresentationProblemReportHandler.ts
new file mode 100644
index 0000000000..925941e3a4
--- /dev/null
+++ b/packages/core/src/modules/proofs/handlers/PresentationProblemReportHandler.ts
@@ -0,0 +1,17 @@
+import type { Handler, HandlerInboundMessage } from '../../../agent/Handler'
+import type { ProofService } from '../services'
+
+import { PresentationProblemReportMessage } from '../messages'
+
+export class PresentationProblemReportHandler implements Handler {
+  private proofService: ProofService
+  public supportedMessages = [PresentationProblemReportMessage]
+
+  public constructor(proofService: ProofService) {
+    this.proofService = proofService
+  }
+
+  public async handle(messageContext: HandlerInboundMessage<PresentationProblemReportHandler>) {
+    await this.proofService.processProblemReport(messageContext)
+  }
+}
diff --git a/packages/core/src/modules/proofs/handlers/index.ts b/packages/core/src/modules/proofs/handlers/index.ts
index 75adea32eb..ba30911942 100644
--- a/packages/core/src/modules/proofs/handlers/index.ts
+++ b/packages/core/src/modules/proofs/handlers/index.ts
@@ -2,3 +2,4 @@ export * from './PresentationAckHandler'
 export * from './PresentationHandler'
 export * from './ProposePresentationHandler'
 export * from './RequestPresentationHandler'
+export * from './PresentationProblemReportHandler'
diff --git a/packages/core/src/modules/proofs/messages/PresentationProblemReportMessage.ts b/packages/core/src/modules/proofs/messages/PresentationProblemReportMessage.ts
new file mode 100644
index 0000000000..a73735e922
--- /dev/null
+++ b/packages/core/src/modules/proofs/messages/PresentationProblemReportMessage.ts
@@ -0,0 +1,24 @@
+import type { ProblemReportMessageOptions } from '../../problem-reports/messages/ProblemReportMessage'
+
+import { Equals } from 'class-validator'
+
+import { ProblemReportMessage } from '../../problem-reports/messages/ProblemReportMessage'
+
+export type PresentationProblemReportMessageOptions = ProblemReportMessageOptions
+
+/**
+ * @see https://github.com/hyperledger/aries-rfcs/blob/main/features/0035-report-problem/README.md
+ */
+export class PresentationProblemReportMessage extends ProblemReportMessage {
+  /**
+   * Create new PresentationProblemReportMessage instance.
+   * @param options
+   */
+  public constructor(options: PresentationProblemReportMessageOptions) {
+    super(options)
+  }
+
+  @Equals(PresentationProblemReportMessage.type)
+  public readonly type = PresentationProblemReportMessage.type
+  public static readonly type = 'https://didcomm.org/present-proof/1.0/problem-report'
+}
diff --git a/packages/core/src/modules/proofs/messages/index.ts b/packages/core/src/modules/proofs/messages/index.ts
index c6228f03e5..f2ad906c75 100644
--- a/packages/core/src/modules/proofs/messages/index.ts
+++ b/packages/core/src/modules/proofs/messages/index.ts
@@ -3,3 +3,4 @@ export * from './RequestPresentationMessage'
 export * from './PresentationMessage'
 export * from './PresentationPreview'
 export * from './PresentationAckMessage'
+export * from './PresentationProblemReportMessage'
diff --git a/packages/core/src/modules/proofs/repository/ProofRecord.ts b/packages/core/src/modules/proofs/repository/ProofRecord.ts
index 2a9cc2b2f8..73efee8791 100644
--- a/packages/core/src/modules/proofs/repository/ProofRecord.ts
+++ b/packages/core/src/modules/proofs/repository/ProofRecord.ts
@@ -20,6 +20,7 @@ export interface ProofRecordProps {
   presentationId?: string
   tags?: CustomProofTags
   autoAcceptProof?: AutoAcceptProof
+  errorMsg?: string
 
   // message data
   proposalMessage?: ProposePresentationMessage
@@ -41,6 +42,7 @@ export class ProofRecord extends BaseRecord<DefaultProofTags, CustomProofTags> {
   public presentationId?: string
   public state!: ProofState
   public autoAcceptProof?: AutoAcceptProof
+  public errorMsg?: string
 
   // message data
   @Type(() => ProposePresentationMessage)
@@ -69,6 +71,7 @@ export class ProofRecord extends BaseRecord<DefaultProofTags, CustomProofTags> {
       this.presentationId = props.presentationId
       this.autoAcceptProof = props.autoAcceptProof
       this._tags = props.tags ?? {}
+      this.errorMsg = props.errorMsg
     }
   }
 
diff --git a/packages/core/src/modules/proofs/services/ProofService.ts b/packages/core/src/modules/proofs/services/ProofService.ts
index 8a3e1184d9..6f83404667 100644
--- a/packages/core/src/modules/proofs/services/ProofService.ts
+++ b/packages/core/src/modules/proofs/services/ProofService.ts
@@ -5,6 +5,7 @@ import type { ConnectionRecord } from '../../connections'
 import type { AutoAcceptProof } from '../ProofAutoAcceptType'
 import type { ProofStateChangedEvent } from '../ProofEvents'
 import type { PresentationPreview, PresentationPreviewAttribute } from '../messages'
+import type { PresentationProblemReportMessage } from './../messages/PresentationProblemReportMessage'
 import type { CredDef, IndyProof, Schema } from 'indy-sdk'
 
 import { validateOrReject } from 'class-validator'
@@ -26,6 +27,7 @@ import { IndyHolderService, IndyVerifierService } from '../../indy'
 import { IndyLedgerService } from '../../ledger/services/IndyLedgerService'
 import { ProofEventTypes } from '../ProofEvents'
 import { ProofState } from '../ProofState'
+import { PresentationProblemReportError, PresentationProblemReportReason } from '../errors'
 import {
   INDY_PROOF_ATTACHMENT_ID,
   INDY_PROOF_REQUEST_ATTACHMENT_ID,
@@ -351,8 +353,9 @@ export class ProofService {
 
     // Assert attachment
     if (!proofRequest) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for presentation request with thread id ${proofRequestMessage.threadId}`
+      throw new PresentationProblemReportError(
+        `Missing required base64 encoded attachment data for presentation request with thread id ${proofRequestMessage.threadId}`,
+        { problemCode: PresentationProblemReportReason.abandoned }
       )
     }
     await validateOrReject(proofRequest)
@@ -419,8 +422,9 @@ export class ProofService {
 
     const indyProofRequest = proofRecord.requestMessage?.indyProofRequest
     if (!indyProofRequest) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for presentation with thread id ${proofRecord.threadId}`
+      throw new PresentationProblemReportError(
+        `Missing required base64 encoded attachment data for presentation with thread id ${proofRecord.threadId}`,
+        { problemCode: PresentationProblemReportReason.abandoned }
       )
     }
 
@@ -485,14 +489,16 @@ export class ProofService {
     const indyProofRequest = proofRecord.requestMessage?.indyProofRequest
 
     if (!indyProofJson) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for presentation with thread id ${presentationMessage.threadId}`
+      throw new PresentationProblemReportError(
+        `Missing required base64 encoded attachment data for presentation with thread id ${presentationMessage.threadId}`,
+        { problemCode: PresentationProblemReportReason.abandoned }
       )
     }
 
     if (!indyProofRequest) {
-      throw new AriesFrameworkError(
-        `Missing required base64 encoded attachment data for presentation request with thread id ${presentationMessage.threadId}`
+      throw new PresentationProblemReportError(
+        `Missing required base64 encoded attachment data for presentation request with thread id ${presentationMessage.threadId}`,
+        { problemCode: PresentationProblemReportReason.abandoned }
       )
     }
 
@@ -558,6 +564,27 @@ export class ProofService {
     return proofRecord
   }
 
+  /**
+   * Process a received {@link PresentationProblemReportMessage}.
+   *
+   * @param messageContext The message context containing a presentation problem report message
+   * @returns proof record associated with the presentation acknowledgement message
+   *
+   */
+  public async processProblemReport(
+    messageContext: InboundMessageContext<PresentationProblemReportMessage>
+  ): Promise<ProofRecord> {
+    const { message: presentationProblemReportMessage, connection } = messageContext
+
+    this.logger.debug(`Processing problem report with id ${presentationProblemReportMessage.id}`)
+
+    const proofRecord = await this.getByThreadAndConnectionId(presentationProblemReportMessage.threadId, connection?.id)
+
+    proofRecord.errorMsg = `${presentationProblemReportMessage.description.code}: ${presentationProblemReportMessage.description.en}`
+    await this.updateState(proofRecord, ProofState.None)
+    return proofRecord
+  }
+
   public async generateProofRequestNonce() {
     return this.wallet.generateNonce()
   }
@@ -822,10 +849,11 @@ export class ProofService {
 
     for (const [referent, attribute] of proof.requestedProof.revealedAttributes.entries()) {
       if (!CredentialUtils.checkValidEncoding(attribute.raw, attribute.encoded)) {
-        throw new AriesFrameworkError(
+        throw new PresentationProblemReportError(
           `The encoded value for '${referent}' is invalid. ` +
             `Expected '${CredentialUtils.encode(attribute.raw)}'. ` +
-            `Actual '${attribute.encoded}'`
+            `Actual '${attribute.encoded}'`,
+          { problemCode: PresentationProblemReportReason.abandoned }
         )
       }
     }
diff --git a/packages/core/src/types.ts b/packages/core/src/types.ts
index 25e6581336..4baba4347a 100644
--- a/packages/core/src/types.ts
+++ b/packages/core/src/types.ts
@@ -51,6 +51,7 @@ export interface InitConfig {
 
 export interface UnpackedMessage {
   '@type': string
+  '@id': string
   [key: string]: unknown
 }