diff --git a/NEWS.md b/NEWS.md
index 6aae1148..afe03b04 100644
--- a/NEWS.md
+++ b/NEWS.md
@@ -9,6 +9,7 @@
 ### Features
 * Migrate Package Endpoints to HoldingsIQ v2 API ([MODKBEKBJ-804](https://folio-org.atlassian.net/browse/MODKBEKBJ-804))
 * Add additional fields to POST /eholdings/packages endpoint ([MODKBEKBJ-823](https://folio-org.atlassian.net/browse/MODKBEKBJ-823))
+* Update visibility hidden reason handling ([MODKBEKBJ-823](https://folio-org.atlassian.net/browse/MODKBEKBJ-823))
 
 ### Bug fixes
 * Fix offset handling when retrieving holdings from HoldingsIQ. ([MODKBEKBJ-825](https://folio-org.atlassian.net/browse/MODKBEKBJ-825))
diff --git a/ramls/types/visibilityData.json b/ramls/types/visibilityData.json
index a14f04c8..3a5573dc 100644
--- a/ramls/types/visibilityData.json
+++ b/ramls/types/visibilityData.json
@@ -9,12 +9,12 @@
     "isHidden": {
       "type": "boolean",
       "description": "Whether resource is hidden or not",
-      "example": false
+      "example": true
     },
     "reason": {
       "type": "string",
       "description": "Reason why resource is hidden",
-      "example": "Set by System"
+      "example": "Hidden by Customer"
     }
   }
 }
\ No newline at end of file
diff --git a/src/main/java/org/folio/rest/converter/packages/CommonPackagePutRequestConverter.java b/src/main/java/org/folio/rest/converter/packages/CommonPackagePutRequestConverter.java
index e0434f32..e7d69011 100644
--- a/src/main/java/org/folio/rest/converter/packages/CommonPackagePutRequestConverter.java
+++ b/src/main/java/org/folio/rest/converter/packages/CommonPackagePutRequestConverter.java
@@ -9,9 +9,12 @@
 import org.folio.holdingsiq.model.Proxy;
 import org.folio.holdingsiq.model.Visibility;
 import org.folio.rest.jaxrs.model.PackagePutDataAttributes;
+import org.folio.rest.jaxrs.model.PackageVisibility;
 
 public abstract class CommonPackagePutRequestConverter {
 
+  static final String HIDDEN_BY_CUSTOMER = "Hidden by Customer";
+
   protected PackagePut.PackagePutBuilder convertCommonAttributes(PackagePutDataAttributes attributes) {
     var builder = PackagePut.builder();
 
@@ -29,12 +32,16 @@ protected PackagePut.PackagePutBuilder convertCommonAttributes(PackagePutDataAtt
       builder.customAltNames(convertCustomAltNames(attributes));
     }
 
-    builder.visibilityDetails(mapItems(attributes.getVisibility(),
-      pv -> new Visibility(pv.getCategory().value(), pv.getHidden(), pv.getReason())));
+    builder.visibilityDetails(mapItems(attributes.getVisibility(), this::convertVisibility));
 
     return builder;
   }
 
+  protected Visibility convertVisibility(PackageVisibility pv) {
+    var reason = Boolean.TRUE.equals(pv.getHidden()) ? HIDDEN_BY_CUSTOMER : null;
+    return new Visibility(pv.getCategory().value(), pv.getHidden(), reason);
+  }
+
   private void convertSimpleFields(PackagePutDataAttributes attributes, PackagePut.PackagePutBuilder builder) {
     builder.isSelected(attributes.getIsSelected());
     builder.isFullPackage(attributes.getIsFullPackage());
diff --git a/src/test/java/org/folio/rest/converter/packages/CustomPackagePutRequestConverterTest.java b/src/test/java/org/folio/rest/converter/packages/CustomPackagePutRequestConverterTest.java
index 8b4ffeb7..91495872 100644
--- a/src/test/java/org/folio/rest/converter/packages/CustomPackagePutRequestConverterTest.java
+++ b/src/test/java/org/folio/rest/converter/packages/CustomPackagePutRequestConverterTest.java
@@ -1,7 +1,10 @@
 package org.folio.rest.converter.packages;
 
+import static org.folio.rest.converter.packages.CommonPackagePutRequestConverter.HIDDEN_BY_CUSTOMER;
 import static org.folio.util.PackagesTestUtil.getPackagePutRequest;
 import static org.junit.jupiter.api.Assertions.assertEquals;
+import static org.junit.jupiter.api.Assertions.assertFalse;
+import static org.junit.jupiter.api.Assertions.assertNull;
 import static org.junit.jupiter.api.Assertions.assertTrue;
 
 import java.util.List;
@@ -63,6 +66,23 @@ void shouldCreateRequestToChangeCustomPackageVisibility() {
             .withHidden(true)
             .withCategory(PackageVisibility.Category.PF)))
       ));
-    assertTrue(packagePut.getVisibilityDetails().getFirst().hidden());
+    var visibility = packagePut.getVisibilityDetails().getFirst();
+    assertTrue(visibility.hidden());
+    assertEquals(HIDDEN_BY_CUSTOMER, visibility.reason());
+  }
+
+  @Test
+  void shouldIgnoreIncomingReasonAndClearReasonWhenHiddenFalse() {
+    var packagePut =
+      converter.convert(getPackagePutRequest(
+        new PackagePutDataAttributes()
+          .withVisibility(List.of(new PackageVisibility()
+            .withHidden(false)
+            .withReason("some incoming reason")
+            .withCategory(PackageVisibility.Category.PF)))
+      ));
+    var visibility = packagePut.getVisibilityDetails().getFirst();
+    assertFalse(visibility.hidden());
+    assertNull(visibility.reason());
   }
 }
diff --git a/src/test/java/org/folio/rest/converter/packages/ManagedPackagePutRequestConverterTest.java b/src/test/java/org/folio/rest/converter/packages/ManagedPackagePutRequestConverterTest.java
index add2bc4f..60982fc3 100644
--- a/src/test/java/org/folio/rest/converter/packages/ManagedPackagePutRequestConverterTest.java
+++ b/src/test/java/org/folio/rest/converter/packages/ManagedPackagePutRequestConverterTest.java
@@ -1,7 +1,10 @@
 package org.folio.rest.converter.packages;
 
+import static org.folio.rest.converter.packages.CommonPackagePutRequestConverter.HIDDEN_BY_CUSTOMER;
 import static org.folio.util.PackagesTestUtil.getPackagePutRequest;
 import static org.junit.jupiter.api.Assertions.assertEquals;
+import static org.junit.jupiter.api.Assertions.assertFalse;
+import static org.junit.jupiter.api.Assertions.assertNull;
 import static org.junit.jupiter.api.Assertions.assertTrue;
 
 import java.util.List;
@@ -31,7 +34,24 @@ void shouldCreateRequestToHidePackage() {
           .withHidden(true)
           .withCategory(PackageVisibility.Category.PF)))
     ));
-    assertTrue(packagePut.getVisibilityDetails().getFirst().hidden());
+    var visibility = packagePut.getVisibilityDetails().getFirst();
+    assertTrue(visibility.hidden());
+    assertEquals(HIDDEN_BY_CUSTOMER, visibility.reason());
+  }
+
+  @Test
+  void shouldIgnoreIncomingReasonAndClearReasonWhenHiddenFalse() {
+    var packagePut = converter.convert(getPackagePutRequest(
+      new PackagePutDataAttributes()
+        .withIsSelected(true)
+        .withVisibility(List.of(new PackageVisibility()
+          .withHidden(false)
+          .withReason("some incoming reason")
+          .withCategory(PackageVisibility.Category.PF)))
+    ));
+    var visibility = packagePut.getVisibilityDetails().getFirst();
+    assertFalse(visibility.hidden());
+    assertNull(visibility.reason());
   }
 
   @Test
diff --git a/src/test/resources/requests/rmapi/packages/put-package-custom.json b/src/test/resources/requests/rmapi/packages/put-package-custom.json
index 88555a32..7e0c3461 100644
--- a/src/test/resources/requests/rmapi/packages/put-package-custom.json
+++ b/src/test/resources/requests/rmapi/packages/put-package-custom.json
@@ -6,7 +6,7 @@
     {
       "category": "PF",
       "hidden": true,
-      "reason": "Hidden by customer"
+      "reason": "Hidden by Customer"
     }
   ],
   "customDescription": null,
diff --git a/src/test/resources/requests/rmapi/packages/put-package-is-selected.json b/src/test/resources/requests/rmapi/packages/put-package-is-selected.json
index d9a64bf3..20c2000b 100644
--- a/src/test/resources/requests/rmapi/packages/put-package-is-selected.json
+++ b/src/test/resources/requests/rmapi/packages/put-package-is-selected.json
@@ -6,17 +6,17 @@
     {
       "category": "PF",
       "hidden": false,
-      "reason": "Hidden by customer"
+      "reason": null
     },
     {
       "category": "FTF",
       "hidden": true,
-      "reason": null
+      "reason": "Hidden by Customer"
     },
     {
       "category": "MARC",
       "hidden": true,
-      "reason": null
+      "reason": "Hidden by Customer"
     }
   ],
   "customDescription": "Custom description",