What is a chargeback and when to dispute

We want to help you make better informed decisions. Certain links on this page – clearly marked – may direct you to a partner website and earn us a referral commission. For more information, see How we make money.

One of the most powerful defenses consumers have against fraud and unauthorized transactions is chargeback, a reverse payment through your credit card company.

And the data shows that more and more people are using this defense, as the number of chargebacks has increased. increased since the start of the pandemic. You may have had to cancel a non-refundable trip early last year or disputed concert ticket charges for a show that was canceled or postponed indefinitely. Likewise, you may have disputed the cost of an online order that you never received due to supply chain issues or ongoing USPS delays.

Although you are more likely to receive a refund or chargeback in some of these cases rather than others, contesting a credit card transaction with your issuer is a useful protection against fraud and payment accidents. But it’s important to understand the right time to make a claim and how the process works before you initiate the chargeback process. Here’s what you need to know:

What are chargebacks?

A chargeback is money returned to you after you dispute a charge. They are most commonly associated with credit card transactions, but can also be issued for debit card transactions.

Here are some situations where you can dispute a charge and need to initiate a chargeback:

  • Unauthorized charges on your account
  • Duplicate fees
  • Fees greater than the cost of what you bought
  • Charges for items or services you never received
  • Charges for damaged or defective items

A chargeback comes from your card issuer. If you dispute a charge with the merchant and get the funds back that way, technically it’s a refund.

At either end, the process of recovering the funds must be initiated by you by reporting the misconduct. That’s why it’s important to regularly check your debit and credit card statements to make sure everything is okay. A billing error can include charges such as charges from retailers you have never purchased from; additional, duplicate or excessive charges from retailers with whom you have purchased; or charges for an item that you never received.

How to request a chargeback

In most cases, you must first begin the resolution process with the merchant, unless you believe your account has been exposed to fraud and you want to notify your transmitter. Check the company’s return policy to see if you are eligible for a refund. You may need to see the merchant in-store with a receipt or contact an online customer service representative.

If the merchant will not reimburse you, you can initiate a dispute with your card issuer. Call your transmitter and speak to a representative. You can also initiate chargeback through your online account or in your issuer’s mobile app.

Pro tip

Request your chargeback within 60 days of the first billing error. Your creditor must settle the dispute within two billing cycles of receiving your request, depending on the Fair Credit Billing Act.

If you dispute a duplicate or overly large charges, you may need to provide proof of what you actually purchased, such as a receipt.

It takes time to resolve a dispute and get a chargeback on your account once settled. Depending on your issuer and your situation, you may need to fill out forms, submit documents, or go through other processes.

When can consumers legally use chargebacks?

Consumers have the right to dispute any of the following billing errors, in accordance with the Federal Trade Commission:

  • Unauthorized charges – Federal law limits your liability for unauthorized charges to $ 50
  • Fees that indicate the wrong date or amount
  • Charges for goods and services that you have not accepted or that have not been delivered as agreed
  • Mathematical errors
  • Failure to record payments and other credits, such as returns
  • Failure to send invoices to your current address – assuming the creditor has your change of address, in writing, at least 20 days before the end of the billing period
  • Expenses for which you request an explanation or written proof of purchase, accompanied by an alleged error or a request for clarification

The FTC recommends that you file your chargeback request within 60 days of the first billing error. After that, it may take up to two billing cycles or 90 days for resolution.

If you have already paid the balance of the statement on which the disputed charge appears, you may still receive the chargeback, depending on the Consumer Financial Protection Bureau. But instead of a quick return, you may have to wait until the dispute is resolved and your issuer decides the money is owed to you before you receive it.

Potential consequences of chargebacks

It is recommended that you request a refund from the merchant before disputing a purchase from your card issuer.

Businesses can dispute a chargeback request if they believe a customer should not be reimbursed. If the merchant disputes your claim, you could still be held responsible for the charges. And initiating a chargeback for your own mistakes – such as misunderstanding a merchant’s return policy or regret a purchase – is its own form of fraud, known as “friendly fraud. “

Most often, the consequences of chargebacks fall on the seller. If your chargeback is approved, the amount is recovered from the company account once the claims are settled. Chargebacks are expensive for businesses; Beyond the charge itself, disputes take time and money to resolve, and they can result in chargeback fees and loss of inventory. But they can also damage the reputation of companies. If a merchant refuses to work with you to resolve an issue, you may be less likely to shop with them again in the future.

Comments are closed.