Thanks to online shopping, practically anything you could ever want is as close as your personal device from which you can make an order. Advertisers all over the world are fighting for your attention and you seemingly have almost limitless choices.
What to do if you are not satisfied with your purchase? Perhaps you did not receive something you ordered? Or you notice an unauthorized charge on your card? Should you initiate a credit card chargeback in every case?
The short answer to that is “NO”. Cardholders should always dispute a transaction first by contacting the merchant. Unless the merchant is not responding to your calls or emails, don’t do a chargeback.
What consumers often don’t understand is that filing an illegitimate chargeback is almost the equivalent of cyber-shoplifting. Merchants are billed for any fees generated during the chargeback and could also get their bank accounts frozen.
For what? Because a customer did not receive an item? And the item was shipped, however was lost in transit? The fact that you did not receive an item, might not be the merchant’s fault. A chargeback should only be used when you suspect fraud and after you tried to solve the issue directly with the merchant. Businesses get hit hard every time a buyer files a chargeback.
There are of course very justified reasons for requesting a chargeback. If used correctly, chargebacks are a critical level of protection for consumers. Credit and debit card companies offer chargebacks at their own discretion. Card issuing banks are not entitled to rule a case in your favor. Reading this guide will increase your chances of winning a legitimate case.
What is a Credit Card Chargeback?
With a chargeback, you can dispute and reverse a credit card transaction and get your money back. Instead of requesting a refund from the merchant who arranged the purchase, cardholders can dispute a transaction by contacting their bank directly and request a chargeback.
The ability to dispute a payment is intended to protect consumers from unauthorized transactions, but it can be a major headache for businesses, especially if it has been issued in error. When a chargeback occurs, the disputed funds are held back from the company until the card issuer finds a solution and decides what to do:
NOTE: If you have been purchasing through unsafe online shops or fallen for phishing scams your credit card numbers and secure personal information related to it, could have been stolen. If you suspect fraud, call your card issuing bank and cancel your card immediately.
When to Initiate a Chargeback
Good Reasons to Initiate a Chargeback
Chargebacks are annoying for all parties involved. A case can drag on for several months, as the merchant has the right to challenge your accusation.
Therefore, filing a chargeback should always be the absolute last resort. Only contact the bank if you have no other options. In these following cases you are encouraged to initiate a chargeback:
These chargeback reasons apply only if the company refuses to open a dialogue with you and solve the issue directly. You usually have about 120 days to initiate a chargeback. The time limits will vary a bit depending on your bank and the type of chargeback.
Such crimes, as described above, can be widespread and so largescale that at times they make it to the headlines. This led many people to believe that a credit card is an unsafe method of payment, however, the option of a chargeback makes credit and debit cards one of the safest options.
Incorrect Use of Chargebacks
Because the system was originally designed for offline payments and today’s online consumers, there are loopholes that allow chargebacks to be used intentionally for unwarranted reasons. Examples include:
The Chargeback Process
Does the company not respond to you or refuse to refund your payment? If you run into an impasse with the company you bought from, you can and should start the chargeback procedure.
What Is The Chargeback Time Limit?
The rules laid down by card issuers usually give you 120 days to make a claim. The clock starts ticking from the date of payment, although the timeframe depends on the claim-back reason. Here are some examples:
How To File A Chargeback
The exact procedure to initiate a chargeback depends on your credit card company. If in doubt, you can call the number on the back of your credit card and inform your bank’s customer service department that you wish to initiate a chargeback or dispute a charge. They will guide you through the process.
Depending on your bank, you may be able to initiate a chargeback completely online. There might even be a “dispute” button next to each purchase on your credit card company’s website.
When you submit a chargeback, prepare yourself with an exact explanation why you’re doing the chargeback and what went wrong. Provide as many details as possible. Acquire all details you have about the transaction in question. This may include invoices, emails, credit card statements and any other related papers.
If you never received a product, say so. If it was damaged or counterfeit, say so. Tell the credit card company if you tried to contact the company customer service and explain why they were not helpful enough.
For example, if you contacted company customer service three weeks ago and they didn’t respond or turned you away, it’s good to disclose this.
How the Chargeback Process Works
To initiate a chargeback, contact your credit card issuer and file a dispute. They will point out the transaction you are contesting and state the reason for your dispute. This is how the process usually unfolds:
NOTE: It is important to understand that even after you have received a refund from a chargeback, it can still technically be withdrawn from your account. This may be the case if the company from which you bought successfully contests your claim within a limited period of time.
How Long Does It Take to Receive a Refund?
There is no specific time frame when it comes to getting your money back. Once you have requested a chargeback, it is up to your card provider to contact the provider’s bank and to process your refund request. The whole proceedure could be lengthy.
The Effects of Chargebacks
Both consumers and retailers may ultimately pay the price of chargebacks. The possible negative effects of any chargeback include:
Use Chargeback as the Last Resort
As a cardholder, you are responsible for ensuring that your account is used ethically and honestly. If you do not recognize a charge to your account, do not automatically assume credit card fraud. First, contact any household members who may have access to the card and ask them if they have authorized the card without your knowledge.
Read the terms and conditions carefully before you buy anything. Do not buy if you do not agree with the guidelines. Before you request a chargeback, check again what you originally agreed to. Consider the possibility that you simply have forgotten what you have purchased.
Cancel your subscriptions long before the next billing cycle begins. Give the merchant enough time to cancel your contract. The process could take a while, so it is in many cases unreasonable to expect you will avoid the fee if you called just a day before.
Above all, contact the merchant in question to verify the purchase and give a sufficient amount of time to initiate a refund before assuming fraud. The merchant’s account may not have sufficient funds to cover the chargeback at the moment and therefor a debit may not be possible until the account is recharged.
If your bank does not approve your request and you believe that you have provided all the required evidence, you can still make a complaint with the State Attorney General’s Office.