A chargeback is the reversal of a credit or debit card purchase transaction by your card issuer. You can request a chargeback to remove a fraudulent or illegitimate charge from your account.
How Does a Chargeback Work?
Let’s say that you spot a transaction on your credit card statement that you never authorized.
You promptly contact the merchant and ask them to issue you a refund, but they refuse to do so, asserting that the transaction is legitimate.
At this point, you would file a chargeback request with your card issuer.
As part of your request, you would explain why you believe the transaction is unwarranted, accompanied by the necessary evidence to support your claim.
Your credit provider will review your case and work with the merchant, as well as the card network (usually Visa or Mastercard), to resolve the issue.
If you succeed in your claim, your card issuer will credit your account and debit the merchant’s account accordingly.
However, if your claim is denied, you’ll be responsible for paying the disputed charge like any regular transaction.
How Long Does it Take to Process a Chargeback?
Removing an illegitimate charge from your account can take weeks or even months to investigate and resolve.
The amount of time needed will depend on the nature and complexity of the transaction and how vigorously the merchant contests your claim.
Even if your request is resolved swiftly and you win your case, it could still take a considerable amount of time before the funds arrive in your account.
How to File a Chargeback
Here’s how to file a chargeback request and what the process entails.
1. Contact the merchant
The quickest and most convenient way to remove an erroneous charge from your account is to contact the merchant and ask them to issue a refund.
In some cases, your card issuer may insist that you make a reasonable attempt to sort out the issue with the merchant before they review your chargeback request.
By speaking with the merchant, you may also get the chance to gather significant evidence that can bolster your claim.
2. Collect the evidence
Assembling all the evidence relevant to your claim is vital, as it will increase your chance of successfully getting the transaction reversed.
Relevant evidence may include:
- Email and text message correspondence
- Logs with details of discussions with customers service representatives
- Delivery tracking information
- Screenshots of the product’s features, price, discount, etc.
- A copy of the merchant’s refund policy
3. File a dispute with your card issuer
The procedure for filing a chargeback request varies and depends on your card issuer’s policy.
Typically, you can initiate the process by calling your card issuer’s customer service number; an agent will guide you through the steps to file your application.
You may also have the option to submit your dispute application through your card issuer’s online banking portal.
Card issuers provide you with a narrow window of opportunity to submit a chargeback claim, usually 30 days to 60 days of your statement date.
4. Wait for your card issuer to review your case
Your card issuer will evaluate your case to see if it has merit.
If they decide that your claim has merit, they’ll pass on the details to the merchant and their bank and ask them to pay for the transaction.
The process can be tedious and drawn-out, as there’s a chance the merchant and their bank may dispute the chargeback.
The card network that facilitates your card’s transactions may also play a role by helping to decide who must ultimately cover the transaction.
5. Receive a resolution
Once the review is complete, your chargeback request will either be approved or denied.
If it’s approved, your card issuer will credit your account accordingly.
If it’s rejected, you’re responsible for paying the transaction.
You can appeal your claim by writing and submitting a request to your card issuer or filing a complaint with the ADR Chambers Banking Ombuds Office (ADBRO).
When Should I Ask for a Chargeback?
Here are some common scenarios where it’s perfectly acceptable for you to ask for a chargeback:
- Someone has charged an unauthorized purchase to your card
- The good or service you paid for wasn’t delivered
- You were overcharged for a purchase
- The item you purchased was damaged, defective, or not as advertised
- You were billed twice for the same purchase
- You were charged for an item you never purchased
Can My Chargeback be Disputed?
There are instances where your card issuer or the merchant may dispute your chargeback request.
If you purchase a train ticket and miss the departure date and time, your card issuer will deny your claim.
The reason is that the merchant delivered on their promise – it was incumbent on you to arrive on time at the terminal to board the train.
If you file a chargeback request after failing to ask for a timely refund, it’s likely to be rejected.
Most merchants have a clearly defined refund policy; once it expires, you’re out of luck.
Suppose the merchant has compelling evidence that you knowingly and explicitly agreed to specific terms and conditions outlined in a purchase contract.
In that case, you can expect pushback from them if you proceed with a chargeback request.
The merchant may contend that you willfully violated the terms and conditions and accuse you of filing a disingenuous claim.
Did You Know?
Some credit cards come with extended warranties that provide you with an extra year of insurance on items you purchase using them.
Frequently Asked Questions
- Is a chargeback the same as a refund?
No. While you receive money back in both instances, the key difference is who handles the transaction.
Your card issuer processes a chargeback after the purchase has already been posted to your account. Conversely, a refund is issued directly by the merchant.
- Do chargebacks hurt your credit score?
Filing a chargeback claim won’t harm your credit score.
However, it’s prudent to pay the disputed charge by the due date as you wait for a resolution to a chargeback claim. Failing to do so will negatively affect your credit, as you’re still responsible for paying all purchase transactions that appear on your statement.
Ensure you pay the disputed charge on time, even if you anticipate a favourable outcome.
- What is a chargeback fee?
A chargeback fee is a penalty that the acquiring bank (the bank that processes payments for a merchant) charges to merchants when they process an illegitimate transaction to a customer’s credit or debit card.
It takes considerable time, effort, and money to review and resolve customers’ chargeback requests, which is why banks have no qualms about passing the cost onto merchants.