Many people don’t know anything about doing a chargeback on credit card.

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Are you one of them too?

Don’t worry!

In this article, you will find every detail you need to know about filing a chargeback on your credit card and getting your money back.

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What is a Chargeback?

A chargeback is a refund initiated by a bank for a purchase made via credit card. Instead of requesting a refund from the merchant, credit cardholders can dispute a transaction by directly contacting their bank.

The bank or issuing authority takes care of the entire chargeback process. The issuing authority or bank will call the merchant or business and they will sort things out between themselves. Credit cardholders almost always win if they have a valid reason to file a chargeback.

Chargebacks offer a protective cushion between credit card holders and risks like identity theft and business scams. It helps credit cardholders recover their money from fraudsters, unauthorized purchasers or identity thieves.

Though doing a chargeback on credit card is a formal process, most of the credit cardholders are able to handle it without the need for legal representation.

How to Use Credit Card Chargeback – Step by Step Guide

If you are new to credit card chargebacks, we’ve got you covered. Here’s a step by step guide on how to file a chargeback against a merchant or business.

1. Try to Resolve the Matter with the Merchant

The first thing that most people do before filing for a chargeback is trying to resolve matters with the merchant. Here’s what you should do.

i. Confirm the Refund Policies of the Merchant

It is important to read the merchant’s terms and conditions if you want to file for a refund. You must be familiar with the contracts, refund and returns policy. You will need to cite these provisions when you file for a chargeback.

ii. Ask for a Refund

Many merchants and businesses have refund and return policies. If you find any such policies, quote them and ask for a refund directly from the merchant.

iii. Ask for a Store Credit

Is the merchant not willing to refund your money? You can ask for a store credit. You can purchase other products or services from the same merchant with this store credit.

iv. Talk to the Manager

If you think your matter is not being resolved as per the policies, you can always involve someone from the upper management into the matter. Talk to the supervisor, customer service team or the manager and discuss your issue with them.

Most issues are resolved when they are escalated to higher management.

v. Mention Filing for a Chargeback

If your issue is not being resolved, mention that you will use a credit chargeback option. Most businesses will resolve the issue there and then as a chargeback can be very costly for the business.  

vi. Put Your Complaint in Writing

Write a formal complaint. Explain your purchase and why you are requesting a refund. This will provide documentation of your complaint. This documentation will be needed if you file a chargeback on credit card.

How to file a chargeback on credit card

2. File a Chargeback on Credit Card

If you’ve tried to resolve the matter with the merchant but are unsuccessful, then you can file a chargeback on credit card. Here are the steps to follow in this case.

i. Find Out if You are Eligible for Filing a Chargeback

If you think filing a chargeback is the best option available to you, then you have to check whether or not a chargeback applies to your situation. In general, you can file for a chargeback in the following situations:

  • There is a fraudulent charge on your credit card statements.
  • You are charged for products or services that you didn’t purchase.
  • A full refund was not given to you for an item that you returned.
  • You didn’t receive the product or service that you paid for via your credit card.

ii. Take Immediate Action

Remember, you have a limited time to request a chargeback after the transaction has been made. The number of days you have may vary from state to state and from bank to bank. However, most financial institutions give their customers 120 days from the date of purchase to file a chargeback.

While you should try and resolve the matter with the merchant, don’t lose track of the deadline that you have to file for credit card chargeback.

iii. Notify the Authority Concerned of the Dispute

Notify the bank or credit card issuer immediately if you are filing for a dispute or have already filed for it. Just call their customer service department and tell them that you are filing for a chargeback dispute. The customer service representative usually asks for the following information in such cases:

  • The date of the transaction.
  • The disputed amount.
  • The efforts you have taken to resolve the dispute.

iv. Receive a Chargeback

Once you report your case to the relevant authority, you will usually receive a temporary chargeback. However, this will be a temporary credit. The authorities will look into your dispute and see if it’s valid or not.

v. Fill the Detailed Chargeback Form

You will be sent a detailed chargeback form to fill out once you have lodged your initial complaint with the bank. Complete this form and send it back to the bank with all the details of your dispute. More details about the dispute make a strong case.

  • Use your credit card statement to fill in the correct amounts and dates.
  • Be concise in your explanation. Write all the facts but don’t include any unnecessary information that may confuse the officer.
  • Attach a copy of your complaint letter that you wrote to the merchant earlier.
  • Provide all the documents that support your claim, such as the receipts, etc.

vi. Receive the Final Decision from the Bank

You will receive the final decision of the bank or the credit card issuer once they have carefully examined your complaint and supporting documents. Your chargeback request will be either accepted or declined.

The temporary chargeback will remain in your account if the final report comes in your favor. Otherwise, it will be reversed and you will have to pay the initial charges.

When Is a Chargeback Valid?

You can request for a chargeback if you have suffered at the hands of bad business. If you think that the merchant deliberately carried out a wrong transaction or charged you for something you didn’t buy, then file for a chargeback immediately.

Request for a chargeback if you think you have been a victim of identity theft or criminal fraud. For example, if someone gained access to your personal information and used it to purchase something in your name.

Usually, people file for a chargeback when all other options are exhausted. Filing for a chargeback can be a long and taxing process. Therefore, most people prefer to settle the dispute with the merchant. They go to the bank with a chargeback request only as the last resort.

Learn how the credit card chargeback process works

Credit Card Chargeback Lifecycle

Here is how the credit card chargeback lifecycle works:

  1. A complaint is filed by the customer with the bank or the card issuing authority.
  2. The bank looks into the matter and verifies if the dispute is valid or not. If the dispute is valid, the customer is paid the disputed amount and the process ends here.
  3. The customer is given a refund. The customer’s bank also gets in contact with the merchant’s bank.
  4. Merchant’s bank conducts research at their end and the merchant is notified about the chargeback processing.

Two things can happen from here on:

  • The Merchant Deems the Chargeback Invalid: The bank of the consumer will be contacted and be informed about the findings of the merchant’s bank. This happens very rarely.
  • The Merchant Deems the Chargeback Valid: In this case, the merchant’s bank will ask the merchant to provide any documentation that they have to counter the chargeback claim. If the merchant provides sufficient documentation, the refund will be reversed. If not, then the refund amount will stay in the customer’s account. The merchant is also charged an additional fee.
People use chargebacks for illegitimate reasons

Improper Use of Chargebacks

The number of chargebacks is increasing each year. There are some loopholes in the chargeback system that many people take advantage of. People also use it for illegitimate reasons. Some examples include the following:

Contacting the Bank Seems the Easiest Way Out

Many people contact the bank immediately for a chargeback without talking to the merchant first. They don’t want to deal with the customer service department of the business and find contacting the bank the easiest way out of the situation.

However, you will be surprised to know that many merchants resolve such disputes there and then. Their customers are very important to them and they don’t want to risk their relationship with them. They will try to resolve your issue as quickly and efficiently as possible.

Buyer’s Remorse

Many customers purchase something willingly and then regret making this purchase. However, they also don’t want to cancel the service or return the merchandise but want a refund. This is the wrong way to go about a chargeback. In fact, it is not a refund at all. It’s plain theft.

The Customer Is Confused about the Refund Options

Sometimes, the customer is not sure about the different refund options that they have. They resort to calling the bank and asking for these return or refund options. However, the bank may think that you’re asking for a chargeback and may initiate the process.

It is best to contact the merchant first before you go on to the bank and file for a chargeback.

The Customer Doesn’t Remember Making the Purchase

Many customers forget that they made a purchase especially if they bought a lot of things within a short period of time. If you are doubtful whether or not you made a purchase, it is best to call and confirm it with the merchant first before going to the bank.

In short, it is always recommended that you go to the merchant first with your dispute before filing for a chargeback with the bank.

This was a short guide on doing a chargeback on credit card. We hope you will be able to make better chargeback decisions after reading this guide.

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