A chargeback is the reversal of a transaction made using a credit card or debit card.

What is a chargeback?

In its simplest definition, a chargeback is the reversal of a charge made to your credit or debit card. This is one of the many regulations designed by credit card companies to ensure that both the customer and merchant are protected.

When a customer has lost their card or found themselves victim to a credit card thief, they can notify their bank to reverse any changes made on the lost or stolen card. They are also able to reverse an authorised charge for goods or services if they were falsely advertised.

If you wish to create a disputed charge on your monthly credit bill, you can send the bank a chargeback request. If this is a charge which you did not authorise then you should submit a claim immediately. You can submit this to the bank either in writing, online, or by phone.

What is a chargeback fee?

The chargeback process can sometimes be lengthy and require a lot of work from the bank to thoroughly investigate your request. This is why you will receive a chargeback fee, a small fee paid by the cardholder for the bank’s chargeback services.

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How to request a chargeback?

If your card has been stolen or somehow lost, you might be eligible for a chargeback to return any money spent on unauthorised purchases.

Here are some simple steps to guide you, how chargebacks work:

  1. Contact your bank to raise a dispute over a transaction.
  2. The issuing bank will review the disputed charge and sends a transaction to the acquiring bank electronically.
  3. When the acquiring bank receives the chargeback request, they will either resolve the issue automatically or forward it to the merchant.
  4. The merchant then accepts the chargeback request or rejects it and provides proof of an authorised transaction to the acquiring bank.
  5. The acquiring bank will then review the merchant’s evidence and ensure it meets their requirements before sending it back to the issuing bank.
  6. The issuing bank will then review the merchant’s evidence and decide on the chargeback request.
  7. Then both the cardholder and the merchant will be notified of the decision made by the issuing bank. Then if either party disagrees with the decision, they can initiate arbitration.

How long does a chargeback take?

Card companies or a duly authorised agent are required to investigate your claim within a reasonable period upon receiving the request.

The entire credit or debit card chargeback process can potentially take up to six months, from the cardholder’s initial request to the final resolution. In most cases, chargeback processing generally takes around three to four months. When dealing with more straightforward cases, this time frame can be much shorter or potentially much longer when dealing with more complicated issues.

The timeframe for issuing a chargeback will be dependent on the card company’s terms and conditions. Generally speaking, cardholders should inform their bank within 120 days from the date of the transaction. Sometimes cases can extend up to 540 days; however, the key for issuing a successful charge back is to file the request with your bank as soon as physically possible.

The difference between unauthorised use and genuine mistakes:

Customers can often be involved in various disputes resulting from credit card fraud, identity theft, or just by a genuine mistake. If an unauthorised usage is unauthorised, then the cardholder will not be held liable, and neither will the bank.

But sometimes disputes also arise from genuine mistakes. For example, a monthly statement including a charge for products you did not order, services you did not order, or products you did order but never received. In these cases, this may be a genuine mistake on the merchant’s behalf, so resolving the dispute should be reasonably simple.

From time to time, customers can find themselves with an inadvertent overcharge for a legitimate purpose; in this case, you should immediately contact the merchant.

Grey Charges and Unfair Merchants:

Sometimes merchants may play dirty by applying grey charges to their goods or services. A grey charge is an additional cost that you agreed to pay the merchant without realising it. They typically appear in the small print and online, and you will likely find any grey charges in the terms and conditions section.

Examples of grey charges often include:

  • automatic renewals
  • mysterious subscriptions
  • ‘free’ products which end up costing you money

There may be a minimum initial charge; however, you might end up paying for products and services you don’t want after a while. In this case, you are entitled to legal protection if this came about via a credit or debit card purchase and can be eligible for a chargeback.

Advice for dealing with a credit card dispute:

Dealing with a conflict dispute is not an easy task. It can be very stressful and time-consuming. And to get a successful resolution to your problem, you will have to keep it together despite any stress you may be going through. So here is a list of things to do when waiting for a dispute to be settled:

  • Reconcile your bills regularly and on time
  • Disapprove unauthorised charges instantly-
  • preferably before the next two billing cycles
    preferable to purchase using a debit card rather than a credit card since it has more significant security features
  • Be patient and kind with bank workers and merchants, and yelling won’t get you anywhere and isn’t an advisable strategy
  • If you are running out of options, and have exhausted all other avenues, consider hiring an attorney. Only use this as a last-ditch resort since the attorney’s cost might exceed the amount of money you want to recover.

How can Trader Defense Advisory help?

If you are currently settling a dispute or are about to file a chargeback request, consider a free consultation from the Trader Defense Advisory. If you want some quick legal advice, report a merchant, receive other legal services, or are just confused about the chargeback process, you can rely on Trader Defense Advisory to help you get the financial guidance you need.

A stolen credit card or a credit card fraud can result in reversed charges. If the credit card holder approved a transaction and didn’t receive the service or was created by the broker, you will be eligible for a chargeback.