How to initiate a chargeback


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A chargeback offers protection against services and goods that are faulty or mis-advertised, by allowing you to reverse a charge made on your credit card. The process of a chargeback begins when you officially dispute a charge on your account.

There was a time when the only way you could initiate a chargeback was to send a letter to your credit card issuer through the mail. Now, chargebacks can be initiated on your computer or phone. Here are the details.

How to conduct a chargeback

Initiating a chargeback involves quite a few parties – the consumer, the merchant, the merchant’s bank, your credit card issuer and the card network that processed the transaction. All of these players have a hand in determining whether you will receive a refund on a disputed charge. The steps are as follows:

Evaluate the charges: Makes sure the charges are indeed invalid. Gather any evidence you need to show that the charges should be reversed. This may include the time and place of the charge, product marketing that shows you didn’t receive what you paid for and the date of the billing cycle when the charge first appeared.

Contact the merchant: If possible, negotiate with the merchant before initiating the chargeback process. It may mean reaching a quicker resolution. J. Craig Shearman, spokesman for the National Retail Federation, says, “Going to the credit card company should only be a last resort. Consumers need to realize that abuse of chargebacks drives up costs for retailers. Higher costs for retailers ultimately means higher prices for consumers.”

Contact your card issuer: You can either call the number on the back of your card or complete an inquiry form on your issuer’s website. If you’re discussing a fraudulent purchase, calling is best.

Complete dispute paperwork: You can notify your card issuer by mail with a dispute letter. The Federal Trade Commission provides a sample letter.

It’s important to note that during the time of a dispute, you still need to make your minimum credit card payments as normal. Smaller disputes may be refunded in short fashion, but larger disputes could take time to investigate. A chargeback does not guarantee that you will receive a refund, but it does offer a clear process for investigating charge disputes.

How chargebacks are protected

The Fair Credit Billing Act of 1975 provides some protections for consumers as far as billing and chargebacks are concerned. It’s a way to prevent unfair billing practices. It also provides guidelines for consumers and card issuers for how to go about dealing with chargebacks.

The act states that you have 60 days to notify your card issuer of a charge you wish to dispute. That 60 days begins from the day you receive your credit card statement showing the charge, not from the day of the purchase. At this point the card issuer has 30 days to respond with how they plan to resolve the issue. By law, issuers have to resolve any issues within two billing cycles. In the event that a card issuer does not follow the guidelines outlined in this act, they forfeit the right to collect on a disputed charge.

How a chargeback can be reversed

A chargeback reversal can happen when a merchant contests the process. According to Chargebacks911, 28% of merchants contest all chargebacks. It can be in a merchant’s interest to reverse as many chargebacks as possible in order to recover revenue, save face and send a message to customers that chargebacks should only be used when there is a genuine reason. That said, the process involves a great deal of documentation including evidence to show why the chargeback should be reversed as well as a rebuttal letter explaining the evidence.

The next step in this process is informally called pre-arbitration chargeback. This involves the card issuer rejecting the merchant’s reversal, and the card network stepping in to make a ruling on whether the chargeback will stand or be reversed.

Canceling a chargeback

In a world where purchases can be made with a tap to a phone screen, it’s easy to lose track of them sometimes. Maybe someone in you home made a purchase using your card and didn’t tell you. Or maybe the merchant agrees to a refund after you’ve initiated the chargeback process. If you have initiated a chargeback and wish to cancel it, you can call your card issuer and ask to withdraw the chargeback. You’ll need to explain why you are withdrawing it and include details of how the chargeback was resolved.