Have you wondered about how chargebacks on credit cards work? It is not unusual anymore that your friend goes out every week and keeps on buying all the new gadgets again and again just by swiping his shiny credit card.
Credit cards are payment cards issued by the bank to the customer using which the customer can make payments and take small credits up to the defined limit with a promise to pay back the amount used to pay for goods in addition to the charges levied against any such transaction for a stipulated amount of time.
But what happens when you pay for a service or good is not up to the mark as promised by the seller and you want your monkey back? Chargebacks happen; it is a legal activity to protect the customers.
5 Essential Things About Chargebacks On Credit Cards
What are Chargebacks?
What if you purchased a microwave and after delivery, you get to know that it is not working or what if you come across some unusual transaction or double payment for one product made through your credit card? That is exactly when Chargeback comes to the rescue. In simpler words, a chargeback is a claim filed by the customer against the price he/she paid and not receiving the promised service to get a refund.
What Do You Need to Do?
To get chargebacks on credit cards, you need to raise a dispute with your bank which issued you the credit card. But before that, you need to make sure that you are through the terms and conditions of the company policies and then contact the retailer (in cases of goods & services exchanged for money) and make sure that you have written proof, or emails and invoices to prove authenticity and your effort to resolve the issue with the retailer itself as many times the refund is generated by the retailer itself. Only if the retailer is not keen to resolve your issue, approach the bank and keep your documents ready.
What Does the Bank Do?
Once, the complaint is filed successfully; the bank will hold the funds in question as per your complaint. The investigation process starts to judge the authenticity of the claim. If the investigation favors the customer, the customer gets a chargeback, but if the investigation doesn’t deliver worthiness, then the funds which were kept on hold are transferred to the retailer’s account.
What Are the Charges Involved?
There are a certain amount of chargers involved when it comes to dealing with chargebacks. The bank charges a fee to the retailer whenever a customer files for a Chargeback and can justify the claim.
But if the Chargeback request made by the customer is found to be illegitimate, then it negatively affects the credit score of the customer and can even reach to the point where the card issued by the bank can be closed. If a seller has too many chargeback requests, the bank can also term the seller as a “fraudulent seller”.
When Can You File for a Chargeback?
Typically, you can file for a Chargeback request within 120 days of the date of the transaction and it has to be settled in 180 days. But at the same time, the duration differs from country to country, make sure to get in touch with the deciding authorities as soon as you get to know that there is some trouble.
Chargebacks are nothing but a fair medium to protect the customers after due investigation but at the same time consider loopholes for honest sellers.