Ever purchase a product online that was never delivered? Or pay a mechanic to fix your car only to find the problem is worse? If you paid with a credit card and the seller or service refuses or fails to issue a refund, a chargeback can get your money returned.
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The term chargeback might be unfamiliar, but it’s a powerful tool for credit card holders to protect their accounts from unauthorized or unfair charges. In the face of a payment dispute, a cardholder can request a chargeback so that the issuer reviews the transaction and decides whether to refund the money.
Learn all about how credit card chargebacks work, how to initiate a chargeback and when you can request one. For more on credit cards, learn about new credit card features from Amazon and check out our recommendations for the best credit cards right now.
What is a credit card chargeback?
A credit card chargeback occurs when an issuer reverses a payment amount based on a complaint from a customer. Common reasons for chargebacks include product returns, fraud, billing mistakes, unsatisfactory services or undelivered items.
A chargeback is often called a payment dispute because the customer believes they deserve a refund and the merchant doesn’t agree or is unresponsive. You can request a chargeback if you can’t get the disputed amount back from the merchant directly. To come to a resolution, the credit card issuer may work with a number of parties, including the merchant, the merchant’s bank and the payment network that processed the charge.
How do credit card chargebacks work?
Online banking has made it easier for credit card holders to request a chargeback. Initiating the process usually takes a few minutes, though it could take several weeks or months for a credit card issuer to resolve a payment dispute.
After your credit card issuer receives a chargeback request, it will evaluate your claim. You might receive a temporary credit after making your request, which will become permanent if your request is approved.
If approved, the issuer will generally contact the merchant or payment processor to retrieve the funds. The merchant or service provider then has a chance to either accept the chargeback or contest the claim in a process called “representment.”
If your chargeback is contested, the merchant provides evidence showing the charge was justified, and the credit card issuer reviews all the documentation and makes a final decision. That decision can be further contested with an appeal for arbitration, which could involve fees if you lose your case.
How do I request a credit card chargeback?
Before requesting a chargeback, make sure to communicate with the merchant or service provider to see if you can agree on a refund first. Many credit card issuers require proof that you made at least one attempt at getting a refund before it resolves a payment dispute. Because businesses are required to pay fees ranging from $20 to $100 for each chargeback, according to credit bureau Experian, a merchant has some incentive to directly return the amount if it’s owed to you.
Though you can file a written request for a chargeback, most credit card companies make it easy to do on their websites and mobile apps. First, find the specific credit card transaction, then look for a link that says “dispute this transaction,” or something similar.
If you can’t find a way to file a chargeback online, call your credit card company to ask about the process or request one directly over the phone. Some credit card issuers may only allow you to dispute certain transactions by phone.
US federal law stipulates that credit card issuers provide at least 60 days for customers to file chargeback requests, and you may get up to 120 days, depending on the reason for the chargeback, according to Experian. You can request a chargeback for a charge you’ve already paid off, even if it’s from a previous billing cycle.
What’s the difference between a credit card chargeback and a ‘charge-off?’
Though chargeback and charge-off sound similar, they’re two entirely different things related to your credit card. A chargeback gives you money back for fraud, errors, returns or defective service. A charge-off, on the other hand, occurs when a credit card issuer closes an account because a customer fails to pay their credit card bill for a significant period.
Correction: An earlier version of this article was assisted by an AI engine and it mischaracterized some aspects of chargebacks. Those points were all corrected. This version has been substantially updated by a staff writer.
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