Consumers who pay for the majority of their purchases in plastic can rest easy knowing they can request a refund if they are unhappy with a payment.
Credit card chargebacks allow customers to receive refunds in a variety of circumstances, including billing errors and payments for goods and services that were not delivered as agreed.
But what is a credit card refund? And when should you request one? These are common questions that consumers have every time they encounter an unauthorized or incorrect credit card charge.
Also note that cardholders must take certain steps. before they request a chargeback through their card issuer. Read on to find out everything you need to know about credit card chargebacks and how and when to request them.
What is a chargeback?
A chargeback is a chargeback initiated by your card issuer after you have taken steps to ask them to investigate a payment.
Here’s how chargebacks work: If you paid for a product or service with a credit card and you’re unhappy with the payment you received, you can dispute it through the card issuer and let them go to the merchant. If the issuer succeeds where you failed, the purchase amount will be refunded to the credit card from which you charged it.
Please note that chargebacks only apply to “open” accounts such as credit cards and even store cards. In other words, you cannot file a chargeback on other types of loans you have, such as installment loans or personal loans.
When to request a refund
Assuming you first try to resolve the issue by contacting the merchant directly, the following situations require you to request a chargeback from your credit card issuer:
- You have not received the ordered item.
- You feel that the product or service does not meet the standards or is not presented as it was presented.
- You have been billed incorrectly.
- Charged in the wrong amount.
- A fee you don’t recognize appears on your account statement.
Your rights regarding false allegations are set out in the federal Lending Truth Act. Follow the instructions outlined there and the dispute process may work in your favor.
Also keep in mind that there are two categories of disputes: billing errors and “claims and objections”. Your rights are different in each of them. Most complaints can be resolved using the bug billing process. Claims and objections disputes involve quality issues and are a bit harder to prove, but not impossible.
How to make a chargeback
There are a few important steps to keep in mind if you’re unhappy with your credit card charge. By following these steps, you can increase your chances of getting a chargeback and getting all or part of your money back:
- Step 1: Request a refund directly from the seller first.. Your credit card issuer will require proof that you have done this before they will consider disputing the payment. It will also review the terms and conditions you signed when you made the purchase, so you should do that too. With this in mind, you should review your purchase email receipt before proceeding with the next steps.
- Step 2: Keep records related to the purchase. If the seller does not voluntarily refund the purchase you are disputing, you will have to start building your business for a refund. Keep emails, receipts, or screenshots from the seller you bought from to prove you didn’t get your money’s worth.
- Step 3: Contact your card issuer. If you receive a refusal or no response from the seller, file a dispute with your card issuer. You can do this by calling the customer service number on the back of your credit card or by logging into your account online and filling out a dispute form.
How does a credit card refund work?
According to the Federal Trade Commission (FTC), you have the legal right to withhold payment of the disputed charge (or amount in dispute) while your credit card issuer investigates the charge. However, in most cases your card issuer will take care of this part for you by placing a temporary credit in your account while your refund request is pending.
At the same time, the creditor is not legally allowed to take any action to collect the debt or the disputed amount. They are also not allowed to threaten your credit score or report a late or late payment. The lender in question may report that you are disputing their account, the FTC notes.
If your invoice is ultimately found to be in error, the creditor is required by law to explain the corrections to you in writing. You are legally entitled to a credit in your account for the full amount of the approved dispute, and all financial charges, penalties and other erroneous charges must be removed.
However, in some cases, your credit card issuer No decide to refund the payment in your favor, or they may decide only partially in your favor. In this case, you will owe the amount deducted from your account and any credit added to your account during the investigation will be removed. If it is found that you owe a portion of the amount in dispute, your lender is legally required to inform you of the change and also offer an explanation for the partial loan.
You have the right to dispute a chargeback that has not been awarded in your favor, but you only have 10 days to do so after receiving a written explanation of the decision. Your creditor may still try to collect the debt, and they may send any amounts that you don’t pay for collection. However, they are required by law to report that you do not believe you owe that amount. From there, your creditor is also required to tell you who is receiving these reports.
“The lender must also promptly report any subsequent settlement of the alleged delinquency to anyone who receives the report,” the FTC said.
If they do not follow these procedures, your creditor forfeits the right to recover the disputed amount (up to $50).
bottom line
There are many situations where it makes sense to request a chargeback from your credit card, including when you’ve been accidentally charged twice for the same purchase, or you’ve been billed by a company for a product or service that you canceled. You can also request a refund if the product or service was not delivered to the agreed terms, or if you find a purchase you didn’t even make on your credit card bill.
Ultimately, being able to file a chargeback is one of the best benefits of using a credit card over other payment methods. If you choose to pay cash and are unhappy with your purchase, you will almost certainly be out of luck.
Requesting a chargeback through your credit card issuer gives you the option to let someone else resolve your dispute, and you will most likely get your money back if your payment instincts are correct.
Editorial disclaimer
The editorial content on this page is based solely on the objective judgment of our contributors and is not based on advertising. It was not provided or ordered by credit card issuers. However, we may receive compensation when you click on links to our partners’ products.
