How Do Chargebacks Work? A Guide to Chargebacks and Deductions
How often do you check Chargebacks your credit reports and bank statements? If it’s not often, consider doing it more frequently. If you let these go unchecked for too long, you risk erroneous data entering your reports.
If false data enters your statements, it can result in you getting charged for purchases you didn’t make. Fortunately, however, there is a way to fight these charges. That’s where chargebacks come in.
How do chargebacks work, you ask? A chargeback is similar to a refund. However, a refund comes from the seller, while a chargeback comes from your credit card issuer or bank.
In this guide, we’ll further explore the question of “What is a chargeback?” and how to do a chargeback. So, without further ado, let’s jump right in!
What Is a Chargeback Fee?
We’ve briefly explained what a chargeback is, but let’s explore it in more detail. Chargebacks focus on charges posted to an account, such as a credit or debit card account. In these instances, you as the consumer have already had money deducted from your account.
There may be several participants involved in a chargeback, but three primarily exist. These three participants include you, the card issuer or bank, and the seller who received the payment.
How Do Chargebacks Work? Looking at the Participants
The first person affected by a chargeback is you, the cardholder. As the person charged, you become responsible for all the transactions. Sometimes, the merchant who received the charge will agree to refund you the money.
However, merchants may be reluctant to recognize your claim. In cases like this, you’ll have to work through your credit card or bank card issuer.
The issuer or bank typically requires a written statement with your charge details on it. From there, they also require a thorough rationale for the chargeback’s request.
Once you do so, the issuer or bank must conduct its investigation. Afterward, they can determine whether the charge is accurate.
Finally, the merchant must receive notification of the chargeback claim and have enough time to offer a response. Sometimes, a seller may not respond to the chargeback request. In those cases, they usually suffer supplier deductions.
However, a merchant may provide a response that provides robust evidence for the charge’s validity. From there, the claim falls back into the hands of the consumer’s credit card issuer. The issuer will likely compare your claim to the merchant’s response and decide the case accordingly.
When to Use the Chargeback Process
There are several times you may consider using the chargeback process. Some of these include:
- Unauthorized charges
- Receiving a defective item
- An undelivered item
- Duplicated charges or an incorrect amount charged by the seller
Undergoing this process can take significant amounts of time. However, many sellers will choose to honor your request unless they can prove with certainty that your claim is wrong.
Do You Need a Chargeback?
Now that you know the answer to “How do chargebacks work?” decide if you need one. Have you noticed an unauthorized charge or had a faulty transaction? If so, consider using this process!
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