You get your credit card statement and notice two separate charges for that Friday night when you invited a few co-workers out for a drink. Being a responsible drinker, you remember the bar tab you signed. You know you didn’t sign another one. And, being a responsible credit card holder, you know your rights. You call your credit card issuing bank to request a chargeback.
The chargeback procedure protects credit card holders by allowing them to dispute a charge on their account. You can request a chargeback for various reasons such as:
• a billing error
• duplicate charge
• unauthorized transaction
• goods or services not delivered, not what you ordered, or damaged.
You follow up your initial call with an e-mail, fax or letter explaining why you are requesting the chargeback, providing details of the date and place of the transaction, the name of the establishment (merchant), and any supporting documentation you have. According to the Fair Credit Billing Act you have 60 days from the date your credit card statement is mailed to provide your chargeback request in writing.
Your credit card issuer will verify the validity of your claim. The issuer gives you a provisional credit and charges the merchant’s bank. Then the merchant’s bank reviews the chargeback and requests documentation from the merchant. Now the ball is in their court. They have to substantiate the charge to your credit card. One way they can do this is with a signed receipt. If the merchant cannot produce adequate documentation, the chargeback is successful — your account is credited and the merchant’s account is charged.
The merchant’s recourse is generally preparation and prevention. In a brick-and-mortar establishment, they swipe your credit card or get a manual imprint of the card, and will generally have a signed receipt. Online merchants have to take extra precautions such as obtaining authorization approval and address verification.
According to the Consumer Credit Counseling Service, debit cards are not covered under the Fair Credit Billing Act, but Visa and MasterCard provide a chargeback feature for debit cards as long as you choose to run it as “credit” rather than “debit.” The difference is that for debit cards, the money has already been taken from your account and you have to wait for a refund.
You may want to try to resolve the disputed charge directly with the merchant before beginning a chargeback. Merchants have an incentive to avoid chargebacks because they are charged additional fees. If they have too many chargebacks, their ability to accept credit card payments could be revoked. Keep track of your telephone calls, e-mails and other efforts to resolve the matter with the merchant. This information will support your chargeback request if you are unable to resolve the claim with the merchant.
That extra charge for your Friday night out may be a simple billing error. But what if your credit card information got into the wrong hands? Chargebacks also protect you against fraud and identity theft. Traditionally, merchants have been liable for credit card fraud, but if they handle the transaction properly, the burden may be shifted to the card issuer. As far as you are concerned, it is important to carefully review your credit card statements and question any doubtful charges. The chargeback can be one of your best defenses.
