You may be unhappy with a purchase or feel that a broker is not providing you with the service you signed up for. If you paid with a credit card, you may feel it is worth filing a chargeback claim and try to get your money back.
The chargeback process sometimes goes smoothly and often does not, so it is important to be informed from the beginning. There are essential things to know about the chargeback process and the different types of chargebacks.
Chargebax has the expertise and the right strategies to make your chargeback claim successful. We work with hundreds of banks and financial institutions and can communicate your case in a way that can greatly improve your chances of chargeback success.
What Is a Chargeback?
A chargeback is a reversal of charges on any transaction for which a credit card was used. The true chargeback definition is restricted to credit cards, although people may speak informally of Paypal chargebacks, for instance, even though other payment platforms don’t strictly fit the chargeback meaning.
Many of us have had experience with chargebacks when we look at our statement or transaction history and notice charges we did not make. We then request that the charges be reversed. This is a simple example of a chargeback. However, often chargebacks require a detailed complaint and a dispute between the customer and merchant. The issuing bank will issue a final decision in these chargeback disputes.
One reason many consumers prefer to pay through credit cards is that it makes refunds and fund recovery in the case of fraud easier. If you pay in cash, it is your word against the merchant’s, even if you manage to produce a receipt. Bank transfers require a separate transaction to return the money and the same is true of cryptocurrency on the blockchain.
However, credit cards have the advantage of allowing transactions simply to be reversed as if they didn’t happen. This may sound simple, but chargeback disputes can be complex and take some time. Issuing banks are not as quick to grant chargebacks as they were in the past given the prevalence of chargeback fraud and the volume of claims and complaints in the eCommerce era.
What Is the Chargeback Process Like?
If fraud or unauthorized charges can be proven to have been without the customer’s knowledge or permission, the chargeback process can be fairly straightforward. For obvious reasons, the other party is not involved in the dispute and there is no prolonged back and forth between sides.
However, the situation is more complex if there is a dispute. The issuing bank, or the bank that issued the credit card, acts as a judge between the two sides. The customer is first asked whether they approached the merchant prior to making a claim because this is required.
The issuing bank can decide whether the claim is worth pursuing and will forward the complaints to the merchant who has 20 days to a month to respond. The issuing bank will decide whether to honor the chargeback request and get the money back from the merchant or to throw out the complaint.
3 Types of Chargebacks
Fraud or Unauthorized Charges
Outside of the world of chargebacks, we tend to speak of fraud in broad terms. Basically, we think of fraud or a scam as a situation in which the merchant wants to get away with taking money from a customer without providing the product or service that was promised.
However, this is not what is meant by “fraud” in the chargeback process. The issuing bank, after all, may act as a judge but is not an actual judge in a law court and can’t determine intent. Therefore, the only type of chargeback claim that usually results in the expedited return of funds is fraud as it relates to wholly unauthorized charges.
That means that people who feel they were scammed by a merchant or a broker must file a claim for a merchant dispute, but they can’t call it fraud if they authorized the charges. It is very important to understand this before filing a chargeback claim, or the claim could be promptly thrown out if it is labeled as fraud but the charges were authorized.
Most of the chargeback cases fall under the chargeback definition of merchant disputes. This occurs when you pay for a product or service but it is not what you ordered. The burden of proof is on the customer to prove that the merchant did not deliver on what was promised. To prove that they are entitled to a chargeback, the customer may have to provide:
- Communications with the merchant
- Records of the transaction
- Terms and conditions
- Claims and guarantees expressed in advertisements
- Reviews of the product
- Photos and other evidence showing the quality of the item or service
A customer making a chargeback claim may be asked to provide additional documents. The purpose is to prove that the customer was not given what they paid for.
Chargeback Fraud or Friendly Fraud
The third type of chargeback is a major problem for merchants and by extension consumers as well. Chargeback fraud or friendly fraud is the shoplifting of the digital age. It involves dishonest consumers abusing the chargeback process. They buy something they intend to keep or sell and file a fake chargeback claim. The issuing bank may rule in their favor, and this means they have successfully stolen the object.
The prevalence of chargeback fraud has made the chargeback process more complex for customers and means that banks may be less quick to rule in the favor of the consumer. This means that your case must be airtight if you want to file a chargeback claim. It also means that having a fund recovery agency on your side that understands the banks will increase the likelihood that your claim will result in recovered funds.
How Chargebax Can Help You Succeed with Your Chargeback Claim
Given the increasing challenges in the chargeback process, you need to have someone on your side. Chargebax experts have dealt with numerous chargebacks and have helped our clients retrieve funds from crypto scams, forex scams, and merchant frauds. We have a strong working relationship with banks and can give you the strategies you need to get your funds back.