What Is a Chargeback?

Most of us use credit cards frequently without worry. Although there is some risk that a credit card will get lost or stolen, credit card companies and issuing banks are usually quite helpful in making chargebacks on behalf of customers. However, when it comes to merchant disputes and chargeback requests for items or services that were unsatisfactory, it may not be so simple to get your money back. 

Why are some chargeback claims honored rather quickly whereas others involve a long back and forth between the customer, banks, and customers? What happens when you are dealing with scams and merchants or brokers that disappear without a trace? It is important to understand the chargeback process and how banks deal with various types of claims. 

Because of chargeback fraud and the rapid increase in the number of requests for reversal of charges, many issuing banks are more cautious about these claims. Customers have been found to abuse this process at the same time that the incidence of crypto scams and forex scams and merchant fraud have increased the volume of requests to have a transaction reversed. 

Therefore, it is essential for everyone who makes a chargeback claim to have a fund recovery agency working on their side. 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 to your advantage.

Different Types of Chargebacks

A chargeback refers to a reversal of charges on a credit card. It is like getting a refund from a merchant. If you have ever asked for a refund when a credit card was used for a transaction, you can usually contact the merchant, state the reason for your refund request, and the merchant will likely agree to refund your money by reversing the credit card transaction. 

Another category of chargeback involves unauthorized charges. This is what issuing banks refer to as “fraud” when they discuss various chargeback definitions. This is not to be confused with chargeback fraud, which is committed by customers who misuse the chargeback process or the customer’s perception that a merchant is fraudulent, but they authorized the charges. 

In the case of unauthorized charges, the chargeback process is fairly straightforward, particularly if the card was reported lost or stolen before the unauthorized charges appeared. This is what the issuing banks refer to as “fraud” for the purposes of chargebacks, although most of us have a broader definition of fraud. 

For instance, we recognize we can authorize a transaction at the time only to discover that a merchant or broker is fraudulent later and want to get our money back. The issuing banks, however, do not call these cases fraud, but refer to them as “disputes.” 

It is important that anyone who is making a complaint understand these categories. You only have one time to make a chargeback claim, and often people make the mistake of submitting a complaint about problematic activity by merchants after they have authorized charges as “fraud” instead of as “dispute.” This often results in a claim getting rejected, so it is essential to understand this distinction. 

The Chargeback Process Explained

The chargeback process involves many steps with the issuing bank playing the central role in deciding the dispute. The customer submits a request for a chargeback and states their reason. The issuing bank will decide whether or not the case has merit. Often they will confirm that the customer has first brought the problem to the attention of the merchant. 

The issuing bank will inform the acquiring bank or the merchant’s bank about the chargeback request and the customer’s complaint that led to it. The merchant will have a certain amount of time to respond, usually around 20 days. The merchant will either agree that the charges should be reversed or will provide a response. If the two parties continue to disagree, the issuing bank will decide the dispute. 

What Are the Challenges Involved in the Chargeback Process

The chargeback process can be relatively quick or can take months. Those involving unauthorized charges that can be proven as such usually handled quickly. However, cases of merchant dispute can often last a long time. Some credit card companies are rumored to have tendency to rule in favor of merchants or customers. However, there is no evidence that credit card companies have a special bias towards one party or the other. Of course, issuing banks want to keep their customers and to be fair to them. However, they also have to keep up a strong relationship with their mechants. Losing either customers or merchants would be hard for issuing banks.

Customers who do not have a successful chargeback could threaten to leave negative reviews. Merchants could end their connection with a credit card company. Therefore, it isn’t in the interest of credit card companies and their banks to show bias. However, it can be noted that chargebacks can be more challenging than they have been in the past. One reason is the massive increase in chargeback requests since the beginning of the COVID pandemic.

This has occurred as a result of the rise in crypto scams and forex scams and fraudulent merchants cheating people online. Many people want charges reversed, even though they have authorized charges. In addition, chargeback fraud has become more frequent. Chargeback fraud is also referred to as “friendly fraud” and is a high-tech version of shoplifting. The customer will buy something, claim it is not what they wanted, keep it and still go through the chargeback process to try to get their money back. The increase in these abuses can put a greater burden on the customer to prove that they deserve to have their funds returned.

How Your Chargeback Claim Can Be Successful

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.