What is a Chargeback?
A chargeback protects cardholders from unsatisfactory sales and service by letting the cardholder demand a "refund" directly from the credit card issuer. If a customer successfully disputes a credit card charge, the account will be credited for the disputed amount via a chargeback.
How to Do a Chargeback
A credit card chargeback gives the consumer third-party protection from merchants and lets consumers recover money that was lost from fraud. The potential threat of a chargeback may also encourage merchants to be more honest and transparent.
Let's say a credit card holder discovers a charge that shouldn't be on their credit card -- perhaps someone stole their credit card number and made a fraudulent charge.
To do a chargeback, the credit card holder must notify their card issuer (bank or financial instutition) and dispute a charge on their credit card that has appeared on their online balance without their consent. The card issuer will typically ask for the amount of the erroneous charge and send the cardholder a form so the cardholder may write more details about why the charge appears to be incorrect or fraudulent.
After the cardholder completes the dispute form, the card issuer will investigate and initiate a chargeback, which refunds the cardholder for the amount in question. The card issuer will then charge the merchant for that same amount for reimbursement.
Can I Dispute a Credit Card Charge I Willingly Paid For?
Yes, sometimes a cardholder may dispute an already purchased item that is damaged or otherwise not to their expectations. That said, consumers should pursue other remedies with merchants and only use chargebacks after exhausting all other choices.
Try contacting the merchant first, as it is usually best for a merchant to voluntarily refund the consumers money than to suffer a chargeback.
How long does a cardholder have to dispute a charge and use a chargeback? The answer depends on the card issuer, but typically they require 30 to 60 days after the charge has been posted on the cardholder's online statement.
The card issuer may also tell the cardholder to not pay the balance on the amount disputed until the dispute has been investigated and resolved.