One of the primary benefits of using a credit card is the level of protection it provides. Along with various perks, credit cards offer a few safeguards, such as fraud protection and a chargeback system. Although the chargeback system is incredibly useful, it's often overlooked. Therefore, today, we'll delve into the details of the credit card chargeback system.
Compared to a bank account or debit card, a credit card's chargeback system is much more potent. Chargeback refers to the process of disputing a transaction that you believe you're not responsible for paying.
Under what circumstances can you file a chargeback claim?
You can file a chargeback claim with your card-issuing bank if you experience any of the following issues:
- Fraudulent transactions
- Non-delivery of an ordered item
- Item damaged upon arrival
- Incorrect transaction amount
- Charged for a canceled subscription
- Service not received
In case of any fraudulent transaction, it's essential to file a chargeback immediately. If you've purchased a damaged product, received an incorrect item, or the merchant didn't deliver the product, you can also file a chargeback claim. Additionally, if you've paid for a service but didn't receive it, or if a company continues to charge you for a canceled digital subscription, you can also file a chargeback claim. These are just a few examples, and the reasons for filing a chargeback claim are not limited to them. If you feel that you've been cheated, you can file a chargeback claim. However, it's crucial to avoid filing a false chargeback claim, as this can result in legal issues.
What is the procedure for filing a chargeback?
If you wish to file a chargeback, you can call your bank's customer care and explain your issue, and help them to identify the transaction you want to dispute. Your bank may ask you to download a chargeback claim form, fill it out, and send it to them via email. This process may take up to 120 days to complete. The bank will provide you with temporary credit for the disputed amount so that you do not have to pay until the bank decides on your chargeback claim.
What happens next after a chargeback is initiated?
The chargeback process is not a single event, but rather a complex and time-consuming process involving several parties. The main participants in this process are the cardholder, the merchant, the issuing bank, the acquiring bank, and sometimes the credit card network.
The chargeback process starts with a disputed payment. When you dispute a transaction, your card-issuing bank will notify the merchant through the acquiring bank. Upon receiving the notification, the merchant can either accept the chargeback or challenge the claim. If the merchant accepts the chargeback, then you will receive a refund from your bank, the temporary credit that was previously credited will become permanent.
However, if the merchant decides to challenge your claim, they must submit a rebuttal letter and supporting evidence to prove that the dispute is invalid. The issuing bank will evaluate this evidence and make a decision whether to reverse or uphold the chargeback.
If the bank decides in favor of the customer, they will receive a refund, the temporary credit will become permanent. On the other hand, if the bank decides in favor of the merchant, the temporary credit will be reversed from the customer's account, and they will have to pay the bill within the due date.
If the merchant disagrees with the bank's decision, they can also appeal through arbitration. At this point, the card network, such as Rupay, Visa, Mastercard, Amex, etc, who issued customer’s credit card, will step in to decide the case. However, the losing party in arbitration will be charged some fees, and no further appeal will be accepted.
Credit cards offer many benefits, including the ability to file chargeback claims. Personally, I have filed three or four chargeback claims and won all of them. Unfortunately, many credit card users are not aware of these hidden benefits, which can be invaluable. Chargebacks have saved me many times and given us the power to avoid being harassed by merchants or companies.
