Many consumers occasionally encounter a situation where they don’t want to pay a fee on a credit card statement and consider contacting their bank to dispute it. Sometimes it does make sense, such as when fraudsters have used your charge card information.
The right to chargebacks for consumers was established by law in 1974. The purpose of this law is to protect credit card holders from fraudulent practices by merchants as well as individuals who may steal their credit card numbers. Under the law, every consumer has the right to go to the card-issuing bank and dispute a chargeback they believe was illegally made or did not authorize.
Key credit card networks such as Visa, Mastercard, American Express, and Discover have used the chargeback law to create their own rules to guide them in handling disputes from consumers.
Obviously, when credit card fraud occurs, you need to report the problem to the bank and dispute the payment as soon as possible. What often happens, however, is that the cause of problems with orders may not be fraud but rather delays in delivery, substandard products, or misunderstanding of the contract or return policy.
That’s why it’s important first to understand the intricacies of eСommerce order processing, understand the causes of disputes, and how you can get out of them victorious.
How Does a Cardholder Dispute a Charge?
Most credit card holders are able to dispute chargebacks simply by contacting the issuing bank through a convenient service channel. This can usually be done over the phone, online, or through an online banking application. Most often, such disputes should be opened within 60 days of the payment being made. Sometimes banks may require customers to dispute charges in writing, but most banks value customers and don’t require too much from them when filing a dispute.
Nevertheless, they always require the cardholder to make clear and reasonable demands with the necessary documents that establish legitimate grounds for a chargeback. Today banks do not always follow the rules clearly and may accept dubious chargeback requests just to satisfy their demanding customers. Such situations contribute to the emergence of friendly fraud.
To decrease your chargebacks, you can use Chargebackhit. This service prevents chargebacks with alerts, resolves disputes, and fights such claims.
What Happens After a Dispute is Filed?
The process can be described as follows: if the issuing bank accepts the dispute, it turns into a chargeback. The bank reserves the disputed charge on a merchant account, which was presented as a temporary credit and became permanent after the acceptance of the chargeback by the acquiring bank.
Sellers, in turn, have the right to make countercharges which they believe are valid and should not be returned. They do so by providing evidence of their case. Those disputes that cannot be resolved at this stage are referred to card network arbitration. Such actions can be very costly, and the cardholder should know they will be liable and incur additional costs if the card network sides with the merchant in the arbitration process.
What Are Valid Reasons to Dispute a Charge?
There are several reasons you can request a chargeback from the issuing bank:
- When fraud occurs, a third party steals your credit card information and uses it to make unauthorized payments or other actions. There may also be a scenario where a husband or wife has access to your credit card and uses it without your permission. Unfortunately for consumers, this is not fraud and is not the reason your chargeback request can be granted.
- Billing errors, recurring charges, or charging the wrong amount.
- Fraudulent conduct on the part of sellers when they have not provided the promised goods or services for which they have received payments. Also, failure to fulfill other obligations, such as timely delivery, nonconforming goods, or other actions.
When there are problems with the order or other difficulties that the merchant is able to resolve on their part, the cardholder must try to contact the merchant and resolve the problem without the issuing bank’s involvement. On the other hand, the merchant should also go out of their way to help the customer, be loyal and try to solve their customers’ problems.
Why Should Buyers Avoid Filing a Chargeback?
If a customer decides to request a chargeback while communicating with the merchant about an order problem, that’s too bad. The fact is that the cardholder will most likely receive a temporary refund from the issuing bank, and the merchant will pay additional fees for processing the chargeback.
What’s more, every chargeback is tracked by acquiring banks and payment processors. This means that merchants who receive a lot of chargebacks can lose payment accounts or face penalties. Also, merchants who think a chargeback request is invalid may block the buyer and prohibit them from making purchases.
In general, sellers are sensitive to chargebacks, and every seller will likely try to resolve buyers’ problems without requesting a chargeback. Therefore, if you, on the consumer side, are experiencing difficulties with your order, delivery time, or other issues, it’s a better idea to contact the seller, who will likely be happy to resolve your problem, provide you with a replacement product, or provide you with a refund.