What is a chargeback and how to get money back for a purchase with it

[Carding]

What Is a Chargeback?
A chargeback is a charge that is returned to a payment card after a customer successfully disputes an item on their account statement or transactions report. A chargeback may occur on debit cards (and the underlying bank account) or on credit cards. Chargebacks can be granted to a cardholder for a variety of reasons.

In the U.S. chargeback reversals for debit cards are governed by Regulation E of the Electronic Fund Transfer Act. Chargeback reversal for credit cards are governed by Regulation Z of the Truth in Lending Act.

KEY TAKEAWAYS

• A chargeback is the payment amount that is returned to a debit or credt card, after a customer disputes the transaction or simply returns the purchased item.
• The chargeback process can be initiated by either the merchant or the cardholder’s issuing bank.
• Merchants typically incur a fee from the card issuer when a chargeback occurs.

Chargebacks Explained
A chargeback can be considered a refund since it returns specified funds taken from an account through a prior purchase. In this sense, it differs from a voided charge, which is never fully authorized for settlement. Focused on charges that have been fully processed and settled, chargebacks can often take several days for full settlement as they must be reversed through an electronic process involving multiple entities.

Charges can be disputed for many reasons. A cardholder may have been charged by a merchant for items they never received, a merchant could have duplicated a charge by mistake, a technical issue may have caused a mistaken charge, or a cardholder’s card information may have been compromised.

Important: Typically, credit cardholders have a timeframe in which they can dispute a charge, known as the chargeback period.

Disputing a potential chargeback can be challenging for a cardholder as it requires time to dispute the charge with a customer service representative and may also require a receipt or proof of transaction. Still, in the case of a fraudulent charge, banks are usually highly supportive in researching and issuing chargebacks in a situation where a card number has been compromised.

The most common chargebacks occur, however, simply when a cardholder chooses to return an item. If it is within the merchant’s allowable timeframe, the merchant can initiate a chargeback as a refund. If it's not, the merchant might issue the customer a store credit, as a courtesy. Other chargebacks may be more complicated.

Chargeback Processing
The chargeback process can be initiated by either the merchant or the cardholder’s issuing bank. If initiated with a merchant the process is similar to a standard transaction; however, the funds are taken from a merchant’s account and deposited with the cardholder’s issuing bank.

For example, a chargeback initiated by a merchant would begin with a request sent to the merchant’s acquiring bank from the merchant. The acquiring bank would then contact the card’s processing network to send payment from the merchant’s account at the merchant bank to the cardholder’s account at the issuing bank.

If a chargeback is initiated by the issuing bank, then the issuing bank facilitates the chargeback through communication on their processing network. The merchant bank then receives the signal and authorizes the funds' transfer with the confirmation of the merchant. In some cases, such as with fraudulent charges, the issuing bank may grant the cardholder with a chargeback while also sending the claim to a collection department. In this case, a bank takes on the liability and expenses the chargeback through reserve funds while researching and resolving the claim.

Merchant acquiring banks will generally charge a fee to merchants for chargeback transactions. These fees are detailed in a merchant account agreement. Fees are typically charged per transaction to cover the costs by the processing network. Additional penalties for chargebacks may also apply.

(c) https://www.investopedia.com/terms/c/chargeback.asp

 

[Father]

Marina ordered expensive shoes from a foreign online store. When the package arrived, it turned out to be completely different shoes. Marina sent the purchase back to the store, but the money was never returned to her. The seller did not even answer any of her letters. Friends told her that you can try to get the money back through the bank using a chargeback. We will tell you what it is and in what cases it can be used.

What is a chargeback?
A chargeback is a procedure for challenging a payment on a bank card with which a person does not agree.
Usually, a chargeback is used when there is a disagreement between the buyer and the seller of a product or service provider. If the cardholder mistakenly sent money to the wrong person, voluntarily transferred it to scammers, or invested unsuccessfully, the chargeback will not work.
In the process of refunding a payment through a chargeback, the buyer's bank, the seller's bank and the payment system through which the payment was made will be involved.
The return scheme looks like this. A dissatisfied buyer contacts his bank and asks him to return the money to the account. The bank evaluates whether it is possible to start the chargeback procedure. Whenever possible, he transfers the buyer's claim to the payment system, which sends it to the seller's bank. He finds out whether his client is really obliged to return the money. If everything is so, he will write off the required amount from the seller's account and send it to the buyer's bank through the payment system. The refund will then be credited to the buyer's account.
The rules and terms of the procedure are established by the payment systems. There is no concept of “chargeback” in legislation, therefore banks independently decide whether to use this procedure or not. The bank's position on this issue should be the same for all customers and fixed in its internal rules. Customers of most banks that issue plastic cards can try to return the money through a chargeback if the seller refuses to comply with the terms of the contract.
Most often, chargeback is a free procedure for the client, although banks have the right to set a commission for it. But in this case, its size must be indicated in your agreement with the bank.

When can a chargeback be requested?
The situations in which you can request a refund are determined in the rules of payment systems and the banks themselves. The most common ones are:

• You paid for the item but did not receive it.
• The seller delivered the wrong item to the one you ordered, or sent a defective item. You returned the purchase, but did not receive the money back.
• More than the value of the product or service was charged from the card. The exception is situations when you paid for the goods in one currency, the seller received money in another, and due to the conversion there was a difference in the amounts.
• The seller wrote off the money by mistake. For example, you paid for an annual subscription to an online cinema. The checkbox “automatically renew subscription” was not checked, but the service still took money from your card for the next period. Or you bought socks in an online store, but after that they began to bring you a new batch every month and withdraw money from the card. You refuse the product, but you cannot cancel this “auto-subscription”, the seller does not respond to letters.
• Money for the same purchase was charged twice.
• The hotel said it was free to cancel your reservation, but when you did, you were still charged for the room.
• The car rental service debited money from the card for repairing damage that occurred through no fault of yours. You have photographs or videos that prove that you returned the car in the same condition in which you took it.

Chargeback can help out in other cases when your money was unlawfully debited or you were supposed to return the payment for the purchase, but did not do it.
Check with the bank if he can start the chargeback procedure in your case. Sometimes you can get a return in other ways as well. Let's say your card is issued by the same bank that serves the merchant, then the dispute will be resolved without the participation of the payment system, based on the rules of the bank itself.

What do I need to do to get my money back through a chargeback?
The procedure consists of several stages.

1.vTry to fix the problem with the seller yourself
This step cannot be skipped. The bank will not accept an application for a chargeback until you prove that you have already tried to refund the payment yourself.
Tell the seller what happened and ask them to transfer the money back. Perhaps he will immediately admit the mistake and correct it.
It is best to send a complaint in writing: by e-mail, through the contact form on the website or chat with a consultant. If you purchased items from a catalog and the seller does not have electronic contacts, send a certified letter with return receipt requested by regular mail.
Be sure to save your correspondence with the seller: letters, their copies, print screenshots of chats. If the seller refuses to return the money, you can confirm that it was not possible to resolve the conflict on your own.
If the seller did not respond to your first request, write to him again, wait a while, say, a week (for online correspondence) or a month (for communication via email), and then proceed to the next step.

2.Submit a refund application to your bank
Do this immediately after you receive a rejection from the seller or realize that there will most likely be no response. Payment systems set different deadlines for applying for a chargeback, depending on the moment at which the purchase was paid.
If the buyer immediately received the product or service after payment, then usually the application can be submitted within 120-180 days. Moreover, the countdown can begin both from the moment the money is transferred and the expiration of the service agreement. For example, you bought an annual subscription to a fitness club, but for a long time could not reach the gym. After 10 months, you finally pulled yourself together and went to training, and by this time the club had already closed. The paid service was never provided. If the owners of the club do not voluntarily refund the money for it, you can request a chargeback, despite the fact that almost a year has passed since the payment. After all, taking into account the fact that the contract has not yet ended, you are meeting the deadlines.
If the buyer has paid for the product or service in advance, then up to 540 days from the date of payment are given to protest the operation. For example, on May 1, you bought a ticket for a concert due on November 29. A week before the event, it was canceled, but the money was not returned. 213 days have passed between the purchase of the ticket and the date of the canceled concert, which means that you still have the right to chargeback. The same scheme works if you made an advance payment for furniture. It was made for a couple of months, and then they brought a marriage, while they refuse to eliminate the defect or return the money.
Banks have the right to reduce the time for filing claims for cards. If you are planning to request a chargeback, please check what rules apply to your bank.
For a refund, you need to contact your bank, and not the seller's bank. Tell them that you want to object to the card transaction (not all banks know the word "chargeback"). You will be given an application form provided for such an event, or asked to write a free-form complaint. In some banks, you can submit an application by e-mail or through your personal account.
All documents that are relevant to the case must be attached to the claim. For example, a check, a copy of a postal receipt that confirms the shipment of the goods back to the store, correspondence with the seller. If your letters remain unanswered, please attach only them.

3.Wait for the bank's decision
By law, the bank is obliged to accept your application for a refund on a card transaction and give an answer within 30 days if you made a purchase within the country, or 60 days if you paid for a product or service to a foreign seller.
The bank will either launch a chargeback by transferring your application through the payment system to the merchant's bank, or will refuse to return the money.

Refusal is possible in three cases:

• your bank does not carry out a chargeback procedure at all;
• your claim does not comply with the chargeback rules of the payment system that serves your card, or the bank's rules;
• you applied for a chargeback later than the allotted time.

The bank may also ask you for additional documents or recommend that you contact the seller again if you have made only one attempt before.

4. Get your money back
After your bank transfers the claim to the payment system, it forwards it to the merchant's bank, which will conduct its own investigation.
It may turn out that you were debited or not returned money completely legally. For example, you bought air tickets at a non-refundable rate, and then decided to refuse them. In this case, the chargeback will not help you get paid back.
If it turns out that the seller really unlawfully debited money from the card, his bank will transfer the required amount to your bank through the payment system. And he will credit it to your account.

The bank did not help to return the money. Can I complain about it to the payment system or the Bank?
Payment systems do not work with individuals. But the banks themselves can involve the payment system as an arbiter if they fail to come to a consensus.
The Bank can check whether your bank has violated the law, the rules of the payment system and its own rules, for example, whether it responded to your application on time. But the regulator has no right to force him to return money to you from someone else's account.
If the chargeback procedure did not work, you can try to solve the problem differently - complain about the seller, file a lawsuit against him, or try to negotiate with him peacefully again. For example, if a company is unable to meet its obligations due to the coronavirus pandemic, it may offer other compensation options instead of refunds . And it's up to you whether to agree to them or continue the argument.