A chargeback is a reversal of a charge on a credit or debit card, typically initiated when a customer disputes a transaction on their account statement or transaction report. It occurs when a customer asks their bank or credit card issuer to return funds for a transaction they believe is incorrect, fraudulent, or unauthorized. Key points about chargebacks:
- They are initiated by the cardholder or the issuing bank.
- Chargebacks reverse the payment amount and return the funds to the cardholder.
- They differ from refunds, which are initiated directly by the merchant.
- Chargebacks can happen for reasons such as fraudulent charges, duplicate charges, technical errors, or if the customer did not receive the goods or services.
- The process involves the bank investigating the dispute, and the business has a chance to contest the chargeback.
- Chargebacks can take weeks to months to resolve and often involve fees for merchants.
In summary, a chargeback protects consumers from unauthorized or incorrect charges by allowing them to dispute payments and potentially have them reversed by their card issuer. It is a regulated process in the U.S. under laws like the Electronic Fund Transfer Act and the Truth in Lending Act. Merchants often seek to avoid chargebacks because they can be costly and time- consuming to handle. This overview captures the essential meaning and function of a chargeback. Let me know if you want more details on the chargeback process or how it differs from refunds.
