What is a credit card chargeback?
If you want to reverse a transaction and can’t get a refund, you may be able to get a credit card chargeback instead – here's how.
A chargeback is a form of consumer protection that helps you get your money back in specific situations – for example, if a business refuses to give you a refund that you're entitled to or an unauthorised transaction is made from your account. In these cases, a chargeback can reverse the charge that was made to your card so you're not unfairly out of pocket.
How to request a chargeback
Credit card providers have their own processes for chargebacks, but they usually involve the following steps:
- Contact your provider and explain the charge you want reversed.
- Fill out a chargeback or dispute form.
- Provide relevant documentation as requested (e.g. purchase receipts, account statements, written communication or cancellation of a direct debit).
After submitting your chargeback request, your credit card provider will review it. This usually takes up to eight weeks (but could take longer during the coronavirus pandemic).
If it's approved, your credit card provider will deduct the amount owed from the merchant and credit it back into your account.
When can I request a chargeback?
A chargeback is only available under certain circumstances:
- Unauthorised transactions. These include unrecognised or fraudulent transactions that appear on your account, which have not been authorised by you or an additional cardholder.
- Different transaction amounts. If the amount on your account statement doesn’t match the amount on your receipt, you may be eligible for a chargeback.
- Duplicate processing. This happens when a merchant accidentally charges you twice.
- Cancelled recurring transactions. This happens when a recurring transaction goes through even though you have cancelled it.
- Faulty or defective purchases. If your purchase arrives with faults or defects or it’s not as described and the merchant refuses to refund you, then you can request a chargeback.
- Unfulfilled services. These include services that have been paid for but not rendered – for example, if you booked and paid for a company to clean your home and they never showed up.
- Missing or undelivered items. This happens when you have ordered goods but they did not arrive.
- Missing refunds for returned items. When a merchant has accepted your return, but fails to process the appropriate refund to your account.
In most cases, your credit card provider will advise you to approach the business directly and try to resolve the issue before you request a chargeback. This is usually a faster way to deal with the issue as chargeback requests can take months to be assessed.
But if you have tried to get a refund and been denied when you think you're entitled to one, you can request a chargeback and include details of your attempts to get a refund as part of the process.
When would a credit card chargeback be denied?
The most common reasons a provider might deny a credit card chargeback include:
- You provided incorrect or insufficient information. This happens if you made mistakes filling out the chargeback request, lied or did not provide enough required details.
- You’ve already been compensated. You cannot be compensated twice for the same transaction, so your chargeback will be denied if you have already received a cash refund from the merchant.
- You’re eligible for an insurance claim. Your chargeback may be denied if you can make an insurance claim.
- It’s too late to apply. Most issuers have specific time limits for requesting chargebacks. You must apply within your card provider’s specified time limit or your chargeback request will be denied by default.
- The merchant successfully proves the transaction. During the chargeback investigation process, merchants are given the opportunity to dispute the chargeback request. If they are able to provide evidence that the transaction was correctly processed and that all items were delivered to you in good order, your chargeback request may be denied.
How to deal with a denied chargeback claim
If your credit card chargeback is denied and you think the decision is not fair, you can make a formal complaint to your provider or through the Australian Financial Complaints Authority (AFCA). This is the official dispute resolution scheme for financial services in Australia (previously the Financial Ombudsman Service).
You can lodge a complaint with AFCA online or by calling 1800 931 678. You can also lodge a complaint by mail.
Depending on your circumstances, you may also be able to consider the following options:
- Submit an insurance claim
- Contact the merchant directly
- Look into other dispute or resolution services (for example, those provided by PayPal or eBay if relevant)
Generally, you should have no problem getting a successful credit card chargeback if you apply for it within the eligible period and are careful to provide all the necessary details and documentation. In some cases, your chargeback may be denied because you’re eligible to make an insurance claim for the item. If it gets more complicated than that, you can always file a dispute.
Understanding how the whole chargeback process works beforehand will help ensure that you get what you’re entitled to.
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