When To Dispute Credit Card Charges & Get A Chargeback

by Silicon Valley Blogger on 2010-06-069

There is nothing more frustrating than paying for something and not getting the service or product you expected. What’s even worse is not getting anything at all. In some cases you have even been charged twice, three times or even more for something you never bought in the first place. I know. I’ve been there.

Disputing An Airline Charge

So what do you do when you come across a mistake in your card statement? In my particular situation, I wasn’t sure what to do at first when I realized that my airline credit card had been overcharged for the $1,203 flight I took to New York. Would I have to pay it? How did it happen? Will the airline credit my account?

Apparently, simple mistakes made by merchants such as overcharging a customer, charging the wrong customer, or simply not providing what the customer asks for is pretty common in the marketplace. For cash transactions, the only recourse for us is to negotiate with the merchant that sold us the products or services, which is hit or miss at best. For credit card transactions, however, the process is a little bit different. You actually have options.

credit card chargeback

Since I had purchased the tickets with my Visa card, I figured that the airline would be able to see the error and “fix it”. Boy, was I wrong. The airline, which will remain nameless, refused to address the problem, claiming that I must be mistaken after three full hours of discussions with numerous “managers”, etc. It looked like I was going to be stuck after all, or was I?

Instead of letting it go, I decided to call my bank. Not the one where I have my free checking account, but the one that issued my travel credit card. I explained the situation to them, reminding myself to keep my already boiling temper under control. The representative then suggested that I should issue a chargeback against the merchant.

What Is A Credit Card Chargeback?

Ok, so what the heck is a chargeback? A chargeback is simply a fancy name for a dispute lodged against a merchant in regards to a specific transaction or transactions levied against a credit card. Here’s how it works:

As the cardholder, you find out either by reviewing your credit card statement (which you should always do each and every month) or through a notification by your card-issuing bank, that you’ve been overcharged for a product or service, or you did not receive the services or goods you paid for. You should then call your bank and let them know, preferably in a civil conversation, what has occurred. The bank will then issue a chargeback on your behalf.

The bank contacts the acquirer, or the “bank” for the store from which you used your card, notifying them of the dispute. The merchant’s “bank” will remove the disputed funds from the merchant’s checking account and transfer them to your bank, which then makes those funds available while the investigation is occurring.

The burden of proof lies with the store that initiated the charge(s) to your account. They must prove that they not only charged you in accordance with the terms of the sale but that you received the goods or services that you bought and that they reasonably met your expectations. In some cases, proof of signature is all that is needed, however in more complicated cases, more substantiation is required.

At the end of the investigation, usually within 30-90 days of the initial dispute date, a decision is made regarding the transaction. If the merchant is in the right, he or she will be credited with the amount of the sale and you will be responsible for paying for the goods or services in accordance with your cardholder agreement. If you are found to be in the right, you will not be responsible for the transaction.

I followed the representative’s advice. I completed the form and sent it back to the bank. My credit card account was credited the next morning. Since the merchant was in error, the charges were removed from my account, and I was back to flying the friendly skies in no time, with a different airline of course, armed with the knowledge that if I find myself in this situation again, I would know exactly what to do.

There’s a caveat here though: a company called BadCustomer.com keeps track of customers who make it a habit to seek chargebacks too often. Interesting how the term “friendly fraud” is used to refer to customers who try to abuse this particular avenue for avoiding payments. The key here is to be careful about going down the road of disputing transactions; you should have a strong basis for going down this path.

Credit Card Chargebacks: When To Dispute Card Charges

Being overcharged isn’t the only reason you can issue a chargeback against your credit card. Here is a list of common reasons to initiate a chargeback:

1. Your account number does not match.
2. You did not authorize the transaction on your card.
3. You never received the services or goods you’ve ordered.
4. Your expired card was used improperly.
5. The transaction on your card was processed multiple times.
6. You didn’t get a receipt.
7. There’s an error in the amount you were charged.
8. The receipt you receive is illegible, incomplete or incorrect.
9. The product or service is not what you expected or what was advertised.
10. The transaction performed was counterfeit.
11. The merchant did not get your signature.
12. The signature on your transaction is not yours or is different from what’s on the card.
13. Your credit card has no signature.
14. Possible fraud discovered.
15. Transaction dates are incorrect.
16. You have problems with your order.
17. You are unhappy or dissatisfied with products or services rendered.

There’s a whole lot of other transactions that can trigger a chargeback — these are just some examples.

Understand that you are not required to pay for transactions that you have not authorized or which did not meet your expectations. If you find that you have been a victim of an unauthorized transaction or have simply been overcharged for an item, then contact your bank immediately! In most cases, you only have 30 to 60 days after you receive your statement to dispute an item.

Contributing Writer: Alexis Anderson

Copyright © 2010 The Digerati Life. All Rights Reserved.

{ 9 comments… read them below or add one }

Impulse Magazine June 6, 2010 at 5:12 pm

I definitely believe that you receive a chargeback if it is of course a valid claim.

Free Classifieds Blog June 6, 2010 at 8:22 pm

A very helpful information for charge-back. I get a few email almost weekly where people say their credit cards were charged for some thing that they did not authorize. I always tell them to call their bank and do a charge back because I know I did not charge their credit cards. Many people have no clues what a charge back is.

The other side of the coin, as you have already mentioned, is the habitual charge backer. Instead of refunding the product and getting a proper credit, these people will call their bank and do a charge back. As a business owners, we should fight back against these fraudsters.

Silicon Valley Blogger June 7, 2010 at 9:36 am

This is one of the reasons I give for why I appreciate having a credit card. You can use your credit card as a “buffer” in case you come across issues when dealing with a merchant, vendor or business. I’ve successfully disputed a couple of transactions in the past and found my card company to be very helpful about the process. So yes, got my money back this way.

Another thing about the credit card industry — if you’re a good customer (not just someone who pays on time but also someone who spends a lot), they’re much more attentive to your situation when you actually need their help this way. (I don’t spend a lot but I know a few people who do… and this is what they tell me).

ConsumerMiser June 7, 2010 at 8:19 pm

SVB, thanks for the information on chargebacks. I have been mis-charged for things in the past on my credit card and have disputed it.

I have also used the dispute feature available through credit cards when I receive faulty service such as an auto repair. In fact, when I had a SAAB 900 years ago, I disputed a faulty repair that left me stranded the next day. I ended up getting the repair for free and saved about $800!

Michelle June 23, 2010 at 7:52 pm

This is indeed one of the advantages of using a credit card over a debit card in these situations, for booking tickets, or purchasing something you don’t have the cash for. I don’t think you can use chargebacks with debit cards, since debit cards don’t have the consumer protection credit cards have.

Joy June 12, 2011 at 11:58 pm

I have a problem with a merchant who is supposed to understand my situation. I’ve used a particular website for hotel reservations but for some reason, they charged me for an amount that even in my dreams, I can’t imagine I can pay. After receiving the reservation confirmation from this website, I then cancelled it (due to the steep charges). The website tells me I can cancel then receive my refund within 10 wokring days, but it’s been 21 days already and I’m still awaiting my refund. They’ve told me “No Show, No refund”, regarding my reservation. Any suggestions on how to proceed?

Silicon Valley Blogger June 13, 2011 at 9:16 am

Alert your credit card issuer of your problem. They may put this matter on dispute and reverse your charge. It sounds like a clear cut case to me if you can point out the refund policy of this website and prove your cancellation.

James October 26, 2012 at 1:24 am

Hey SVB,
Do you know what recourse I have if I signed for a credit card transaction but it was under duress because the merchant and its staff threatened to physically harm me if I did not sign? This happened to me last week in Shanghai, China. I called my issuing bank and they said they would not do anything, but how could I be responsible for a transaction I was forced to complete?


Silicon Valley Blogger October 27, 2012 at 11:34 am

Hi James,
I am not sure who your issuing bank is, but the ones I have will take dispute claims. Have you tried to dispute the claim? Most banks I know will investigate such issues. In fact, they will automatically apply the dispute status on your transaction once you call in. Now if this does not work, then I am not sure what you can do — if the transaction is not a large one, you may have to accept the charge. But if it were me, I would dispute it.

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