Have you ever made a purchase that went wrong – the item never arrived, was damaged, or completely not as described? Frustrating, right? Well, before you fume in rage, there is a useful consumer protection called a chargeback that can help you get reimbursed in these situations.
Chargebacks allow you to dispute transactions through your bank and potentially get the funds credited back to your account. But how exactly does the process work? When can they be used and what are the rules?
What is a Chargeback?
A chargeback, otherwise known as a dispute, allows you to reverse a credit or debit card transaction that has gone wrong. It’s a way of getting your money back when dealing directly with the retailer fails. Here’s how it works:
Let’s say you buy a new mobile phone online. When it arrives, the screen is cracked and it won’t even turn on. You contact the retailer but they are unable to resolve the issue and they keep giving you the runaround. With a chargeback, you can go to your bank or card provider and request that they reverse the transaction directly. In theory, they should pull the funds from the retailer’s account and credit the money back to yours.
As such, chargebacks provide buyers with recourse when a retailer refuses a proper refund or goes out of business before delivering the purchased goods or services. It gives you a means of getting your money back through your financial institution when transactions disappoint, acting as an important form of consumer protection.
What is Section 75 Protection?
When talking about chargebacks, it’s important to also understand Section 75 protection. This is a provision that applies specifically to credit card purchases between £100-£30,000 in the UK.
With Section 75, your credit card company shares equal liability with the retailer if goods or services are not provided as agreed. So if you buy an item on credit and have an issue, you can claim reimbursement from your credit card provider under Section 75. In most cases, this provides an extra level of protection and it usually means that you will have a much easier time getting your money back since you will have the credit card company fully on your side.
The key differences between Section 75 and chargebacks:
- Section 75 only applies to credit card transactions, while chargebacks can also apply to debit cards
- Section 75 provides legal protection, while chargebacks are more of a voluntary system between banks
- The timeframes, minimum amounts, and claims processes can also differ
More from Finance
- Banxe Launches Debit Card To Spend Crypto, With Free Card Offer In February
- Do Self-Employed People Pay PAYE?
- Embracing eSignatures in Financial Document Workflow
- Expert Predictions For Payroll In 2024
- What Are ‘Discretionary Commission Arrangements’ Within The UK Motor Finance Industry?
- Introducing a New Era of Workbench Solutions
- 10 Reasons Why Financial Institutions Are Embracing VoIP
- What Is An Underwriting Workbench?
Key Differences Between Chargebacks on Credit Cards vs Debit Cards
While chargebacks can be used for both credit and debit card transactions, there are some notable differences between the two:
- Time Limits – Credit card chargebacks typically have a 120-day limit from the date of purchase to file a dispute. Debit card chargebacks often have shorter time limits, around 90 days from purchase date. This can restrict the window to file a claim
- Minimum Amounts – Credit card chargebacks generally have no minimum transaction amount required to dispute. Debit card chargebacks frequently have minimum purchase amounts in the range of £10-£25 before a claim can be made. This precludes small transactions
- Dispute Process – The exact dispute process and paperwork can vary slightly between credit and debit providers. Debit card chargeback claims often require more documented evidence of attempts to contact the retailer first before filing. Extra steps may be involved
- Liability – Credit card providers share liability for purchases with retailers under Section 75 protection. Debit card providers have no such legal obligation or liability. This gives credit card users more leverage
- Evidence Requirement – Credit card providers may require less evidence and documentation from the cardholder when filing a chargeback, compared to debit card providers. Debit claims often rely more heavily on customer-provided evidence
The Chargeback Process
The process for a chargeback in the UK works as follows:
Contact the Retailer First
First things first – always try to sort it out directly with the retailer before filing a claim. Send over a nice formal email laying out the issue and give them a chance to make it right. Chargebacks should only come into play if they won’t budge.
Next, start gathering your evidence. Keep those order forms, emails, photos, and any other documents showing what went down. The more proof you provide, the stronger your case will be.
File the Claim with Your Card Issuer
Once you have given the retailer a chance to make things right, contact your card issuer, explain the situation, and formally request they chargeback the transaction. Provide details like the purchase date, amount, and reason for dispute along with your documentation.
Allow Time for Investigation
Your card issuer will then investigate your claim, contact the retailer, and make a determination – typically within 30-60 days. The funds may be temporarily credited to your account while under investigation.
Receive the Outcome
Finally, your card issuer will either accept or deny the claim based on the investigation. If approved, the funds will be permanently credited to you. If denied, you may be able to provide additional evidence and appeal.
Thoroughly documenting the issue, communicating clearly with your card issuer, and allowing time for proper investigation will offer you the best chance of a successful chargeback claim.
The key thing to remember is only use a chargeback after you’ve made an effort to work things out directly with the company first. No need to immediately jump the nuclear option without giving them a fair shot. But when used right, chargebacks can be a good tool for people looking to undo unwanted charges or get paid back from a lackluster shopping experience.
In the end, businesses need to stand behind their products. At the same time, customers should communicate openly and give stores a chance to make things right before taking it further. The system aims to balance protections for both buyers and sellers as long as everyone acts in good faith.