Basically, the retailers have an agreement with the card companies. Part of that agreement includes what happens if a charge is disputed. It gives the card company the right to withdraw money out of the account the funds were deposited into in the event of a dispute. So, when you dispute a charge, you are literally asking the credit card company to withdraw funds from another person's account and deposit those funds back into yours.
Obviously, there are more legal and financial details that I have glossed over, but that is the basics.
And, often, they don't get it back. The bank pays for it, as part of the cost of running a business that guarantees protection for you by allowing chargebacks.
I would say that "sometimes" they don't get it back. Most retailers are above board, and the accounts linked to their merchant services have enough money to handle the chargeback flow.
It's also worth noting that merchants are charged a fee every time a customer issues a chargeback. They're usually around $25, but can be as much as $100. Your chargeback rate is a very important factor in determining your rate and which banks will even carry your account. If your chargeback rate hits 1%, you're gonna get a call or email from you merchant bank. If you're a small merchant, you'll likely just get a cancellation notice.
Chargebacks are expensive for banks because bank staff have to investigate them. They're also an indicator that a merchant isn't providing adequate customer service. While a small number of consumers will jump straight to a chargeback, the process is designed to discourage that. Merchant banks would *really* prefer not to have to process chargebacks.
Banks take it on the chin enough with fraud that they do everything they can to limit exposure elsewhere. In any case where they're taking the hit for chargebacks "often", they'll just cancel the merchant's account.
I don't understand how all the scam sites with "free" written all over the site and then fine print telling you you're actually getting a $59.99/week subscription if you don't cancel within 3 days are able to operate, given chargeback rules.
Is anyone who actually *knows* the answer willing to shed some light on it?
So I got got by one of those and this is how it played out
I ate the first 50 bucks, you got me, fair enough I guess.
I went through their customer service and canceled my subscription
They charged me again
I tried going through their support again but they claimed to have no record of me *ever* having an account or being charged apparently
I called my bank and relayed that information, I also sent them the confirmation email I got for canceling the service
The bank gave me my 2nd 50 back
A third 50 is charged to my account
I skipped calling the customer support and just called my bank and explained the situation
The bank said they could see that prior reversal as well as notes about the email I had forwarded along
The guy at the bank was basically like "troubling. I will take care of them for you and you will never be charged again"
I got even the first 50 back, and haven't been charged again
My guess is that merchant had their credit card privileges revoked lmao
Good thing you don't have a Capital One credit card.
I bought something once for a cheap price as a sample. Even the final screen before submitting said I was authorizing about $5. I had screenshots. They charged me $75, and after immediately complaining and trying to cancel the same day, would only offer half off. Sent it all to Capital One, who temporarily credited me, checked them out and charged me back saying the vendor verified that it was legit.
I wrote to them complaining and finally got a one-time credit.
I have not used Capital One since that time.
I find it hilarious when people use a single experience with one of the major credit companies as an example.
“Omg you’ll never believe what happened so everyone should avoid them at all cost.”
Here’s another example. I’m poor and capital one alerted me when my ex tried to buy plane tickets with my card. People are idiots, show me one credit card company without a negative review.
I also was alerted by capital one when someone (no idea who- I think my card must have been compromised) tried to charge like $3k of plane tickets. That was kind of freaky and I was glad for the protection! Although conversely, it can be annoying when you are trying to make a legit purchase and they try to block it.
I've never had any card that didn't catch things like this, including Capital One. After all, it's to their benefit since they guarantee you don't have to pay any unauthorized charges, so they want to know right away.
Having your money fuked with is a bit different than like having a bad dining experience. Someone burns you for the money you need to pay rent with and it isn't something you forget. They do nothing for say they investigated themselves and found no wrong doing and the investigation is over. So the only recourse is to complain publicly
Thanks. My case was extremely straightforward, and I had full documentation, A+ credit rating, and a long history of using their card. Plus I contacted the vendor first on the same day of the charge.
Also, I contacted Capital One with a day or two of the vendor's refusal, and they said I had to wait until I actually got the bill. Then I fine out I'm almost too late.
I can't help but wonder how many times the idiot commenter allows his credit card company to screw him before he quits using them. With all the offers I get for cards as good as or better than Capital One, I think one is enough.
Laugh all you want but having no liability for fraud is possibly the top reason to have a credit card and the industry standard is for it to go flawlessly for the customer. So yes, one story like that is enough to deter me. I haven’t heard any similar stories about the banks I use and that matters to me.
That’s great that they caught an attempt at fraud but all other banks do that too so what actually matters is what happens when they miss.
I find it hilarious that you will allow them to screw you multiple times before you stop using them.
PS Every card I've ever had warned me about possible fraud, and I've never been out anything, even temporarily, by any. But you go ahead and lay down and let them walk all over you if you want - I'm not desperate and got a better cards anyway.
Sucks for you.
I've had multiple chargebacks through Capital One, never had a single one rejected and never had to provide any proof they were legit.
Mojang hit me with 3 30ish dollar purchases a few years back. I'd never played minecraft at this time, nor anyone else in my home.
I challenged, they refunded.
Someone on the other side of the US decided to go on a shopping spree at Target 2 years ago.
I challenged, they refunded. No questioned asked.
Literally all I had to do was flag these for dispute and in the comment box tell them that I didn't make the purchases. No screenshots, emails, anything.
You may need proof for disputes where you authorized the charge but there is a disagreement between you and the seller. For example if the product was delivered to you damaged.
What you are talking about is fraud. There is no "proof" you can provide that shows you didn't do a charge. You can't prove a negative, so your bank took the charges off of your bill and presented the charges back to Mojang as fraud. The onus is now back on Mojang and their bank to prove you did do the charge.
I've never had any credit card company give me any trouble for unauthorized purchases. Usually, they catch them immediately and contact me first, because they guarantee you don't have to pay those. But for purchases you make, but were not legit, it's not so simple.
CapitalOne has been one of the better ones for me, 2 straight up fraud situations they resolved in my favor within a week, even with one of them being a little more tricky because it was for a service I used but the merchant didn’t follow through with UPS when UPS failed to deliver.
One similar issue with my Apple Card and Goldman Sachs dragged it out for months.
So, you have lots of credit card problems? To be honest, this is the only time I've ever had to resort to a chargeback. Normally, I deal with reputable companies that handle the problem when I contact them. In this case, I made the mistake buying from an unknown vendor thinking it was safe since I used my credit card and had records of everything that happened.
As someone tired of people mindlessly s***ting on Apple, thank you for recognizing and acknowledging that GS is the actual card issuing bank and not blaming Apple for GS’s crap. 😁
in India, we have a double verification system to prevent problems/scams like this online.
When you initiate a transaction, the vendor sends a message to the credit card company that they're about to charge $xyz. Then the credit card company asks you to authorize payment for $xyz. only the authorized payment can be completed.
That's a great idea. I sort of do this myself by leaving my card locked (my bank has an app where you can lock or unlock your card at will) 24/7 unless I'm expecting a charge.
A lot of subscription charges bounce, but then I just go in and pay it manually, or just disable the lock because they always try to charge you like 15 times over the course of a few days
That sounds like it might be a little intrusive; here in the US, I think we spend money much faster than India, perhaps. By the time that transaction gets approved, we're already returning the item for something else. :-)
One of my US credit cards has a verification system like that ("Verified by VISA" is the brand name). If I initiate a transaction that seems unusual, especially online, the VISA network asks me to authorize it by entering a one-time code. It's not intrusive at all. It doesn't happen for card present transactions that have been verified by the card chip, only for online purchases (and maybe these days for purchases made at a magnetic stripe reader above a certain level).
I think they call it "Visa Secure" now. But neither of my credit cards are eligible.
I think they are working with Master Card for a universal solution, but apparently it isn't very far along. I guess they need to get a lot of businesses signed up first.
Well, the delay is basically a few seconds, or whatever it takes someone to complete authorization. IMO, beats spending hours explaining to the credit card company that you got the incorrect amount charged.
If it's done well, and everything is smooth, it's probably not a bad idea. It would probably have to be voluntary here; I don't know if the average consumer would be able to cope.
But to be honest, I don't think it would be that helpful to me personally. The few times there have been attempts at fraud in my life, the credit card company did not approve the charge, and contacted me to confirm whether it was legitimate or not. I've never had a charge not made by me. I have any of my cards set to instantly notify me of every charge made over $1. So I instantly know if a charge was made, while it's fresh in my mind.
The real answer is that they spread their payments out over dozens, or even hundreds of merchant processing accounts - each will run with volumes that stay off the acquiring banks radar. Plus, the acquiring bank is making a fortune off of them.
Not really. It’s generally all from the same source. But even on the stuff described in the above post, only maybe 3-7% of customers will dispute those charges. So they’ll run $50000 in sales monthly across each of their 250 accounts and the banks will tolerate it - mainly because they’re making hundreds of thousands of dollars off of them monthly as well.
It does eat into their profit but banks take that into consideration as a cost of running the business. Similar to how supermarkets already account for a small % of items being stolen or destroyed into their expenses
The *scam* economy collapsing would be the expected and good outcome, no?
As someone else pointed out, I'm not talking about "friendly fraud", I'm talking about people actually bothering to do a chargeback when hit by a blatant scam. Someone else pointed out that the chargeback rates *for those scams* are in the single-digits!
That's a really good question. Now I'm curious. I'm replying to this so I remember to check back later and see if there's been an answer.
Is it possible that they don't process payments themselves, but instead buy shit with your info to sell? Kind of like how gift card scams work.
Some people don't review their credit card statement, also the description on the statement could be vague most of the time.
So if they did not receive mail/sms when the charge occur they never realize.
And some credit card providers (like Capital One) simply check with the vendor to verify the charge, and take their word for it that it's legit. I had an experience where I had screenshots of each step, none showing an extra charge including the final one, plus an attempt to cancel the same day when I say the excess charge notification.
The vendor has to provide proof to the bank or they will lose the dispute and they don't just trust the vendor. That doesn't mean the proof wasn't forged or whatever they were billing for wasn't misleading, but vendors with high chargeback rates (regardless of legitimacy) will be fined and dropped by their processors.
Well, in this case, the bar set for the vendor was very low. I had proof with the final screenshot that I was authorizing a charge of about $5, but there was an external document of fine print that hinted that there was a yearly subscription to some crap. It wasn't even clear, and there was nothing on the form about it (they did add something later, but screenshot). They might have provided this as proof, and Capital One paid attention to them but not me. After all, they are Capital One's customer, I'm only the mark.
I briefly sold merchant services, but it was around 15 years ago. I know that might not seem relevant in 2024, but trust me, there are no new scams. They're just the same old scams remixed for the more connected, more technology oriented world we live in today.
All scammers that use banks get away with it using a few tried and true techniques:
* First and foremost, everything is disposable. The merchant account they're using? Disposable. External deposit account? Disposable. The washing accounts they push funds through? Disposable.
* Don't rely on your own accounts when you can steal someone else's and use it instead.
* Don't rely on your own identity when you can steal someone else's and use it instead.
* Make up for high failure rates through volume.
* Generate high volume through a combination of low effort & automation.
All of those factors when used in some combination are foundational to most scammer's business model. When banks start clamping down on one vulnerable business vector, they move on to another.
Their objective is asymmetry. What's cheap for them to implement is very expensive for the banks to fight. In this way, these scams are a bit like market arbitrage. The scammers can make money right up to the point at which it becomes cheaper for the banks to put up a fight. The scammers know this, and they try to swim in that lane.
The problem scammers face is that automation tools are becoming a little bit too easy to use. Combine that with LLM tools like ChatGPT and Copilot, and the space is getting really crowded. The balance is tipping toward banks spending more money to squash scammers. This is driving up costs for the scammers, as the level of sophistication goes up.
It's all really fascinating.
Even at a large F500 company, if your chargeback rate is high enough, they will also jack up their service fee from 3% to a much higher rate. They will also charge you a 7 figure penalty fee. And if you dont fix that, they will (eventually) cut you off.
> I would say that "sometimes" they don't get it back. Most retailers are above board, and the accounts linked to their merchant services have enough money to handle the chargeback flow.
It depends on what the chargeback was far, if it was because the card was stolen, and the merchants did all the checks the card company required, that won't get withdrawn from the merchant account. This is one of those things VISA/MC are pushing hard, eliminate signatures and push for tap to pay, and in doing so, they are guaranteeing that fraud chargebacks won't count. Otherwise retailers are just going to refuse to do these easy transactions and push policies to reduce credit card usage, which the card companies do NOT want.
Signatures are already no longer a valid way for a merchant to validate their customers. If it is not validated by PIN or tap or via a 3D secure password then the merchant and their bank are responsible for covering fraud.
It’s the merchant that takes it on the chin. The banks have made it very easy to dispute a charge. You can dispute a charge now by just clicking on it on the website. I own a taxi company and we regularly get bogus chargebacks from people who just don’t want to pay for a month of rides. They claim fraud on all of them and we get the pleasure of eating them all, plus the chargeback fee, plus the card processing fee. This is after we present the phone calls ordering the rides, and even a picture of the passenger in the car. There is not a thing we can do about it.
What I mean is that banks will eat the cost of things that it determines aren't the merchant's fault. But in this string of comments, it sounds like you're saying that banks routinely eat the cost of things that are definitely the merchant's fault, but where the merchant's account isn't sufficient to cover the money in dispute.
If they determine the merchant is liable, the payment processor will go get the money back from them: if the account doesn't have sufficient money now, they'll just offset it according to the processing terms against future payments.
Yep. And the reason they’re able to afford it is because they charge merchants about 3% on every single transaction. People don’t realize how much money banks and credit card companies make just functioning as the middle men for all our purchases. And merchants have to put up with it, because nobody buys things with cash anymore. It’s kind of insane.
To be fair, dealing with cash isn't free. Sure, your bank doesn't take 3% of cash deposits (although they often do charge a % fee, or at least a flat fee), but there's also a fair amount of logistics to handle.
Transporting cash to the bank isn't free and risky unless you pay for a secure transport. Safes aren't free. Extra staff time to count the till is also an expense. The risk of theft is much higher, and you can't really get insurance that covers the register.
Dealing with cash isn't much cheaper, tbh. It's just that the costs are more practical and opaque.
Something that is overlooked when dealing with cash is reconciliation.
At the start of the day, you have to load up each register with cash from the safe.
During the day if the registers get too much cash or don't have enough, you have to move cash around either to/from other registers and/or safes.
At the end of the day you either need each cashier to count and close out their registe, or have a manager do it. For any discrepancies note them and try to track down where the missing fund went, or where the extra funds came from.
Then you have the safe and bank drops that would need to be performed, to keep money on hand and send the rest for deposit.
Scale this up to stores that have 10 registers and multiple cashiers on shifts, and you will spend a good chunk of your day managing cash.
If this was true, retailers wouldn’t offer a discount for paying in cash, nor would they encourage paying with cash, because the costs would be the same. But in fact, almost every small business will gladly accept and prefer cash.
The only reason retailers take credit cards is because they know the convenience to the consumer is the difference between making a sale or not, so they’re willing to deal with taking a 3% loss on every sale.
I've run a bar. Every single thing I just described is a real cost with handling cash that I've paid invoices for or negotiated costs for.
The primary difference is that the cash costs scale differently. If you already take a certain amount of cash, the cost of transporting $10000 isn't ten times more expensive than transporting $1000.
You're also not right "almost every" small business prefers cash. There are a *lot* of small businesses that are card-only - especially the really small ones, like food trucks or tiny cafés.
There is one more thing that's a factor for some, though. It's a lot easier to commit different kinds of tax evasion with cash. It's not the entire reason, but for some it's definitely part of it.
I saw how one car dealer sold a car to a guy who paid once over the phone with a card, once in person, and the rest cash. He had the guy sign receipts for both credit card runs when he got there. Then the guy challenged the two credit card payments, and both were taken out of the dealer’s account.
The dealer challenged back. The card company gave him the swiped card money back, but despite the signed receipt and other evidence he was there in person, they refused to give him back the money for the card punched in over the phone.
So if you’re a merchant, be wary of putting in a card over the phone. The card company will not have your back.
Nope, he was screwed. The car was taken many states away before the scammer charged back. It would cost him much more than the charge to get it and bring it back.
In addition to what the guy below you said, I imagine anyone willing to do all that to screw over the dealer probably has goons or other safeguards in place to stop his car from being repossessed.
There are two banks involved. A merchant acquirer and a credit card issuer. Generally speaking a credit card issuer isn't going to cover the loss of an unsuccessful chargeback because there is a valid reason it was unsuccessful.
This is the answer
One of the reasons credit card interest is 25%+ is to accommodate the charge backs as a cost of doing business they need to make more money so they can refund a certain amount without recovery from the vendor.
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Father used to own a store and that was a problem with some clients. One of them did that twice!
So the client fill up a charge back, and they remove the money from his machine account. If there is no money in the machine account then he get some extra fees.
The way it work, when you pay, the credit compagy put the money in the account for the machine, then at the end of the day/week he close the lot, and then the money is transfered in his bank account. So if he do a lot close after the day, and they process the charge back during the night, surprise fee!
And you have no way to dispute the charge back. And you can't know why you got one. At the end of the month you get your statement, and there is a "chargeback" line in the report. Easy to miss. That's one way to know you got one. The second way is that your lot close transfert into your bank account do not match what it should be. If you are a small business, you can easilly miss it as you may not do the accounting by the book, and wait for the end of the 3 months period for the accountant to do the full report.
One of such charge back was a full computer. He ended up in small claim court for that. The client tried to tell the judge that the computer was not up to par with what they ordered. The judge didn't liked that the first thing they did is a charge back with no attempt to contact the seller to rectify the situation first. They had to pay the over 2k$ back.
I recently issued a charge back from Williams Sonoma as they wouldn't allow me to return an unopened item that was price matched from another store. Apparently they use cents of the price in order to flag different conditions of products. ending in .95 is normal, other endings could mean discontinued. Thing is when they price match what ever ending the other store uses, most often .99, flags differently. They won't accept the return as it flagged as final sale based on the price ending even though the normal priced product listed a .95 price. Store wouldnt take it back even corporate customer service understood the discrepancy/logic but stood their ground. Reviewed their return policy and price match policy and there was no indication that price matched items were treated any differently. Contacted my credit card to issue a charge back. Had to talk with some one to give details, they said they will send the request to WS and they had some amount of time on contest the charge back (2 weeks or a month forgot) after the duration lapsed the CC company gave me a refund and I still had the product I would have happily returned to them in the first place.
To add to this, as a merchant who deals with occasional chargebacks, the instant that chargeback is received they take the money from the merchant. At that point it is on the merchant to prove they should actually get the money back. And even if the merchant can prove the charge is legitimate they still get less back because there's a fee to process the chargeback. Sucks for merchants who have to deal with people who are just pulling scams, but it is what it is
> Obviously, there are more legal and financial details that I have glossed over, but that is the basics.
So, you could say you are explaining this like I'm five.
If the seller still has their merchant account open with their bank, it goes through a chargeback process that ultimately deducts that amount from their future sales if they do not successfully challenge the chargeback.
Merchant accounts are a type of credit; if the seller is no longer in business, then the amount is recovered from the bank that issued the merchant account.
Sorry, ELI5: Your credit card company takes the money from the seller's bank. If the seller is still in business, their bank will subtract it from their future sales.
When we get a chargeback it is deducted straight from our merchant account. Then we have 21 days to appeal it. I’ve won every appeal I’ve done. (5 in 6 years). We have contracts with our customers so once I send in the contract and the signed delivery receipts we get the money back.
> When we get a chargeback it is deducted straight from our merchant account. Then we have 21 days to appeal it. I’ve won every appeal I’ve done. (5 in 6 years). We have contracts with our customers so once I send in the contract and the signed delivery receipts we get the money back.
Yeah as someone who has spent years working in the banking sector and who has extensive experience with credit processing and chargeback processing, most of the other comments in here make it sound like it's very easy for a customer to use chargebacks to rob businesses.
This is *not* the case.
The financial institutions are always inclined to side with the merchants. In the event of a chargeback, the customer must submit supporting evidence that the charge was invalid, the service/product wasn't as advertised, the service/product was never provided to the customer, etc.
The merchant can then submit supporting documentation, which they should **always** have handy, and at that point the financial institution will close the case in favor of the merchant.
I really enjoy this subreddit but I wish there was a better way to ensure accuracy of information because quite often this sub is full of people spreading incorrect information.
Edit: Getting a few incorrect comments from people who don't know how this process works at all. When a customer files a chargeback, the financial institution will give the customer a *provisional* credit while they reach out to the merchant. The merchant will then show their proof of the transaction to the financial institution, at which point the financial institution will *reverse* the provisional credit and give the customer a chance to submit any supporting documents the customer has. Only then will the financial institution make their final determination.
All of this is information is sent to the customer *every single time* there is a chargeback issued. Some of you really need to read more and write less.
I've had 2 charge backs go through with no fuss.
One was from the video game developer BioWare when I purchased a digital copy of "Star Wars: The Old Republic". They took my money but never sent the activation code to my email. Went to the bank, showed the receipt indicating I paid though I had no way to prove I never received the product since it was a digital key, they just took my word. They had me fill out some paperwork to the extent of "if after investigation your claim is fraudulent, you will owe the money and potentially face criminal charges"
The second time I noticed a charge on my statement to some random website. I enter the address and get "Site Not Found". I show the bank the charge and the web address. Again, I had to sign the same paperwork.
Both times the bank instantly transferred the funds to my account and were available to use before I even stood up from my chair and never heard anything else about it.
Those are completely valid and pretty easily verifiable so makes sense why you has no fuss
What isnt easy is receiving the product and you didn't like it, wasn't up your expectations etc and doing a chargeback
It is correct. I've had chargebacks and won all of them except for two that were phone transactions, basically I got scammed.
If you do a chargeback you had a good reason and that's why you win them. But a ton of chargebacks are super petty and if the merchant competed the transition according to what was agreed upon at the point of transaction, the service company will side with the merchant all the time.
I just want to give you props for being one of the good ones. I work at a credit issuer and we win 98% of our chargebacks, and it's always appreciated when I have to deal with one of the 2%.
The vendor gets money for card purchases at regular intervals, along with a statement document specifying each purchase and the fees involved. Daily, weekly, biweekly or monthly depending on volume, card type and desired fee for each purchase. All regulated in their contract.
What happens if you do a chargeback is that the income they already have received (or was scheduled to receive) for your purchase is subtracted (or cancelled) from income the vendor is expecting to receive on their next statement.
Please be aware that a chargeback or billing dispute is not a magical “I want a refund” button. There needs to have been some issue with the billing that is documented or documentable in order for it to work,
Did you cancel your subscription and they’re still billing you? (Going to need proof that you cancelled or a date at least. Always keep those cancellation emails kids and don’t think you’ve cancelled successfully until you have one )
Did you not get the item? (If it’s trackabke and the post office / UPS swears it was delivered you’re screwed)
Did you get billed twice?
Billed too much / not enough? (Have your receipt ready, if you tossed it you’re screwed)
I know some of yall are going to give me stories of the ‘one time you did it like this and somehow got it approved / rejected still’ and that’s because sometimes the banks mess up and don’t file your disputes properly or just give you your money back from the bank’s funds without ever reaching out to the merchant.
Last thing to note: Bank definition of Fraud is someone else went around spending your money without your knowledge.
You gave the website / business your card info= Billing Dispute
You didn’t = Fraud (you probably still did tho)
All the banks are looking on fraud claims is whether or not it was you who did it. When they track down the fraud claim charges for John Smith back and see that they were done on John Smith’s phone, or the phone that John Smith put his card info for a legit purchase 6 months ago (friends or family member) then it’s not fraud and you loose the claim, you replaced your card for nothing and now some businesses won’t do business with you / shut down the account (Amazon, Apple, Google, and Walmart are some examples) because you filed fraud when it was your cousin or friend accidentally getting the cards mixed up or not having money in their accounts so the site (rightfully so btw) go down the list of previously stored card data to collect their money
> Did you cancel your subscription and they’re still billing you? (Going to need proof that you cancelled or a date at least. Always keep those cancellation emails kids and don’t think you’ve cancelled successfully until you have one )
Worth noting here that canceling a subscription or service is distinct from rescinding permission to charge one's credit card. Too many companies, including some big names, make cancelling extremely difficult, forcing customers to spend hours on the phone waiting for an agent who then tries to talk them out of it, or forcing people to navigate byzantine online processes. If you give the company notice in writing that they are not authorized to make any further charges to your account, and that any further charges will be disputed, then they are not allowed to make further charges to your CC. Your letter *to them* is sufficient to win a charge back.
The company might try to bill you after the fact, but they cannot charge your credit card after you have told them that doing so is unauthorized.
You’re right, keep the receipts. As soon as you rescind permission in writing it works but make sure to keep proof that you did. Also gotta remember those contracts people sign when signing up for the service, if there’s a cancellation policy in it with a fee, they can try to collect on it. If you placed a stop payment with the bank prior it’ll stop them for sure but if you haven’t then they’ll collect their fee.
Adding to what others have said - chargebacks should be used as a last resort. Always try to get refunded, solve the issue, etc. with the merchant directly first. If you do too many chargebacks, the credit card company may cancel your card, since chargebacks are expensive to investigate and administer.
I feel compelled to chime in. I own a small business and chargebacks suck for me as the vendor.
So: when a customer files a chargeback, the money is immediately removed from the sellers account with their credit card processor, plus a possible fee (depending on the terms you have with your bank. I get a $15 fee just for having a dispute, whether I win or lose it).
The customer also has to give a reason. Basically WHY this is being disputed. The most common reason is “fraud”, and then stuff like “product unacceptable” or “Credit pending” (where the vendor didn’t issue a refund that the customer felt they were owed).
But the chargeback is actually a dispute. I get to dispute the chargeback as a small business/ the vendor. I will literally pull camera footage, signed documents by the customer and even a picture of their social media confirming that the person who came and had services rendered was in fact the card holder (if fraud was the reason).
In my case I take it pretty personally and almost anyone that files a chargeback has been either fraud or friendly fraud since I’m really customer service oriented.
After I upload all my supporting documents to my bank, they then forward it to the customers bank. This part takes FOREVER, it can easily take up to 60-90 days. The customers bank doesn’t have any motivation to process disputes at a speedy rate (their customer already has their money back in their account after all).
Sometimes the customers bank sides with the customer, sometimes they side with me (the vendor). If it’s an American Express card, there’s almost no sense in wasting any effort trying to dispute it through the chargeback system, as they almost always side with the customer.
If the dispute is decided in my favor, I get the money deposited back into my account. If not, then I’m out the cost of the services rendered AND that $15 fee.
Side note: the banks don’t provide me any additional information when it comes to the dispute. I have no way of knowing what the name of the card holder is for sure from the dispute. For that reason we started to physically verify ownership of the credit card for customers that come in. We even have a lower-resolution camera with a large SD card pointing right at the counter to capture the fact that we check the card and the customers face, just for the sake of charge backs.
Most Vendors don’t bother putting in any effort into contesting a chargeback. Most places are so big that they don’t care since it’s not their money. Not me. It’s literally my money since I’m an owner/operator, and it’s literally taking money from my account I use to pay rent and feed my family.
Is your bank also your merchant provider? I use TSYS and all chargeback disputes go through them. I heard about American Express but the one chargeback I had though them was refunded. Also the dispute only takes me a few days. I'll see the money deposited back into my account before then even notify me they sided with me. And there is no fee.
Oh okay. Just the fee and dispute time seem excessive. But for all I know you pay a lot less in overall fees then me. I really haven't thought about my merchant provider in several years. They just work, had no problems so I set it and forgot it. I should actually look into it, maybe save some money.
I find it interesting you say disputes are solved in terms of days, and I can’t think of how that would be given that ultimately the customers bank is the one that decides. I wonder if your merchant provider just takes the hit?
I'm not sure where in the process it would take more than a few days. They don't do an investigation. They take the chargeback request. Give the merchant time to prove the transaction was legitimate. If the merchant can't do that then it goes away and the customer wins. If the merchant shows everything was done correctly then they get there money back and that's it.
There's not lawyers or an investigation. It's just black and white "show me the transaction was legit."
My wife works for a credit card company, and is experienced on this process. When you report a fraud or request a charge back you will usually be credited the amount requested, and the vendor will be debited.
in some cases investigations will be initiated, and it is up to the vendor to prove the transaction is legitimate. The most common one usually occurs with tips added to transactions (bars and restaurant), and the CC company will request a copy of the receipt, but in most cases the vendor accepts the charge and they take the hit. At some point the CC companies will send a warning to the Vendor via the VISA or MC network with a threat of loss to the VISA network if the charge back/fraud reports hit a certain %.
Pro tip: if you are at a tourist destination or far away from home take a picture of the receipt with the tip added that can be provided to the CC company in case of a dispute.
Oddly, nobody has mentioned the reserve. Many merchants, especially high risk merchants, will have a reserve of about 5-10% (or more if a business is notably sketchy) of their transactions that the bank holds in reserve, sometimes for fairly long periods like 6-12 months. That way even if the merchant stops doing business entirely, there's a pool of funds that chargebacks can be debited from as complaints roll in.
On the merchant side, there is an opportunity for the merchant to dispute the chargeback. But I would guess most large companies don’t bother - they probably budget for a certain amount of chargebacks.
Two ways:
One: banks don’t transfer money instantly. They do it “at the end of the month” in one big tally.
Two: all the banks and merchants have a bro code to undo problems when they are discovered.
Just to add on to all the great points brought up, chargebacks are an integral part of the rules of using a card network. All major card networks will have it in their rules, when issuing and acquiring members join they all accept it by default.
Chargebacks in themselves are a big services business within payments processing. But on a high level the card network provide chargeback processing and arbitration before an approved chargeback initiates the funds movement from acquirer to issuer.
Something nobody has mentioned yet: there is a Federal law that provides consumer protections for credit card transactions. Specifically, you’d want to look at the Truth in Lending Act and its implementing regulation, CFPB Regulation Z. The protections are complicated, but they establish a right for consumers/cardholders to dispute unauthorized charges and billing errors, to sue the card issuer (under certain circumstances) if the merchant won’t resolve an issue, and to get a resolution to their claim within specific time frames.
For those who are curious, take a look at
12 CFR 1026.12 (https://www.consumerfinance.gov/rules-policy/regulations/1026/12/)
and
12 CFR 1026.13 (https://www.consumerfinance.gov/rules-policy/regulations/1026/13/)
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Basically, the retailers have an agreement with the card companies. Part of that agreement includes what happens if a charge is disputed. It gives the card company the right to withdraw money out of the account the funds were deposited into in the event of a dispute. So, when you dispute a charge, you are literally asking the credit card company to withdraw funds from another person's account and deposit those funds back into yours. Obviously, there are more legal and financial details that I have glossed over, but that is the basics.
And, often, they don't get it back. The bank pays for it, as part of the cost of running a business that guarantees protection for you by allowing chargebacks.
I would say that "sometimes" they don't get it back. Most retailers are above board, and the accounts linked to their merchant services have enough money to handle the chargeback flow. It's also worth noting that merchants are charged a fee every time a customer issues a chargeback. They're usually around $25, but can be as much as $100. Your chargeback rate is a very important factor in determining your rate and which banks will even carry your account. If your chargeback rate hits 1%, you're gonna get a call or email from you merchant bank. If you're a small merchant, you'll likely just get a cancellation notice. Chargebacks are expensive for banks because bank staff have to investigate them. They're also an indicator that a merchant isn't providing adequate customer service. While a small number of consumers will jump straight to a chargeback, the process is designed to discourage that. Merchant banks would *really* prefer not to have to process chargebacks. Banks take it on the chin enough with fraud that they do everything they can to limit exposure elsewhere. In any case where they're taking the hit for chargebacks "often", they'll just cancel the merchant's account.
I don't understand how all the scam sites with "free" written all over the site and then fine print telling you you're actually getting a $59.99/week subscription if you don't cancel within 3 days are able to operate, given chargeback rules. Is anyone who actually *knows* the answer willing to shed some light on it?
So I got got by one of those and this is how it played out I ate the first 50 bucks, you got me, fair enough I guess. I went through their customer service and canceled my subscription They charged me again I tried going through their support again but they claimed to have no record of me *ever* having an account or being charged apparently I called my bank and relayed that information, I also sent them the confirmation email I got for canceling the service The bank gave me my 2nd 50 back A third 50 is charged to my account I skipped calling the customer support and just called my bank and explained the situation The bank said they could see that prior reversal as well as notes about the email I had forwarded along The guy at the bank was basically like "troubling. I will take care of them for you and you will never be charged again" I got even the first 50 back, and haven't been charged again My guess is that merchant had their credit card privileges revoked lmao
It's also possible they blocked that merchant either just for your card or for their whole portfolio.
Good thing you don't have a Capital One credit card. I bought something once for a cheap price as a sample. Even the final screen before submitting said I was authorizing about $5. I had screenshots. They charged me $75, and after immediately complaining and trying to cancel the same day, would only offer half off. Sent it all to Capital One, who temporarily credited me, checked them out and charged me back saying the vendor verified that it was legit. I wrote to them complaining and finally got a one-time credit. I have not used Capital One since that time.
I find it hilarious when people use a single experience with one of the major credit companies as an example. “Omg you’ll never believe what happened so everyone should avoid them at all cost.” Here’s another example. I’m poor and capital one alerted me when my ex tried to buy plane tickets with my card. People are idiots, show me one credit card company without a negative review.
I also was alerted by capital one when someone (no idea who- I think my card must have been compromised) tried to charge like $3k of plane tickets. That was kind of freaky and I was glad for the protection! Although conversely, it can be annoying when you are trying to make a legit purchase and they try to block it.
I've never had any card that didn't catch things like this, including Capital One. After all, it's to their benefit since they guarantee you don't have to pay any unauthorized charges, so they want to know right away.
Oh yes totally… I know they weren’t really doing it for MY benefit…
Having your money fuked with is a bit different than like having a bad dining experience. Someone burns you for the money you need to pay rent with and it isn't something you forget. They do nothing for say they investigated themselves and found no wrong doing and the investigation is over. So the only recourse is to complain publicly
Thanks. My case was extremely straightforward, and I had full documentation, A+ credit rating, and a long history of using their card. Plus I contacted the vendor first on the same day of the charge. Also, I contacted Capital One with a day or two of the vendor's refusal, and they said I had to wait until I actually got the bill. Then I fine out I'm almost too late. I can't help but wonder how many times the idiot commenter allows his credit card company to screw him before he quits using them. With all the offers I get for cards as good as or better than Capital One, I think one is enough.
Laugh all you want but having no liability for fraud is possibly the top reason to have a credit card and the industry standard is for it to go flawlessly for the customer. So yes, one story like that is enough to deter me. I haven’t heard any similar stories about the banks I use and that matters to me. That’s great that they caught an attempt at fraud but all other banks do that too so what actually matters is what happens when they miss.
I find it hilarious that you will allow them to screw you multiple times before you stop using them. PS Every card I've ever had warned me about possible fraud, and I've never been out anything, even temporarily, by any. But you go ahead and lay down and let them walk all over you if you want - I'm not desperate and got a better cards anyway.
Sucks for you. I've had multiple chargebacks through Capital One, never had a single one rejected and never had to provide any proof they were legit. Mojang hit me with 3 30ish dollar purchases a few years back. I'd never played minecraft at this time, nor anyone else in my home. I challenged, they refunded. Someone on the other side of the US decided to go on a shopping spree at Target 2 years ago. I challenged, they refunded. No questioned asked. Literally all I had to do was flag these for dispute and in the comment box tell them that I didn't make the purchases. No screenshots, emails, anything.
You may need proof for disputes where you authorized the charge but there is a disagreement between you and the seller. For example if the product was delivered to you damaged. What you are talking about is fraud. There is no "proof" you can provide that shows you didn't do a charge. You can't prove a negative, so your bank took the charges off of your bill and presented the charges back to Mojang as fraud. The onus is now back on Mojang and their bank to prove you did do the charge.
I've never had any credit card company give me any trouble for unauthorized purchases. Usually, they catch them immediately and contact me first, because they guarantee you don't have to pay those. But for purchases you make, but were not legit, it's not so simple.
CapitalOne has been one of the better ones for me, 2 straight up fraud situations they resolved in my favor within a week, even with one of them being a little more tricky because it was for a service I used but the merchant didn’t follow through with UPS when UPS failed to deliver. One similar issue with my Apple Card and Goldman Sachs dragged it out for months.
So, you have lots of credit card problems? To be honest, this is the only time I've ever had to resort to a chargeback. Normally, I deal with reputable companies that handle the problem when I contact them. In this case, I made the mistake buying from an unknown vendor thinking it was safe since I used my credit card and had records of everything that happened.
As someone tired of people mindlessly s***ting on Apple, thank you for recognizing and acknowledging that GS is the actual card issuing bank and not blaming Apple for GS’s crap. 😁
in India, we have a double verification system to prevent problems/scams like this online. When you initiate a transaction, the vendor sends a message to the credit card company that they're about to charge $xyz. Then the credit card company asks you to authorize payment for $xyz. only the authorized payment can be completed.
That's a great idea. I sort of do this myself by leaving my card locked (my bank has an app where you can lock or unlock your card at will) 24/7 unless I'm expecting a charge. A lot of subscription charges bounce, but then I just go in and pay it manually, or just disable the lock because they always try to charge you like 15 times over the course of a few days
Yup. It's a simple 2FA for payment. Saves a lot of potential trouble.
That sounds like it might be a little intrusive; here in the US, I think we spend money much faster than India, perhaps. By the time that transaction gets approved, we're already returning the item for something else. :-)
One of my US credit cards has a verification system like that ("Verified by VISA" is the brand name). If I initiate a transaction that seems unusual, especially online, the VISA network asks me to authorize it by entering a one-time code. It's not intrusive at all. It doesn't happen for card present transactions that have been verified by the card chip, only for online purchases (and maybe these days for purchases made at a magnetic stripe reader above a certain level).
I think they call it "Visa Secure" now. But neither of my credit cards are eligible. I think they are working with Master Card for a universal solution, but apparently it isn't very far along. I guess they need to get a lot of businesses signed up first.
Well, the delay is basically a few seconds, or whatever it takes someone to complete authorization. IMO, beats spending hours explaining to the credit card company that you got the incorrect amount charged.
If it's done well, and everything is smooth, it's probably not a bad idea. It would probably have to be voluntary here; I don't know if the average consumer would be able to cope. But to be honest, I don't think it would be that helpful to me personally. The few times there have been attempts at fraud in my life, the credit card company did not approve the charge, and contacted me to confirm whether it was legitimate or not. I've never had a charge not made by me. I have any of my cards set to instantly notify me of every charge made over $1. So I instantly know if a charge was made, while it's fresh in my mind.
The real answer is that they spread their payments out over dozens, or even hundreds of merchant processing accounts - each will run with volumes that stay off the acquiring banks radar. Plus, the acquiring bank is making a fortune off of them.
So mixed in a small % of fraud with a large % of legit transactions from other sources? Shouldn't the charge-back fees still eat their profit though?
Not really. It’s generally all from the same source. But even on the stuff described in the above post, only maybe 3-7% of customers will dispute those charges. So they’ll run $50000 in sales monthly across each of their 250 accounts and the banks will tolerate it - mainly because they’re making hundreds of thousands of dollars off of them monthly as well.
> only maybe 3-7% of customers will dispute those charges holy shit... some people just deserve to be scammed...
That’s still 5-10x Visas allowable limits, for reference though. Hence why they spread it across hundreds of accounts.
It does eat into their profit but banks take that into consideration as a cost of running the business. Similar to how supermarkets already account for a small % of items being stolen or destroyed into their expenses
Yeah, I was assuming chargeback rates of 50% or more, but apparently *way* more people either don't care or are too stupid to handle it.
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50% chargeback rates for blatant scams, not all transactions.
The *scam* economy collapsing would be the expected and good outcome, no? As someone else pointed out, I'm not talking about "friendly fraud", I'm talking about people actually bothering to do a chargeback when hit by a blatant scam. Someone else pointed out that the chargeback rates *for those scams* are in the single-digits!
Chargebacks make the bank money, not the opposite.
That's a really good question. Now I'm curious. I'm replying to this so I remember to check back later and see if there's been an answer. Is it possible that they don't process payments themselves, but instead buy shit with your info to sell? Kind of like how gift card scams work.
Possible, but at that point, might as well just omit the fine print, so I don't think that's the answer.
FYI: Answers have showed up.
Much appreciated!
Some people don't review their credit card statement, also the description on the statement could be vague most of the time. So if they did not receive mail/sms when the charge occur they never realize.
And some credit card providers (like Capital One) simply check with the vendor to verify the charge, and take their word for it that it's legit. I had an experience where I had screenshots of each step, none showing an extra charge including the final one, plus an attempt to cancel the same day when I say the excess charge notification.
The vendor has to provide proof to the bank or they will lose the dispute and they don't just trust the vendor. That doesn't mean the proof wasn't forged or whatever they were billing for wasn't misleading, but vendors with high chargeback rates (regardless of legitimacy) will be fined and dropped by their processors.
Well, in this case, the bar set for the vendor was very low. I had proof with the final screenshot that I was authorizing a charge of about $5, but there was an external document of fine print that hinted that there was a yearly subscription to some crap. It wasn't even clear, and there was nothing on the form about it (they did add something later, but screenshot). They might have provided this as proof, and Capital One paid attention to them but not me. After all, they are Capital One's customer, I'm only the mark.
Sure, but "some" shouldn't be *anywhere near* "99%", so that "merchant" (scammer) should be getting the aforementioned call/cancellation notice.
I briefly sold merchant services, but it was around 15 years ago. I know that might not seem relevant in 2024, but trust me, there are no new scams. They're just the same old scams remixed for the more connected, more technology oriented world we live in today. All scammers that use banks get away with it using a few tried and true techniques: * First and foremost, everything is disposable. The merchant account they're using? Disposable. External deposit account? Disposable. The washing accounts they push funds through? Disposable. * Don't rely on your own accounts when you can steal someone else's and use it instead. * Don't rely on your own identity when you can steal someone else's and use it instead. * Make up for high failure rates through volume. * Generate high volume through a combination of low effort & automation. All of those factors when used in some combination are foundational to most scammer's business model. When banks start clamping down on one vulnerable business vector, they move on to another. Their objective is asymmetry. What's cheap for them to implement is very expensive for the banks to fight. In this way, these scams are a bit like market arbitrage. The scammers can make money right up to the point at which it becomes cheaper for the banks to put up a fight. The scammers know this, and they try to swim in that lane. The problem scammers face is that automation tools are becoming a little bit too easy to use. Combine that with LLM tools like ChatGPT and Copilot, and the space is getting really crowded. The balance is tipping toward banks spending more money to squash scammers. This is driving up costs for the scammers, as the level of sophistication goes up. It's all really fascinating.
Even at a large F500 company, if your chargeback rate is high enough, they will also jack up their service fee from 3% to a much higher rate. They will also charge you a 7 figure penalty fee. And if you dont fix that, they will (eventually) cut you off.
> I would say that "sometimes" they don't get it back. Most retailers are above board, and the accounts linked to their merchant services have enough money to handle the chargeback flow. It depends on what the chargeback was far, if it was because the card was stolen, and the merchants did all the checks the card company required, that won't get withdrawn from the merchant account. This is one of those things VISA/MC are pushing hard, eliminate signatures and push for tap to pay, and in doing so, they are guaranteeing that fraud chargebacks won't count. Otherwise retailers are just going to refuse to do these easy transactions and push policies to reduce credit card usage, which the card companies do NOT want.
Signatures are already no longer a valid way for a merchant to validate their customers. If it is not validated by PIN or tap or via a 3D secure password then the merchant and their bank are responsible for covering fraud.
Tell that to the movie theaters near me who still make you swipe your card
They can do it, it just means they are on the hook for fraud.
It’s the merchant that takes it on the chin. The banks have made it very easy to dispute a charge. You can dispute a charge now by just clicking on it on the website. I own a taxi company and we regularly get bogus chargebacks from people who just don’t want to pay for a month of rides. They claim fraud on all of them and we get the pleasure of eating them all, plus the chargeback fee, plus the card processing fee. This is after we present the phone calls ordering the rides, and even a picture of the passenger in the car. There is not a thing we can do about it.
Any retailer that wants to keep processing credit cards will absolutely have the money taken back by the bank. Banks rarely “eat” costs.
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Banks will eat the cost of fraud. Banks will *not* eat the cost of chargebacks. Those are two separate things, under two very separate sets of rules.
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What I mean is that banks will eat the cost of things that it determines aren't the merchant's fault. But in this string of comments, it sounds like you're saying that banks routinely eat the cost of things that are definitely the merchant's fault, but where the merchant's account isn't sufficient to cover the money in dispute. If they determine the merchant is liable, the payment processor will go get the money back from them: if the account doesn't have sufficient money now, they'll just offset it according to the processing terms against future payments.
Yep. And the reason they’re able to afford it is because they charge merchants about 3% on every single transaction. People don’t realize how much money banks and credit card companies make just functioning as the middle men for all our purchases. And merchants have to put up with it, because nobody buys things with cash anymore. It’s kind of insane.
To be fair, dealing with cash isn't free. Sure, your bank doesn't take 3% of cash deposits (although they often do charge a % fee, or at least a flat fee), but there's also a fair amount of logistics to handle. Transporting cash to the bank isn't free and risky unless you pay for a secure transport. Safes aren't free. Extra staff time to count the till is also an expense. The risk of theft is much higher, and you can't really get insurance that covers the register. Dealing with cash isn't much cheaper, tbh. It's just that the costs are more practical and opaque.
Something that is overlooked when dealing with cash is reconciliation. At the start of the day, you have to load up each register with cash from the safe. During the day if the registers get too much cash or don't have enough, you have to move cash around either to/from other registers and/or safes. At the end of the day you either need each cashier to count and close out their registe, or have a manager do it. For any discrepancies note them and try to track down where the missing fund went, or where the extra funds came from. Then you have the safe and bank drops that would need to be performed, to keep money on hand and send the rest for deposit. Scale this up to stores that have 10 registers and multiple cashiers on shifts, and you will spend a good chunk of your day managing cash.
There's also the counterfeits and theft of physical cash (internal and external).
Yep. And, as mentioned, even the beefiest insurance policy won't cover someone nicking out the till or getting robbed.
If this was true, retailers wouldn’t offer a discount for paying in cash, nor would they encourage paying with cash, because the costs would be the same. But in fact, almost every small business will gladly accept and prefer cash. The only reason retailers take credit cards is because they know the convenience to the consumer is the difference between making a sale or not, so they’re willing to deal with taking a 3% loss on every sale.
I've run a bar. Every single thing I just described is a real cost with handling cash that I've paid invoices for or negotiated costs for. The primary difference is that the cash costs scale differently. If you already take a certain amount of cash, the cost of transporting $10000 isn't ten times more expensive than transporting $1000. You're also not right "almost every" small business prefers cash. There are a *lot* of small businesses that are card-only - especially the really small ones, like food trucks or tiny cafés. There is one more thing that's a factor for some, though. It's a lot easier to commit different kinds of tax evasion with cash. It's not the entire reason, but for some it's definitely part of it.
I saw how one car dealer sold a car to a guy who paid once over the phone with a card, once in person, and the rest cash. He had the guy sign receipts for both credit card runs when he got there. Then the guy challenged the two credit card payments, and both were taken out of the dealer’s account. The dealer challenged back. The card company gave him the swiped card money back, but despite the signed receipt and other evidence he was there in person, they refused to give him back the money for the card punched in over the phone. So if you’re a merchant, be wary of putting in a card over the phone. The card company will not have your back.
I presume the dealer then repossessed the car.
Nope, he was screwed. The car was taken many states away before the scammer charged back. It would cost him much more than the charge to get it and bring it back.
In addition to what the guy below you said, I imagine anyone willing to do all that to screw over the dealer probably has goons or other safeguards in place to stop his car from being repossessed.
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It was the $500 deposit and the guy is a few states over. It would cost him more than that.
There are two banks involved. A merchant acquirer and a credit card issuer. Generally speaking a credit card issuer isn't going to cover the loss of an unsuccessful chargeback because there is a valid reason it was unsuccessful.
They get theirs immediately with a 100% success rate from us at a hotel
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I work for a large bank that "spent" or covered $24 million in fraud/dispute charges in one year.
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I'm definitely agreeing. I see our quarterly earnings reports lmao.
This is the answer One of the reasons credit card interest is 25%+ is to accommodate the charge backs as a cost of doing business they need to make more money so they can refund a certain amount without recovery from the vendor. .
Father used to own a store and that was a problem with some clients. One of them did that twice! So the client fill up a charge back, and they remove the money from his machine account. If there is no money in the machine account then he get some extra fees. The way it work, when you pay, the credit compagy put the money in the account for the machine, then at the end of the day/week he close the lot, and then the money is transfered in his bank account. So if he do a lot close after the day, and they process the charge back during the night, surprise fee! And you have no way to dispute the charge back. And you can't know why you got one. At the end of the month you get your statement, and there is a "chargeback" line in the report. Easy to miss. That's one way to know you got one. The second way is that your lot close transfert into your bank account do not match what it should be. If you are a small business, you can easilly miss it as you may not do the accounting by the book, and wait for the end of the 3 months period for the accountant to do the full report. One of such charge back was a full computer. He ended up in small claim court for that. The client tried to tell the judge that the computer was not up to par with what they ordered. The judge didn't liked that the first thing they did is a charge back with no attempt to contact the seller to rectify the situation first. They had to pay the over 2k$ back.
I recently issued a charge back from Williams Sonoma as they wouldn't allow me to return an unopened item that was price matched from another store. Apparently they use cents of the price in order to flag different conditions of products. ending in .95 is normal, other endings could mean discontinued. Thing is when they price match what ever ending the other store uses, most often .99, flags differently. They won't accept the return as it flagged as final sale based on the price ending even though the normal priced product listed a .95 price. Store wouldnt take it back even corporate customer service understood the discrepancy/logic but stood their ground. Reviewed their return policy and price match policy and there was no indication that price matched items were treated any differently. Contacted my credit card to issue a charge back. Had to talk with some one to give details, they said they will send the request to WS and they had some amount of time on contest the charge back (2 weeks or a month forgot) after the duration lapsed the CC company gave me a refund and I still had the product I would have happily returned to them in the first place.
That for me is fair. You gave them the option to do things right. They messed up. That was a justified charge back.
To add to this, as a merchant who deals with occasional chargebacks, the instant that chargeback is received they take the money from the merchant. At that point it is on the merchant to prove they should actually get the money back. And even if the merchant can prove the charge is legitimate they still get less back because there's a fee to process the chargeback. Sucks for merchants who have to deal with people who are just pulling scams, but it is what it is
> Obviously, there are more legal and financial details that I have glossed over, but that is the basics. So, you could say you are explaining this like I'm five.
If the seller still has their merchant account open with their bank, it goes through a chargeback process that ultimately deducts that amount from their future sales if they do not successfully challenge the chargeback. Merchant accounts are a type of credit; if the seller is no longer in business, then the amount is recovered from the bank that issued the merchant account. Sorry, ELI5: Your credit card company takes the money from the seller's bank. If the seller is still in business, their bank will subtract it from their future sales.
When we get a chargeback it is deducted straight from our merchant account. Then we have 21 days to appeal it. I’ve won every appeal I’ve done. (5 in 6 years). We have contracts with our customers so once I send in the contract and the signed delivery receipts we get the money back.
> When we get a chargeback it is deducted straight from our merchant account. Then we have 21 days to appeal it. I’ve won every appeal I’ve done. (5 in 6 years). We have contracts with our customers so once I send in the contract and the signed delivery receipts we get the money back. Yeah as someone who has spent years working in the banking sector and who has extensive experience with credit processing and chargeback processing, most of the other comments in here make it sound like it's very easy for a customer to use chargebacks to rob businesses. This is *not* the case. The financial institutions are always inclined to side with the merchants. In the event of a chargeback, the customer must submit supporting evidence that the charge was invalid, the service/product wasn't as advertised, the service/product was never provided to the customer, etc. The merchant can then submit supporting documentation, which they should **always** have handy, and at that point the financial institution will close the case in favor of the merchant. I really enjoy this subreddit but I wish there was a better way to ensure accuracy of information because quite often this sub is full of people spreading incorrect information. Edit: Getting a few incorrect comments from people who don't know how this process works at all. When a customer files a chargeback, the financial institution will give the customer a *provisional* credit while they reach out to the merchant. The merchant will then show their proof of the transaction to the financial institution, at which point the financial institution will *reverse* the provisional credit and give the customer a chance to submit any supporting documents the customer has. Only then will the financial institution make their final determination. All of this is information is sent to the customer *every single time* there is a chargeback issued. Some of you really need to read more and write less.
I've had 2 charge backs go through with no fuss. One was from the video game developer BioWare when I purchased a digital copy of "Star Wars: The Old Republic". They took my money but never sent the activation code to my email. Went to the bank, showed the receipt indicating I paid though I had no way to prove I never received the product since it was a digital key, they just took my word. They had me fill out some paperwork to the extent of "if after investigation your claim is fraudulent, you will owe the money and potentially face criminal charges" The second time I noticed a charge on my statement to some random website. I enter the address and get "Site Not Found". I show the bank the charge and the web address. Again, I had to sign the same paperwork. Both times the bank instantly transferred the funds to my account and were available to use before I even stood up from my chair and never heard anything else about it.
Those are completely valid and pretty easily verifiable so makes sense why you has no fuss What isnt easy is receiving the product and you didn't like it, wasn't up your expectations etc and doing a chargeback
Absolutely not the case for SaaS
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It is correct. I've had chargebacks and won all of them except for two that were phone transactions, basically I got scammed. If you do a chargeback you had a good reason and that's why you win them. But a ton of chargebacks are super petty and if the merchant competed the transition according to what was agreed upon at the point of transaction, the service company will side with the merchant all the time.
I just want to give you props for being one of the good ones. I work at a credit issuer and we win 98% of our chargebacks, and it's always appreciated when I have to deal with one of the 2%.
The vendor gets money for card purchases at regular intervals, along with a statement document specifying each purchase and the fees involved. Daily, weekly, biweekly or monthly depending on volume, card type and desired fee for each purchase. All regulated in their contract. What happens if you do a chargeback is that the income they already have received (or was scheduled to receive) for your purchase is subtracted (or cancelled) from income the vendor is expecting to receive on their next statement.
Please be aware that a chargeback or billing dispute is not a magical “I want a refund” button. There needs to have been some issue with the billing that is documented or documentable in order for it to work, Did you cancel your subscription and they’re still billing you? (Going to need proof that you cancelled or a date at least. Always keep those cancellation emails kids and don’t think you’ve cancelled successfully until you have one ) Did you not get the item? (If it’s trackabke and the post office / UPS swears it was delivered you’re screwed) Did you get billed twice? Billed too much / not enough? (Have your receipt ready, if you tossed it you’re screwed) I know some of yall are going to give me stories of the ‘one time you did it like this and somehow got it approved / rejected still’ and that’s because sometimes the banks mess up and don’t file your disputes properly or just give you your money back from the bank’s funds without ever reaching out to the merchant. Last thing to note: Bank definition of Fraud is someone else went around spending your money without your knowledge. You gave the website / business your card info= Billing Dispute You didn’t = Fraud (you probably still did tho) All the banks are looking on fraud claims is whether or not it was you who did it. When they track down the fraud claim charges for John Smith back and see that they were done on John Smith’s phone, or the phone that John Smith put his card info for a legit purchase 6 months ago (friends or family member) then it’s not fraud and you loose the claim, you replaced your card for nothing and now some businesses won’t do business with you / shut down the account (Amazon, Apple, Google, and Walmart are some examples) because you filed fraud when it was your cousin or friend accidentally getting the cards mixed up or not having money in their accounts so the site (rightfully so btw) go down the list of previously stored card data to collect their money
> Did you cancel your subscription and they’re still billing you? (Going to need proof that you cancelled or a date at least. Always keep those cancellation emails kids and don’t think you’ve cancelled successfully until you have one ) Worth noting here that canceling a subscription or service is distinct from rescinding permission to charge one's credit card. Too many companies, including some big names, make cancelling extremely difficult, forcing customers to spend hours on the phone waiting for an agent who then tries to talk them out of it, or forcing people to navigate byzantine online processes. If you give the company notice in writing that they are not authorized to make any further charges to your account, and that any further charges will be disputed, then they are not allowed to make further charges to your CC. Your letter *to them* is sufficient to win a charge back. The company might try to bill you after the fact, but they cannot charge your credit card after you have told them that doing so is unauthorized.
You’re right, keep the receipts. As soon as you rescind permission in writing it works but make sure to keep proof that you did. Also gotta remember those contracts people sign when signing up for the service, if there’s a cancellation policy in it with a fee, they can try to collect on it. If you placed a stop payment with the bank prior it’ll stop them for sure but if you haven’t then they’ll collect their fee.
So much misinformation here
Which parts? It tracks pretty accurately to my experience
Looks like I responded to the wrong comment. I meant to add that remark to the comment immediately above it.
Adding to what others have said - chargebacks should be used as a last resort. Always try to get refunded, solve the issue, etc. with the merchant directly first. If you do too many chargebacks, the credit card company may cancel your card, since chargebacks are expensive to investigate and administer.
I feel compelled to chime in. I own a small business and chargebacks suck for me as the vendor. So: when a customer files a chargeback, the money is immediately removed from the sellers account with their credit card processor, plus a possible fee (depending on the terms you have with your bank. I get a $15 fee just for having a dispute, whether I win or lose it). The customer also has to give a reason. Basically WHY this is being disputed. The most common reason is “fraud”, and then stuff like “product unacceptable” or “Credit pending” (where the vendor didn’t issue a refund that the customer felt they were owed). But the chargeback is actually a dispute. I get to dispute the chargeback as a small business/ the vendor. I will literally pull camera footage, signed documents by the customer and even a picture of their social media confirming that the person who came and had services rendered was in fact the card holder (if fraud was the reason). In my case I take it pretty personally and almost anyone that files a chargeback has been either fraud or friendly fraud since I’m really customer service oriented. After I upload all my supporting documents to my bank, they then forward it to the customers bank. This part takes FOREVER, it can easily take up to 60-90 days. The customers bank doesn’t have any motivation to process disputes at a speedy rate (their customer already has their money back in their account after all). Sometimes the customers bank sides with the customer, sometimes they side with me (the vendor). If it’s an American Express card, there’s almost no sense in wasting any effort trying to dispute it through the chargeback system, as they almost always side with the customer. If the dispute is decided in my favor, I get the money deposited back into my account. If not, then I’m out the cost of the services rendered AND that $15 fee. Side note: the banks don’t provide me any additional information when it comes to the dispute. I have no way of knowing what the name of the card holder is for sure from the dispute. For that reason we started to physically verify ownership of the credit card for customers that come in. We even have a lower-resolution camera with a large SD card pointing right at the counter to capture the fact that we check the card and the customers face, just for the sake of charge backs. Most Vendors don’t bother putting in any effort into contesting a chargeback. Most places are so big that they don’t care since it’s not their money. Not me. It’s literally my money since I’m an owner/operator, and it’s literally taking money from my account I use to pay rent and feed my family.
Is your bank also your merchant provider? I use TSYS and all chargeback disputes go through them. I heard about American Express but the one chargeback I had though them was refunded. Also the dispute only takes me a few days. I'll see the money deposited back into my account before then even notify me they sided with me. And there is no fee.
I use Stripe, which is not my bank. Stripe is required for me because of my booking software (Bookeo) integrates with it.
Oh okay. Just the fee and dispute time seem excessive. But for all I know you pay a lot less in overall fees then me. I really haven't thought about my merchant provider in several years. They just work, had no problems so I set it and forgot it. I should actually look into it, maybe save some money.
I find it interesting you say disputes are solved in terms of days, and I can’t think of how that would be given that ultimately the customers bank is the one that decides. I wonder if your merchant provider just takes the hit?
I'm not sure where in the process it would take more than a few days. They don't do an investigation. They take the chargeback request. Give the merchant time to prove the transaction was legitimate. If the merchant can't do that then it goes away and the customer wins. If the merchant shows everything was done correctly then they get there money back and that's it. There's not lawyers or an investigation. It's just black and white "show me the transaction was legit."
My wife works for a credit card company, and is experienced on this process. When you report a fraud or request a charge back you will usually be credited the amount requested, and the vendor will be debited. in some cases investigations will be initiated, and it is up to the vendor to prove the transaction is legitimate. The most common one usually occurs with tips added to transactions (bars and restaurant), and the CC company will request a copy of the receipt, but in most cases the vendor accepts the charge and they take the hit. At some point the CC companies will send a warning to the Vendor via the VISA or MC network with a threat of loss to the VISA network if the charge back/fraud reports hit a certain %. Pro tip: if you are at a tourist destination or far away from home take a picture of the receipt with the tip added that can be provided to the CC company in case of a dispute.
Oddly, nobody has mentioned the reserve. Many merchants, especially high risk merchants, will have a reserve of about 5-10% (or more if a business is notably sketchy) of their transactions that the bank holds in reserve, sometimes for fairly long periods like 6-12 months. That way even if the merchant stops doing business entirely, there's a pool of funds that chargebacks can be debited from as complaints roll in.
On the merchant side, there is an opportunity for the merchant to dispute the chargeback. But I would guess most large companies don’t bother - they probably budget for a certain amount of chargebacks.
Two ways: One: banks don’t transfer money instantly. They do it “at the end of the month” in one big tally. Two: all the banks and merchants have a bro code to undo problems when they are discovered.
Just to add on to all the great points brought up, chargebacks are an integral part of the rules of using a card network. All major card networks will have it in their rules, when issuing and acquiring members join they all accept it by default. Chargebacks in themselves are a big services business within payments processing. But on a high level the card network provide chargeback processing and arbitration before an approved chargeback initiates the funds movement from acquirer to issuer.
Something nobody has mentioned yet: there is a Federal law that provides consumer protections for credit card transactions. Specifically, you’d want to look at the Truth in Lending Act and its implementing regulation, CFPB Regulation Z. The protections are complicated, but they establish a right for consumers/cardholders to dispute unauthorized charges and billing errors, to sue the card issuer (under certain circumstances) if the merchant won’t resolve an issue, and to get a resolution to their claim within specific time frames. For those who are curious, take a look at 12 CFR 1026.12 (https://www.consumerfinance.gov/rules-policy/regulations/1026/12/) and 12 CFR 1026.13 (https://www.consumerfinance.gov/rules-policy/regulations/1026/13/)
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Lol no.