What Is a Chargeback?

While it is understood that if you are a customer who is searching for information about chargebacks, you already have some idea what they are all about. However, we will explain them in detail so you have a good idea of what they are, what causes them, and why you need help with them. It is important to notice here that a chargeback can be in many different formats. At times, it is the customer who is responsible for the chargeback and other times, it is the merchant that has made a mistake. Some reasons point to the fact that the customers never authorized a transaction, whereas others indicate that the customer is not interested in the transaction anymore.

Either way, you should know the different types so you can get help when you are faced with a chargeback situation.

Chargeback – Basic Definition

Chargeback is an instance when the customer looks at a transaction on his/her credit card and deems that this transaction was not authorized by him/her. Since they think the transaction was never authorized by them, they dispute the validity of it. This means the customer does not want that transaction to appear on their credit card and wants the money to be refunded. Who is going to return the money? Well, it is the online retailer, broker, or some other company that is being asked to return the money. There are many entities involved in a complex chargeback process and that’s why you need the help of experts to guide you through it.

Chargeback – Detailed Explanation

As stated earlier, there are different types of chargebacks. The first thing you have to know is that the customer can initiate a chargeback based on the change of interest r mind. On the other hand, another form of chargeback results from the fact that the customer really has been charged with an amount unfairly. So, we can categorize chargebacks based on those that are known to customers and those that are only known after the fact.

Chargebacks Due to Customer Faults/Will

We can talk about a variety of chargebacks in this category. A customer can initiate a chargeback if they receive a product which they think does not match the description on the website. In this particular instance, their complaint is that they did not receive the item which was promised to them on the website. For example, you might like a particular dress on the website only to find out that the color is completely different from what you saw on the website upon receiving. This is why websites usually give you this disclaimer that the colors you see on the website might not match the actual colors of the product.

At other times, the customer might just not like the product. They might have different expectations from the product. This can be true in the case of services as well. The customer might feel that the services are not good and that they are not ready to pay for it. Product returns are also a great reason for chargebacks to occur. The other big reason includes customers seeing a strange name on the credit card receipt. Sometimes, businesses have a different name on the front than they have on their receipts. This can cause confusion and result in chargebacks.

Chargebacks Due to Frauds

This is the saddest reasons for chargebacks. A customer has to file for a chargeback when they recognize that a transaction has appeared on their credit card statement but they never authorized that transaction. At times, it can happen when the customer signs up with a shady service on the internet. They might have entered their card details but never agreed to transfer any money. However, the website is able to pick up information from the web form and use it. Only scammers do such a deceptive thing and that results in chargebacks.

Also, customers will notice an unauthorized transaction on their cards when someone uses their stolen information. The credit or debit card information can be stolen from any company with which the customer does business. This fraudulent payment has to be returned.

Chargebacks Due to Errors

These chargebacks can result as errors from the customers or the business. A business may charge the customer’s credit card for a product due to some mess-up in the database. A customer can get charged for a product that some other customer has purchased. Sometimes, the business would charge the customer twice for the same purchase. Yet again, it is nothing more than an error that can occur without anyone’s will. Also, a customer might make a purchase by mistake when they don’t know how to use the online cart of a business or their new application.

The Process of a Chargeback

How does the chargeback take place? The procedure might simple on a piece of paper but because of the involvement of many parties and their interests, the whole process can take a lot of time. Here is what a standard chargeback procedure looks like.

  • Customers see a transaction that they don’t think they authorized.
  • They get in touch with their bank about this transaction and dispute its validity.
  • The bank contacts the merchant’s bank with the dispute from the customer.
  • The amount that the business had charged from the customer’s card is now on hold.
  • The issuing and merchant’s banks now work together to collect evidence from the merchant and the customer to resolve the matter.
  • If a chargeback from the customer is successful, the money is credited back to their accounts and taken from the merchant/business.
  • If the chargeback is not successful, the money returns to the business and the customer receives nothing.

We Give You the Best Chargeback Companies

As said earlier, chargebacks seem pretty straightforward on a piece of paper, but they are quite complex. It is because there are many parties involved in every online transaction. Also, things might not go your way all the time, for which reason it is important that you hire the right people for the right job. Check out the detailed reviews and comparisons of the best chargeback and funds recovery companies on our website and pick the one that can best serve you.