What is a credit card chargeback? (2024)

A chargeback is a feature that ensures credit card users aren’t liable for fraudulent transactions, shoddy goods or services and other billing disputes.

In other words, credit card chargebacks are a form of consumer protection. But what is a credit card chargeback, and what should you consider before disputing a transaction?

What are credit card chargebacks?

A chargeback occurs when you dispute a transaction on your credit card, and the card issuer reverses it. This is different from a refund, which only the merchant can provide.

You might initiate a dispute if you see a confirmed or suspected fraudulent transaction on your credit card statement, or if you made a purchase but received the wrong product, for example.

There may also be situations where you were billed twice for a single purchase, or you were billed for more than you originally agreed to pay.

If you have a billing dispute over a purchase you’ve made, you should try to resolve it with the merchant first.

“Often, businesses are willing to issue refunds to avoid the complexities and costs associated with the chargeback process,” said Rebecca Alter, trust and safety architect at Sift, which offers digital fraud prevention tools. If you’re not satisfied with its response, you can file a dispute with your credit card company.

Benefits of credit card chargebacks

Chargebacks can be a valuable consumer protection tool. Chargebacks can:

• Protect you against fraud: If you notice fraudulent activity on your credit card, the dispute process ensures that you don’t have to pay for it. Most major credit card issuers offer zero-liability fraud protection, and your liability for fraudulent purchases on credit cards is also limited under federal law.
• Empower you in billing disputes: If you have an issue with a product or service you’ve purchased, resolving the dispute with the merchant can be difficult, even if your claim is legitimate. Credit card chargebacks give you some negotiation power when a merchant isn’t cooperative.
• Be easily requested: The process of disputing a charge on your credit card can vary depending on the card issuer, but it may only take a few minutes to complete, and you can often do it online.

Risks of credit card chargebacks

While credit card chargebacks offer clear benefits, you should consider the risks. Chargebacks can:

• Get rejected: When you initiate a dispute, the merchant will be allowed to respond. If it provides sufficient documentation supporting its claim that the transaction is legitimate, the charge may be restored. You also may be required to provide evidence, such as receipts, photos and your communications with the merchant. If you haven’t been documenting everything, it could be an uphill battle.
• Endanger your account for “friendly fraud”: Only submit legitimate disputes to your credit card issuer. If you repeatedly request chargebacks without a valid reason or without talking to the merchant first, the card issuer could close your account.

How to submit a credit card chargeback

The process for disputing a credit card transaction can vary slightly depending on the card issuer. In general, you can do it through your online account or by calling the number on the back of your card. You should expect to:

1. Identify the transaction: If you call, you’ll need to provide the date and amount of the transaction. If you’re submitting your dispute online, you can select the transaction from your account activity page.
2. Provide the merchant response: The card issuer may also ask whether you’ve contacted the merchant and what its response was to your dispute. If you haven’t reached out to the merchant yet, you may not be able to proceed with the chargeback request.
3. Share your reason for the dispute: Indicate why you’re submitting a chargeback request. The card issuer may give you a list of approved dispute reasons.
4. Provide additional details: You can say whether you’re disputing the full charge or only a portion (for example, if you were overbilled or only a few items from a larger purchase were problematic). Then, you can provide additional details about why you’re requesting the chargeback and upload supporting documentation.
5. Verify your dispute details: Before submitting your chargeback request, you’ll be asked to verify the information you provided. Review everything, then submit it.

What happens when you submit a chargeback?

Once you submit your dispute, the card issuer will typically give you a provisional credit for the disputed amount — though it may still count against your credit limit. Then, the issuer will send the dispute to the merchant.

The card issuer has two billing cycles to resolve the dispute, which means that the entire process can typically take up to 90 days to complete.

If the merchant doesn’t respond or offer sufficient evidence to counter your claim, the card issuer will approve the dispute and make the provisional credit permanent. If the investigation finds no mistake or merchant misconduct, however, the charge will be added back to your balance.

“If a chargeback is rejected, the card holder retains the right to escalate the dispute through their credit card network,” Alter said. Once you receive an explanation from the card issuer, you’ll typically have to submit your appeal within 10 days (or by the issuer’s payment deadline, whichever is later), according to the Federal Trade Commission.

Frequently asked questions (FAQs)