There is a very underrated feature that we will talk about today in this blog post, and that is the benefit of Buyer Protection available to credit card holders.
Understanding Chargebacks
Buyer Protection comes into play when you shop using credit cards. Buyer Protection covers transaction disputes or commonly known as credit card chargebacks. And this is a significant reason to have a credit card.
So in this blog post, we will understand what is chargeback?, when you can chargeback?, what the process entails, how to file a chargeback?, and what happens after filing a chargeback?
What is a Chargeback?
To put chargeback simply, it means disputing a transaction made on your card. Basically, you contest a transaction made with your credit card issuer, usually a bank, regarding any fraudulent transaction or discrepancies in the transaction. You can claim a refund against any transaction that you did not authorize.
However, you cannot claim a chargeback against every transaction. There are some reasons for chargebacks that allow you to claim. We’ll discuss those reasons now.
Reasons for Chargebacks
The first reason could be that a payment was made from your card, but you didn’t make it. This means there might have been a fraudulent transaction.
So, disputing such transactions is definitely a reason to file a chargeback. Another major reason is when you ordered a product but didn’t receive it as promised.
For example, if you ordered a phone in the 256GB variant but received the 128GB variant, and the merchant is not providing either an exchange or a refund, you can contact your bank to dispute the transaction.
Another significant reason could be that you ordered a product, but it was never delivered to you. This might happen because either the merchant disappeared or repeatedly failed to deliver, and also didn’t process a refund. In such cases, you can contact your bank to dispute the transaction.
There are some other reasons such as receiving a damaged product, being charged for a subscription you canceled, but still getting billed, etc. In such scenarios, you can initiate a chargeback with your credit cards.
Process of Initiating a Transaction Dispute
Because credit card payments come with Buyer’s Protection, if you are paying through a UPID, you are at the mercy of fate. You might have to follow up with your bank repeatedly, and still, there’s no guarantee you’ll get your money back. Now, let’s understand the process of initiating a transaction dispute.
Many banks, like American Express, simply accept your transaction dispute over a call to their support. In some cases, like with XYZ bank, it can be more complicated depending on the bank and the complexity of the issue.
Dispute resolution can take a considerable amount of time. Once you submit your transaction dispute, the bank will provide you with a temporary refund for the disputed amount until the dispute is resolved.
Meanwhile, the bank or payment network will investigate the issue further, requesting more details from you and contacting the concerned merchant for details. If the dispute is in your favor, meaning if it is proven that there was an issue from the merchant’s end, the temporary credit given to you is not reversed.
However, if the dispute is not in your favor, meaning if it is found that there was no fault from the merchant’s end, the temporary credit is reversed.
Appeal Process
If you are not satisfied with the dispute resolution or the merchant dispute resolution, you can file an appeal against the decision. This appeal is filed with the card network, and then an arbitration process starts where the losing party has to pay a fee to the card network.
My Thoughts
So, this is the process of initiating a transaction dispute. In my opinion, only dispute genuine cases to avoid unfair advantages of chargebacks. If you’ve genuinely been wronged, definitely dispute the transaction, and the sooner, the better.