It’s Not Too Late to Reclaim Money ‘Lost’ to COVID Disruptions

A credit card chargeback can be a helpful tool, particularly if the pandemic has affected the delivery of a good or service. But there are rules and limits to be aware of.
Erin Hurd
By Erin Hurd 
Edited by Kenley Young

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When Dawne Novinger's go-to gym in Portland, Oregon, was ordered to close amid COVID-19 shutdowns in spring 2020, she assumed she wouldn’t be charged the regular monthly fee.

Surprised to see the full $159 monthly membership charge on her credit card statement, she called the gym to request a refund. Unsurprisingly under the circumstances, no one was there. She got no response from calling, emailing or even taking to social media to ask the gym for a refund.

“Employees of the gym could not assist because they said they were suddenly unemployed,” Novinger said. “The franchise owner of the gym was MIA.” Meanwhile, another monthly charge hit her card. As a last resort, Novinger filed a successful chargeback complaint with her credit card issuer.

A chargeback lets you dispute a charge on your card and may help you reclaim a loss. But here’s what to know about pursuing one, especially during a pandemic.

How a chargeback might help amid COVID

A chargeback isn't just for tackling a fraudulent purchase. Thanks to the federal Fair Credit Billing Act, cardholders are entitled to dispute charges for goods and services they didn't accept or that weren't delivered as agreed.

And over the past year — as air travel ground to a halt, supply shortages skyrocketed and businesses folded under economic pressures — plenty of cardholders apparently have felt dissatisfied with certain deliverables.

“Chargebacks are up 25% as a result of COVID-19," according to industry expert Monica Eaton-Cardone, founder of Chargebacks911, a firm that helps merchants handle chargebacks.

If you’re considering filing a chargeback on your credit card, there’s a limited time frame in which a claim can be considered. For major credit card payment networks like Visa, Mastercard and American Express, that window is generally 120 days. But that doesn’t necessarily mean 120 days from the time the charge shows up on your credit card. The window is 120 days from the date of expected services.

“Whenever you pay for something, you have the right to file a chargeback from the date that product or service should be delivered," Eaton-Cardone says. "That means if you purchased travel in 2020 for a trip in 2021, you can still chargeback based on the date the travel was supposed to take place.”

Even in cases where a travel company may offer a voucher or a credit rather than a full refund, you can still dispute the charge. If, say, an airline has canceled your flight or significantly changed your itinerary and isn't willing to give you a full refund, this is counter to the company's obligations as detailed by the Department of Transportation.

Understand the limitations of a chargeback

For one thing, while chargebacks may have shot up during the pandemic, card issuers' "manpower to tackle the onslaught of a higher volume of disputes has not increased," says Michael B. Cohen, co-founder of MyChargeBack, a firm that helps consumers in complex credit card disputes.

According to Cohen, that means you may be dealing with the addition of “human frailty to a system that can already be complex for a cardholder to navigate.” In other words, don't expect immediate satisfaction when filing a chargeback, particularly as the COVID-19 crisis continues.

And, of course, you can’t have your airline peanuts and eat them, too.

“You can’t accept a credit and then file a chargeback," Eaton-Cardone says. "You will not only lose the chargeback dispute, but you could also lose the voucher that was issued.”

3 things to do when considering a chargeback

Though many credit card issuers have made it relatively easy to file a chargeback with just a few clicks, that doesn’t mean the process itself is always cut and dried. Here are three things to do first.

1. Make good-faith attempts to settle with the merchant first

The Fair Credit Billing Act explicitly requires that you contact the merchant first to give it an opportunity to resolve the charge. And indeed, that's in the best interests of both you and the merchant.

You'll likely get money back in your pocket more quickly from the merchant than from a chargeback investigation, and the merchant can avoid the cost of such a process, which can be especially damaging to small businesses already hurting from COVID-19.

“For every $1 charged back by the consumer, it costs the company $3," Eaton-Cardone says.

It's also worth noting that travel companies have instituted more consumer-friendly policies as a result of COVID-19. Many major airlines have rolled out change fee waivers, and once-rigid travel rules have become more flexible all around. There may be a solution waiting for you when you call.

And if you’re not getting anywhere with the representative you’re dealing with, ask if you can escalate the problem to the manager.

2. Keep good records

When you’re trying in good faith to get a refund directly from the company, keep records of everything you’re doing. If you can’t resolve the dispute directly, that "evidence" will help your chargeback case go more smoothly.

If you choose to move forward with a chargeback, be able to show that you tried to contact the merchant via phone, email or even social media. Save all correspondence and take any notes of your attempts over the phone, jotting down who you spoke with on what day and at what time.

If the case turns into a “he said, she said” situation, you’ll have the documentation you need to support your claim.

3. Know your rights and the rules

Cohen knows how challenging the nuances of a chargeback can be for the consumer.

“Every bank has a different process," he says. "Sometimes when well-intended people try to fill out the form on their own, they often inadvertently contradict themselves. They call it fraud and then later they say the charge was authorized. The language used is very important, and a claim can get denied for contradictions the customer didn’t realize they were making.”

An unauthorized charge, aka fraud, is very different from an authorized charge that you want to dispute.

A little research can help you better understand the process. Cohen recommends visiting your issuing credit card’s bank branch in person, if possible, to talk to someone about the chargeback process face to face.

“Try to obtain help from the ‘inside’ to try to cut down on human error," he advises. "Know when to follow up, how to follow up, so your case doesn’t slip through the cracks.”

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