A credit card chargeback is when your credit card provider reverses a transaction. A chargeback is different from a straightforward refund, which is when a merchant reimburses you directly for a charge and the credit card issuer is not involved.
A chargeback can arise for many reasons, such as when someone makes fraudulent charges to your card or if a seller overcharges you or refuses to give you a refund for a faulty item. Be aware, however, that a chargeback is meant to protect customers from erroneous charges and is not simply a way to get your money back if you’re no longer happy with a purchase and want a refund.
To initiate a chargeback, you just need to contact your credit card provider via phone or online. Most card issuers in Canada give you between 30 to 60 days from the statement closing date to report a disputed transaction.
This is why it’s crucial to check your credit card statements against your purchase receipts each month so that you can catch a problematic charge as soon as possible. Your cardholder’s agreement will specify how much time your particular card provider allows to initiate a chargeback.
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When you contact your card provider to initiate a chargeback, they will first attempt to confirm whether the disputed charge results from fraud because your card has been compromised. Generally, fraud will be assumed if you are disputing various transactions that you did not initiate. If this is the case, the card issuer will immediately cancel your card, and you will not be responsible for the charges.
If, however, it appears as though your card’s security was not compromised, the credit card issuer will usually request that you first try to contact the merchant and handle the issue yourself. That’s the fastest and easiest way to get your money back and the card provider wants to know that you’ve exhausted all other avenues before coming to them.
You may be asked to send receipts (via mail or digitally), documents related to the transaction, and any relevant information about the merchant. Then you simply have to wait to see if your chargeback is approved.
While every case is different, it can take anywhere from five business days up to three months to process a chargeback. The timing depends on a variety of factors, including whether the credit card issuer conducts a full investigation into the charge (which often happens when the transaction is for a large amount of money), the complexity of the claim or if a merchant disputes your claim.
Personally, I have asked for a chargeback twice in recent years: once after being double-charged for parking and again after I was overcharged at a restaurant. In the first case, because it was such a small sum, my credit card provider issued a chargeback within a day and didn’t ask for any receipts. In the second case, I was asked to provide a receipt for the meal (this is why it’s imperative to keep your receipts!), which I did and I received a refund within a month.
In Canada, you can get chargebacks with a credit card or a prepaid Visa or Mastercard that is registered to your bank account. However, unregistered prepaid cards (similar to gift cards) essentially act like cash. They are “anonymous” because they aren’t tied to an account the way a credit card is, so there really isn’t any recourse if you lose a prepaid card and someone else uses it to make purchases.
If you request chargebacks too frequently, your credit card issuer may suspect you of cardholder fraud, in which case they would cancel your card. This is, however, a very unlikely scenario. If you are a responsible credit card user and don’t make false chargeback claims, there are no risks involved with chargebacks.
Yes. If you can’t provide original receipts or if the card company investigates your dispute and decides to side with the merchant for whatever reason, then they can deny your claim.
However, if you feel you were wrongly denied a chargeback you still have recourse for help. Contact the Ombudsman for Banking Services and Investments (OBSI) or the ADR Chambers Banking Ombuds Office (ADRBO) if you believe your credit card provider is not acting in good faith. Note, however, that these independent organizations are to be used only when all other efforts with your card company fail.
Sandra MacGregor has been writing about personal finance, investing and credit cards for over a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star. You can follow her on Twitter at @MacgregorWrites.