Introduction to Chargebacks
A chargeback is a mechanism that allows banks to cancel transactions made on a credit, debit, or charge card if there is a breach of contract. This can be a useful way to get your money back if a retailer hasn’t provided the goods or services you paid for. You can request a chargeback if the company refuses a refund, but remember that this is a voluntary system that card providers agree to, and not a legal right.
When to Request a Chargeback
A chargeback can be filed if the goods you purchased were defective or not as described, or if they simply never arrived, even if the company went bankrupt. This is because your bank is demanding the money back from the company’s bank, not the company itself. A chargeback also makes sense if there is an error, such as multiple debits or after canceling a subscription, or if someone fraudulently purchased the item with your money.
Covered Cards
The following cards are covered by the chargeback system:
- Direct debit: Visa Debit, Visa Electron, Maestro, and Mastercard
- Prepaid: Visa and Mastercard
- Credit cards: Visa Credit, Mastercard, and American Express
How to Request a Chargeback
Claims can be made via email, online form, or in writing. A good place to start is your bank’s website, which may have a link to "disputed transactions" or "chargeback claims." The complaint should contain:
- The name of the merchant
- The date of purchase and method of payment
- A detailed description of the goods
- The estimated delivery dates
- A description of what went wrong and evidence, if applicable
The Chargeback Process
Your bank or credit card provider will reverse the payment and give the merchant an opportunity to respond. Retailers don’t like to deal with chargebacks because they are problematic and expensive to resolve. Under American Express’s rules, the retailer has 20 days to dispute the claim, while under Visa and MasterCard’s rules, it has 45 days.
Important Caveats
- Time limit: You must request a chargeback within 120 days of the date you were supposed to receive the product.
- Deposits: Since the amount you paid with the card will be refunded to you, you will not get your money back if you simply paid the deposit using a plastic card and paid the rest in another way.
- Credit cards: If your credit card purchase is worth more than £100, you are entitled to legal protection, which pays out the full price of an item even if you only paid a deposit.
- Mastercard minimum amount: There is a minimum order value of £10. This does not apply to Visa or American Express.
- PayPal: When paying via PayPal, a chargeback is usually not possible, but it may be possible if you have an empty account and pay with your registered debit card.
