Understanding a Chargeback

• A chargeback is a reversal of a credit card transaction. In this situation, the bank that processed the transaction sends the item back to the merchant, withdraws the money from his account, and deposits it back into the customer's account at the request of the customer. This is a major inconvenience for a credit card merchant because he loses his proceeds from the sale and in some cases can't recover the item he sold. His merchant services provider also assesses a fee for a chargeback.
  
  

Debit Card Chargeback

• A debit card is different from a credit card in that the source of funds comes from a bank account rather than a credit account. However, a merchant can experience a chargeback even if the consumer used a debit card. A debit card that contains a logo from one of the major credit card companies is eligible for processing as a credit card and thus eligible for a chargeback.
  
  

Dispute Process

• In order to process a debit card chargeback against a merchant, you must file a dispute with your bank. The bank asks basic questions about the debit card transaction, including the date, amount and reason for the dispute. You must also sign a dispute form to initiate an investigation. The bank sends the chargeback request to the bank that processed the charge. If approved, the chargeback goes through and you receive the amount back in your account.
  
  

Warning

• Filing for a debit card chargeback against a merchant should only be a last resort and backed with evidence. Do not abuse the dispute feature offered by the bank. If the bank discovers that an account holder is disputing charges to get free goods or abuse the card processing system the bank may decide to close the account. The affected merchant can also "blackball" the consumer for a chargeback by placing her on a list of individuals who commit what is called "friendly fraud." Friendly fraud is intentionally submitting unjust chargebacks.