No one is immune to fraudulent actions and erroneous money transfers. If such a situation occurs, there is a solution – use the chargeback service, or in other words, a reverse payment. Many people wonder: what is a chargeback and how does it work?
This procedure is carried out in accordance with the current consumer rights protection system. It offers clients a refund in case of incorrect debiting from bank accounts. A chargeback is also appropriate when a person has not received paid goods or services.
How chargeback works – features of the procedure
To initiate a chargeback, you need to contact the bank from which the payment was made. There, an application for a refund is submitted. The request can be submitted in writing, verbally, or electronically – the type of request is determined by the banking institution. The main task of the affected party is to ensure that the application is accepted and officially registered.
Then the person is given a standard form. In it, they state all the claims based on which the money should be refunded.
Typically, the form includes the following data:
- Date of the transaction;
- Amount and currency in which the payment was made;
- Scanned copies of receipts.
Next, the bank independently conducts a small investigation. It verifies all the provided information for compliance with the reasons stated by the client against the established rules of international payment systems. If the reasons for the chargeback are confirmed, the banking institution notifies the acquiring bank that the refund process has begun.
Then the seller of the goods or service, who received a complaint from a dissatisfied client, is sent a notification that they must return the money. The entrepreneur has 45 days to dispute the complaint and provide the bank with evidence that they delivered the product or provided the service of the proper quality.
Then a decision is made: whether to refund the affected party or not. There are also special chargeback companies with professional lawyers who carry out the entire refund procedure on behalf of the affected party.
When a refund is denied through chargeback
Various situations occur. Therefore, before going to the bank, it is necessary to understand how chargeback works. There are cases when a refund is impossible.
A chargeback is inappropriate when:
- The user confirmed the transaction with a one-time password in an SMS message. In this case, the bank considers it voluntary consent of the client to make the payment;
- The person applied for help late to the banking institution. The deadline for submitting an application depends on the payment system. It is up to 120 days;
- The money was transferred to the seller's personal card. In such a case, returning the money is almost impossible;
- Simple rules for conducting transfers were not followed. For example, the user themselves provided fraudsters with bank card details and a one-time SMS password.
In these situations, disputing payments is almost pointless. The likelihood that the money will not be returned is 99.9%.
Main types of chargebacks
70% of money refund cases involve fraudulent actions. It is necessary to know when chargeback can be applied.
Consumer Disputes. These arise when a client is dissatisfied with the quality of the product (or service) provided. A dispute arises in cases of delayed delivery, defective products, or inadequate service. There are also situations when a person pays for a product but does not receive it.
Authorization (unauthorized access). This happens when fraudsters gain access to a user's account without their knowledge. Fraudsters withdraw money from the card and use it for personal purposes. If evidence of these actions is provided in full, the chargeback will be successful.
Processing Errors. Occasionally, processing errors occur. Such cases are extremely rare, but they should not be forgotten. For example, this includes double payment for a product or service.
Fraudulent brokerage firms and investment projects. When money does not reach the balance when depositing, unexplained debits from the account, refusal to withdraw funds – these are all reasons for a chargeback.
Chargeback fraud – how they deceive in refunds
If a client submits a complaint to the bank personally, the risk of falling into the trap of fraudsters is zero. However, there are now organizations that handle chargebacks. These are professional lawyers and attorneys who offer full support at all stages of the refund process. The services of these companies are paid. But not all such firms are honest.
There are chargeback services that charge for their services, but after receiving payment, they disappear or do not fulfill their duties properly.
It is recommended to contact the bank independently. After all, the banking institution conducts the refund process. Sometimes only banks charge a commission for this service, which should be specified in the contractual agreement.
Disputed transactions and chargeback are interconnected processes. The chargeback procedure helps in cases where users are deceived by brokers, unscrupulous sellers, or unauthorized debiting of funds from a bank card occurs.
To avoid chargeback, always carefully study the document "Terms of Use", ask the seller for all the information about the product or service, and pay attention to the terms of delivery of the product (if it concerns purchasing a product).
Additionally, company owners should avoid refunds.
They can do this by:
- providing detailed information about the terms of the deal;
- informing clients how they can contact the company's managers to resolve disputes;
- keeping all information about the completed purchase (or service provided) until feedback is received from the buyer who has already received the product (or service).
Chargeback is a service that helps achieve justice from unscrupulous sellers. Always strive for a refund if a substandard product has been sold or a fraudulent brokerage or any other service has been provided.