What Is a Chargeback? Definition, How to Dispute, and Example

Posted on Wednesday, June 19th, 2024 | By IndusInd Bank

Credit cards offer a variety of benefits, including measures to safeguard the cardholder’s finances. One such crucial benefit is the chargeback feature. 

A chargebackis a process where the cardholder disputes a credit card transaction that results in a return of the payment to their credit card.

Let’s learn what a chargeback is, how to dispute it, and the nuances involved. 

Understanding Chargebacks in Detail

The following points provide a detailed overview of chargebacks:

• You can file for a chargeback with your credit card issuer if you believe you have been charged incorrectly for a product/service. 

• Here are some examples of situations that lead to a chargeback:
• An unauthorised or fraudulent transaction 
• An ordered item that has not been delivered
• Charges for damaged goods
• A subscription that you have cancelled but are still being charged for, and so on. 

• Let’s assume you paid for a subscription to a music streaming service with your credit card. But you cancelled the subscription a few months ago. Yet, the service provider has deducted monthly subscription charges. These charges are visible in your credit card bill statement. You can dispute such a charge with a chargeback.

• Some people may think a chargeback is the same as a refund due to their similar nature. However, when comparing chargeback vs refund, remember that a refund is a repayment from a merchant. It can be due to reasons such as returns or faulty products. On the other hand, a chargeback occurs when a bank returns funds to a cardholder’s account because of a disputed charge.

Now that you know the meaning of chargeback, let’s see the process of filing for one. 

How to File a Chargeback?

If you come across a charge you want to dispute for a chargeback, here are the steps that you can follow:

·       Contact Customer Care

Connect with your bank’s customer care service regarding your queries/issues and share all the details of the disputed transaction with them.

·       Fill out the Chargeback Form

The customer care representative might ask you to download a chargebackclaim form. Once downloaded, you can fill it out and submit it via e-mail.

·       Receive Temporary Credit

A temporary credit is awarded for the disputed amount until the issue is resolved. 

Also Read: What is Skimming of Credit Cards?

How Does a Chargeback Process Work?

Here is how things unfold after you file a chargeback: 

• The bank informs the merchant about the dispute.

• The merchant can either accept or challenge the chargeback. If the merchant wants to challenge the cardholder’s claims, they can submit a rebuttal letter with the evidence. In the case of the former, the bank will transfer the chargeback amount to you.

• If the merchant challenges the chargeback by providing evidence, the bank will assess the evidence. It will then decide whether to uphold or reverse the chargeback. 

• If the bank rules in your favour, you receive the chargeback. The earlier awarded temporary credit now becomes permanent.

• But, if the merchant wins, the temporary credit is reversed. You also need to pay the bill by the due date.

• If either party disagrees with the bank’s decision, they can appeal through arbitration. In this case, the card network (RuPay, Visa, Mastercard) can help resolve the case. The party that loses must incur fees. Also, no appeals will be accepted later.

Conclusion

It is important to know what a chargeback is and how to file it as it aids in tackling disputed transactions. 

Additionally, always choose a reliable banking partner that understands its customers’ concerns and has a solid dispute-resolution process. IndusInd Bank has an accessible online dispute resolution procedure that allows customers to seek assistance and get resolutions at the earliest. 

To enjoy a seamless banking experience, apply now for IndusInd Bank Credit Cards today.

Disclaimer:

The information provided in this article is generic and for informational purposes only. It is not a substitute for specific advice in your circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for making any financial decisions based on the contents and information.