Chargeback Procedures

Chargeback Procedures

You received a chargeback pre-notification by mail or fax and do not know why you received it.

• The Fair Credit Billing Act gives the customer the right to dispute credit card charges in the following cases: 
  • Unauthorized charges. (Side note: Federal law 15 U.S.C. § 1643 limits a cardholder’s liability to a maximum of $50 for unauthorized charges. That being said, most reputable credit card companies will waive that $50 and give you zero fraud liability.)
  • Charges for goods and services you did not accept or weren’t delivered as agreed upon.
  • Charges that have the incorrect amount or date.
  • Charges incurred when payments/credits are not properly posted to your account – i.e. if you return an item and the credit never shows up on your account.
  • Charges in which you ask for an explanation or written proof of purchase, along with a claimed error or request for clarification.
  • Charges incurred due to the credit card company not mailing the statement to your current address. The change of address must have been provided in written form and the creditor must have received it at least 20 days before the billing cycle ended.
  • Math errors
• Please note that the FCBA credit card dispute rules and rights do not apply if the customer is disputing the quality of the goods or services.  Therefore, if they purchased something defective, it would not be considered a “billing error.”

The chargeback pre-notification is notice that a customer disputed a credit card transaction and the dispute process has begun.  You have a short time to offer “compelling” information to prove that the transaction was valid. 

• Review the chargeback pre-notification you received and determine what the specific transaction is that is being disputed.
  • Determine exactly what information is needed to resolve the dispute and where the information needs to be faxed or mailed.
  • Respond to the chargeback pre-notification as soon as possible
  • Address all of the cardholder’s pertinent claims
  • Be sure to supply “compelling” information to prove the true cardholder participated in the transaction, received the goods or services, and benefited from the transaction.
    • Examples of compelling information included
      • Correspondence between the cardholder and merchant that proves the merchant spoke to the cardholder or received a letter stating that they acknowledge the validity of the transaction
      • Evidence that the merchant swiped or imprinted the card, received an authorization approval, and the cardholder’s signature.
• If the customer did encounter a billing error and their dispute of the charge is valid:
  • Act Promptly when customers with valid disputes deserve credits
  • When card holders contact you directly to resolve a dispute, issue the credit on a timely basis to avoid unnecessary disputes and their associated chargeback processing costs
  • Let cardholders know immediately of the impending credit

You received notice of a credit card chargeback by mail or fax

• A chargeback refers to the return of funds to a customer, forcibly initiated by the issuing bank of the instrument used by the customer to settle a debt.  Specifically, it is the reversal of a prior outbound transfer from a customer’s credit card. 
  • Therefore, a previous credit card transaction was reversed due to a dispute issued by the customer. 
  • Review the chargeback you received and determine what the specific transaction is that is being disputed.
    • Determine exactly what information is needed to resolve the dispute and where the information needs to be faxed or mailed.
    • Respond to the chargeback as soon as possible
    • Address all of the cardholder’s pertinent claims
    • Be sure to supply “compelling” information to prove the true cardholder participated in the transaction, received the goods or services, and benefited from the transaction.
  • If the customer did encounter a billing error and their dispute of the charge is valid:
    • The transaction has already been reversed and that was a valid reversal then you do not have to do anything. 

You received a notice of a credit card chargeback reversal by mail or fax

• A chargeback reversal restores the funds back to the merchant after successfully disputing the chargeback.

You received a notice of a credit card reversal rejection by mail or fax

• A reversal rejection means you disputed the chargeback but the dispute was ruled in the favor of the customer.  There will not be a charge back reversal.