Chargeback

What it means

A chargeback is a reversal of a card payment after you dispute the charge with your card issuer. Card issuers will sometimes undo a disputed charge, and the CFPB notes that this is called a chargeback. The issuer pulls the money back from the merchant, and the merchant can respond to the dispute.

For credit cards, federal billing error rules give you a formal route. Your written billing error notice must reach the issuer within 60 days after it sent the first statement showing the error. The issuer must acknowledge the notice within 30 days and resolve it within two billing cycles, and no later than 90 days. Billing errors include being charged for something you never received.

Debit and prepaid cards have their own error rules, and card networks and issuers set their own dispute procedures. A chargeback is a step after you ask the seller for a refund, not a first move.

What it means for you

Try the merchant or airline first, and keep records of your request, the reply and any refund promise. If that fails, dispute the charge with your issuer in writing as soon as you can, because the 60-day clock runs from the statement that first showed the charge. You do not have to pay the disputed amount while the issuer investigates, but pay the rest of your bill on time. A chargeback is not a way to dodge fair charges, and your issuer can deny it. Use it for charges you did not authorize, goods or services you never received, or refunds a business will not honor.

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