What is a chargeback?
What is a chargeback? How do they work? Are they relevant to scam victims? Who approves them? And do you need someone to assist you in obtaining yours?
So what is a chargeback?
A chargeback is, in the simplest possible terms, the retroactive cancellation and refund of a charge made on your credit card or debit card. You request a chargeback from the bank that issued the card itself. But you can do so only under one of two conditions:
- You did not authorize the transaction, or
- The transaction was for goods or services that the merchant did not deliver as per a contract, receipt or some other written agreement
If you did not authorize a particular purchase, then you’re in luck. If someone stole your credit card or forged your signature on a receipt, its use constitutes fraud. In that case, you are automatically exempt from payment under the terms of the agreement you signed with the credit card company as long as you notify your bank in a timely fashion. Your bank will then approve your request for a chargeback and credit your account for the full amount of the transaction.
Can I get a chargeback for an Investment scam?
Obtaining a chargeback for services that the merchant did not deliver as contracted is a challenge. In fact, it’s daunting to prove, because you really did authorize the payment. And you received something – just the wrong something.
- Especially if you fall victim to a scam
- Especially an online scam whose perpetrators are here today and gone tomorrow
- Especially when the scam involves binary options, forex or cryptocurrency
- Especially in online scam investments involving fake real estate deals and offerings
Binary options scams and forex trading scams victimize you because they employ platforms that do not adhere to any obligatory trading rules and procedures.
Types of Chargebacks
There are two types of chargebacks: Fraud-related and service-related. Your bank might not know that.
Another example of fraud is if you use your credit card to purchase a specific item that is never delivered. Say, for example, you buy a new computer equipped online. You clearly specified its technical specifications. Then, after you accept delivery, you open the box and find it contains an inferior model. Or a used one. Or a toaster. You call the merchant but they deny sending you the inferior model. Or the used one. Or the toaster. They just won’t help. In such a case the merchant defrauded you. Your bank will readily agree that it should reverse the transaction. You clearly deserve a chargeback.
That challenge is much easier said than done. After all, you signed a contract. In all likelihood, you also supplied the merchant with a series of additional documents. That means he can cite them to prove that you willingly entered into a business relationship with him and knew exactly what you were doing.
Does Your Bank Know There Are Two Types of Chargebacks?
Compounding the problem is that the clerks assigned to your bank’s dispute department with whom you speak may not know there are two types of chargebacks. Specifically, they might not know what a service-related chargeback is. Let alone deal with one from start to finish. A common reaction will be for the bank to demand within a limited amount of time additional information that you may not have. And if you can’t provide that documentation in the time frame they expect, they’ll either leave you with the impression that they won’t process your dispute or tell you that outright.
Explaining the Two Types of Chargebacks
Unfortunately, the same bank clerks who are unfamiliar with a service-related chargeback will probably be unfamiliar with the type of service you contracted. That’s most likely when it comes to online binary options or forex scams. If so, they will probably claim that what you did − or more accurately, what you presumed you did − was play the market. If that’s what they think, they will tell you that all investors know right from the start that losing money is a real risk. After all, no bank will retroactively reverse a credit card payment to a stockbroker for shares in a company that ultimately crashed on Wall Street.
So the odds are that bank clerk’s immediate, instinctive reaction will be that you don’t deserve a chargeback for your loss, either.
Their strength is their expertise in being able to explain your rights as credit card holders in language that bankers understand. When necessary, they also know how to resurrect a dispute beyond the standard deadline. That’s vital in the event your bank presumed you missed it.
The Chargeback Process
The chargeback process allows you to retroactively cancel a credit card or debit card transaction. The process begins when you file your initial request with the bank that issued you the card.
The Issuing Bank and the Acquiring Bank
American Express® does not impose any time limit on its cardholders.
The chargeback process begins when a cardholder submits a request to raise a dispute with the merchant to the bank that issued the card. The technical term for your bank is the issuing bank. Once the issuing bank accepts your request, it will raise a dispute with the merchant’s bank. The technical term for that second bank is the acquiring bank. It alerts the acquiring bank through the credit card company’s dispute resolution scheme. The acquiring bank then informs the merchant. In certain cases, the sum you challenge may at this time re-appear in your account as a temporary credit.
The Chargeback Process: Representment
When the merchant files a representment, however, your bank will receive it in a reverse process. Your bank will then either request that you submit a response to the representment, or it may respond on your behalf. It may do so without notifying you. It also has the right to close the case on its own. If you used a Visa card, the merchant may choose to submit a second representment to rebut your response. In that event, a new period 30 days, known as pre-arbitration, begins. If afterwards the acquiring bank still does not agree to the chargeback, the issuing bank can elect to move to arbitration.
If you used a Mastercard, the merchant has 45 days to respond. Should the merchant submit a representment, the cardholder then has 45 days to rebut it. If the issuing bank allows the cardholder to respond to the representment, the acquiring bank can elect to move directly to final stage of the chargeback process, which is arbitration.
American Express, Discover® (and Diners Club International®, which it owns) employ an internal chargeback process. Merchants have 20 days to respond.
The Chargeback Process: Arbitration
The entire process, from your initial request to the final resolution, can take up to six months. Our experience is that in most cases it takes three-to-four months.
MyChargeBack will accompany you throughout this entire cycle.
How can Recovery Experts help?
- The names of all merchants, including the URLs of the domains, with whom there is at least one disputed transaction.
- A comprehensive list of all deposits and withdrawals processed with each merchant.
- A comprehensive list of the relevant credit card details for each transaction.
Their financial professionals will then review this material, chart an appropriate strategy and prepare the document you will submit to your bank. Should it be necessary, one of their experienced recovery agents will then join you in as many conference calls with your bank’s dispute department as are necessary. Their recovery agent will explain to your bank why it must initiate your dispute. In the event the merchant challenges your request, they will, of course, prepare a point-by-point response and continue to work with you in pursuing your case.
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