Let’s say that John buys a brand new book online. He paid $40 using his credit card. When the book arrived, it was not brand new as was described on the website. It was clearly an older book with pencil markings and torn pages.
John attempts to contact the online seller but gets no response for his emails. But he does have a recourse. He can contact his credit card company and explain what happened, asking for a full refund. This is called a ‘chargeback’.
In a chargeback, the consumer demands that his money be returned.
Banks and credit card companies like Visa, MasterCard and American Express, do not like chargebacks. When a customer initiates a chargeback, the responsible company (the book seller in this case) must pay an extra penalty of anywhere between $15 to $30. Because of this heavy penalty, chargebacks have become highly onerous to businesses.
Sometimes when communicating with the responsible party, the mere threat of a chargeback will cause them to act promptly to resolve the matter.
After a customer has initiated a chargeback, the customer may obtain his refund instantly but this can take a week or more in some cases. In cases where the customer is being unreasonable, a business can show the proper paper work to the credit card issuing bank and thus the business can get their money back from the disgruntled customer.
A customer has 180 days from the date of the transaction to file a request for a refund.