Editorial Policy

Using charge-backs in your favor

Allie Johnson

May 22, 2014

Did you love the fuchsia baby stroller in the store, but now you cringe when you look at it? Did that stainless steel toaster look great in the showroom, but doesn't pop up in a satisfying way?

Now, you head back to the merchant, lackluster items in tow, to request a refund. And that's the right thing to do.

“Talk to the merchant if you can,” says Greg Meyer, community relations manager for Meriwest Credit Union. “They might say, 'Oh, geez, we made a mistake and we're happy to fix it.'”

However, there are cases when you'll need backup to resolve a problem. In those cases,  federal law and credit card issuers can protect you. The federal Fair Credit Billing Act covers billing errors — including unauthorized charges. In other cases, the card issuer might help if it decides the consumer is in the right.

Here are six good reasons to file a credit card dispute:

  • A thief made a purchase with your card number. “Unauthorized charges are a number one reason to file a dispute,” Meyer says. If you look at your credit card statement and see an unauthorized purchase, notify your card issuer right away, says Monica Eaton-Cardone, owner and founder of Chargebacks911, a company that helps merchants manage charge-backs. (A charge-back occurs when an issuer electronically returns a payment to the card holder.) However, don't be too hasty, Eaton-Cardone says. Make sure a retailer that you used isn't simply listed on a credit card statement with a name you don't recognize.
  • A merchant accidentally charged you too much. Maybe that beach umbrella on sale rang up at full price, and you didn't notice at the checkout. Or, you canceled a subscription according to guidelines, but the merchant went ahead and ran your card anyway. When you can't get the merchant to correct the problem, a dispute is warranted, Eaton-Cardone says.
  • A store refused to let you return an item. You order a rug online but, when it arrives, you realize it clashes with your decor. Or, the baby swing you bought creaks so loudly your little one can't sleep. But, the merchant doesn't want to take it back — even though store policy says you have 30 days to make a return.
    “Maybe you call to try to return a product and the person on the phone is just impossible,” Eaton-Cardone says. “In that case, if you're unable to resolve your issue, that would warrant a charge-back.”
  • A merchant promises a refund but you don't receive it. What if you return an item, and the store clerk tells you a refund has been issued back to your credit card, but it never appears on your statement? “In these types of cases, the consumer probably will win the charge-back hands down,” Eaton-Cardone says, because the merchandise already has been returned and the consumer is owed the refund.
  • A seller goes out of business. Say you buy a table from a merchant that offers you a month to return the item for a full refund. After you get the table home and assemble it a few weeks later, you realize it's shoddily constructed and one of the legs is wobbly. But the merchant has already shut its doors. “That's one tremendous reason charge-backs are there,” Eaton-Cardone says.
  • A seller tried to defraud you. “There are merchants out there that are shady,” Meyer says. Maybe you order something online and it never arrives. Or it arrives, but it's counterfeit, poor quality or not as described. You call the merchant, but the phone just rings. Or you email, and it bounces back.  “Criminal merchants aren't going to answer the phone and don't offer customer support,” Eaton-Cardone says. “That's an instant giveaway that the best course of action is to contact your card issuer.”

If you decide to file a dispute, you can increase your chances of winning by taking these steps:

  • Document your efforts. Did you call three times and email twice before realizing that the retailer wasn't going to take an item back? Note the day and times you contacted the merchant, and what happened, Meyer recommends.
  • Make a real effort to return the item. Some consumers want it both ways: They want to keep the item and get their money back, Eaton-Cardone says. Don't try to keep that flat-screen TV that you ordered for the Super Bowl and get your money back too, she says.
  • Give your card issuer the details. When you file a dispute, you'll have the opportunity to explain what happened. Refer back to your notes and make a solid case about why you deserve a refund, Meyer says. “Give a full explanation of why you're displeased with the product or service and also the results of your attempts to contact the merchant,” he says. Provide documentation your card issuer requests, he adds.

After you dispute a charge, your credit card issuer typically will issue a temporary credit to your account while it investigates. That can take 30 to 60 days.

But disputes aren't always decided in favor of the consumer. The merchant can fight the charge-back and provide its own documentation — for example, a signed delivery slip, if you're claiming you never got a package. If the card issuer decides in your favor, they will do a charge-back. If not, the item will go back on your statement.

“It's a subjective process,” Eaton-Cardone says. “You card issuer has to believe you have a valid case.”