Reversing Charges On Your Credit Card
by JennaOne of our readers, Tony, sent us this question:
Just curious, can a vendor come after you for the reversed charges and if so what can happen?
Thanks for your question Tony!
What Is A Chargeback?
Basically a chargeback is a refusal to pay for an item or service that you charged on one of your credit cards. There are a lot of reasons why you might want to do this. Maybe you never received the item, it arrived late, the item that arrived was not what you ordered, or possibly even because someone else took your credit information and made the charge without your knowledge. All of these are valid reasons to “chargeback” an item.
What Happens When You Chargeback A Credit Card Transaction?
When you charge something on your credit card, the bank that issued your credit card pays the merchant, and then sends you a bill. When you “chargeback” an item, the bank removes the total from your bill, and re-bills the merchant.
Too many chargebacks to a single merchant can actually hurt them because there is a “Merchant Black List”. Any time a merchant regularly exceeds their number of allowed chargebacks then thy are placed on the black list and are no longer able to accept credit cards.
So, what is my liability? Can a merchant come after me for a chargeback?
In short, yes. It is uncommon, but it does happen. In fact, there is an entire group of legal experts that companies can hire to dispute chargebacks. This usually only happens if you repeatedly chargeback to the same merchant, or chargeback a very expensive item that you may have been able to use before returning. In other words, the merchant will only come after you if they feel like you are trying to defraud them.
It is very, very rare for a merchant to come after a customer over a chargeback, and it pretty much always involves suspected fraud combined with a large amount of money. The current laws are set up to protect you, the customer. Businesses have a tough time fighting chargebacks because of this, but it does happen.
Thanks again for your question Tony!
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October 16th, 2008 at 1:47 pm
I am starting a business where I will be selling my product in retail stores. I was thinking to get my own wireless credit/debit card machine, so that the stores could pay me right there, and I wouldn’t have to deal with checks.
However I had an idea, and this is my question.
Can the stores pay me using THEIR card machine? The practice of giving a refund back onto a credit card is widely done. Buy something, take it back, they give you a refund right back onto your card. But can they do this without me having bought something to begin with?
Can I walk into a store, hand them my credit card, and they give me 500 bucks right into my debit card account?
January 6th, 2009 at 4:28 pm
I operate a marine surveying business. A broker ordered a survey for a prospective buyer at a boat sales lot. The prospective buyer paid for the survey with a credit card and later decided not to buy the boat based on the deficiencies noted in the detailed survey. About a month lated the charge of $950 was reversed by the credit card company. They stated that the card holder reported the card stolen thus the reversed charge. When I asked them to reinstate the charge they refused and said I had to contact the card holder which I have been unable to do. I live in Texas and he lives in Florida. What are my options?