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Reversing Charges On Your Credit Card


One 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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