{"id":7128,"date":"2009-07-08T20:00:39","date_gmt":"2009-07-09T00:00:39","guid":{"rendered":"\/\/www.askmrcreditcard.com\/news\/?p=7128"},"modified":"2009-07-08T20:00:39","modified_gmt":"2009-07-09T00:00:39","slug":"pitfalls-to-chargebacks","status":"publish","type":"post","link":"https:\/\/www.askmrcreditcard.com\/news\/pitfalls-to-chargebacks\/","title":{"rendered":"Pitfalls To Chargebacks"},"content":{"rendered":"

The chargeback is an amazing feature that you get with every credit card purchase.<\/p>\n

What is a Chargeback?<\/strong><\/p>\n

Your credit card agreement protects you from having to pay for goods or services that are not received.\u00a0 In essence, the credit card processor is acting as an intermediary for every transaction. \u00a0 If you do not receive the goods or services, you don’t have to pay for them. \u00a0 Likewise, when a card holder fails to pay their bill, the merchant still gets paid.\u00a0\u00a0\u00a0 Interestingly, the right to a chargeback is guaranteed by the Federal Reserve under the Electronic Funds Transfer Act.<\/p>\n

Why Is It So Powerful?<\/strong><\/p>\n

As I explained recently towards the end of this article<\/a>, a chargeback is a merchant’s worst nightmare.\u00a0 When you threaten a chargeback, you are not just calling into question the amount in dispute, but you are severely endangering a merchant\u2019s relationship with their credit card processor.\u00a0\u00a0\u00a0 This is especially true with an airline.\u00a0\u00a0\u00a0 The rate of chargebacks a merchant gets can change their service fees that they pay to their processor.\u00a0\u00a0\u00a0 Going over a certain percentage by just a single chargeback can cause their merchant fees to jump by a fraction of a percentage point.\u00a0\u00a0 That doesn\u2019t sound like much, but it can cost a large company tens of thousands of dollars a year or much, much more.\u00a0\u00a0\u00a0 Worse yet, in the case of an airline, a large percentage of the money you think you are paying to the airline is held back until the flight is actually flown.\u00a0\u00a0\u00a0 This is why you can get refunds from your credit card company if the airline goes out of business after you your ticket. \u00a0 These holdbacks have even caused an airline to go bankrupt.<\/a> To make a long story short, airlines will do anything to avoid a chargeback, and the threat of a chargeback will prompt them to do the right thing.<\/p>\n

Use and Misuse<\/strong><\/p>\n

As they say in Spiderman, “with great power comes great responsibility”.\u00a0\u00a0\u00a0 I strongly recommend that you only request chargebacks after attempting to resolve your dispute directly with the company at issue.\u00a0\u00a0 In fact, I would make sure you speak with a manager and a supervisor, informing them that you will request a chargeback if they do not immediately deliver the product or service that they promised.<\/p>\n

Ways A Chargeback Can Go Wrong<\/strong><\/p>\n

The chargeback is not a foolproof way of resolving all disputes in your favor.\u00a0\u00a0 In fact, the credit card companies can be rather clumsy in their handling of these issues.\u00a0\u00a0\u00a0 In a recent matter I was involved in, I sent supporting documentation to the credit card company several times, yet kept getting letters saying that they had not received my documentation, and were closing the case.<\/p>\n

In this article<\/a>, The Consumerist goes over several reasons why your claim may be denied.\u00a0\u00a0\u00a0 Most of the problems people will encounter are due to lack of documentation.\u00a0\u00a0\u00a0\u00a0 You should always retain package tracking numbers, and reservation cancellation numbers as if they were cash itself. \u00a0 Without them, you will have no way to prove your claim, should it ever come to that.<\/p>\n

Interestingly, there seems to be some difference between credit card companies when it comes to processing chargebacks.\u00a0\u00a0\u00a0 Visa and American Express seem to be very customer friendly, while Mastercard seems to lay the burden of proof squarely on your shoulders.<\/p>\n

Another interesting aspect on chargebacks is the statute of limitations.\u00a0\u00a0 In this case<\/a>, a traveler was unable to issue a chargeback because his prepaid hotel was charged more than 60 days in advance.\u00a0\u00a0\u00a0 This can be a big problem when traveling, as many vacationers will prepay items several months before they travel.\u00a0\u00a0\u00a0\u00a0 Currently, the trend is to ask for prepayment to get the best deals on hotels, car rentals, and travel packages.\u00a0\u00a0\u00a0\u00a0 In response to these trends, all you can do is try to prepay within the chargeback period.<\/p>\n

Airline travel seems to be the major exception, as the failure of an airline regularly results in the refund for the unused travel for those who purchased by credit card.<\/p>\n

Another Tool In Your Financial Arsenal<\/strong><\/p>\n

Business is business, and we all know that merchants and banks can and will take every measure they can to make as much money as possible.\u00a0\u00a0\u00a0\u00a0 When they feel that you have not played by their rules, they will take every legal means against you such as ruining your credit and foreclosing on your house.\u00a0\u00a0\u00a0 When they are not playing fair, you also have several tools at your disposal.\u00a0\u00a0 When you conduct transactions with your credit card, one of the most effective and convenient of them is the chargeback.<\/p>\n

Use it wisely.<\/p>\n","protected":false},"excerpt":{"rendered":"

The chargeback is an amazing feature that you get with every credit card purchase. What is a Chargeback? Your credit card agreement protects you from having to pay for goods or services that are not received.\u00a0 In essence, the credit card processor is acting as an intermediary for every transaction. \u00a0 If you do not […]<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3],"tags":[],"yoast_head":"\nPitfalls To Chargebacks<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.askmrcreditcard.com\/news\/pitfalls-to-chargebacks\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Pitfalls To Chargebacks\" \/>\n<meta property=\"og:description\" content=\"The chargeback is an amazing feature that you get with every credit card purchase. 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