What is chargeback?
Under the Chargeback scheme, you could ask your card provider to reverse the transaction if you pay for something using your debit card or credit card and there’s a problem with your purchase.
Here’s how it works and how to make a chargeback claim.
Under the Chargeback scheme, you could ask your card provider to reverse the transaction if you pay for something using your debit card or credit card and there’s a problem with your purchase.
Here’s how it works and how to make a chargeback claim.
What is chargeback and how does it work?
Chargeback could help you get a refund if there’s a problem with a purchase you’ve made on your card and the company refuses to put it right.
Under chargeback rules, you can ask your debit or credit card provider to try and claim back what you’ve paid from the retailer’s bank. But you’ll need to provide details of what’s gone wrong with your purchase and any communication you’ve had with the seller.
Chargeback is not covered by the UK Consumer Credit Act, so it’s not a legal requirement. Instead, it’s a voluntary scheme that Visa, Mastercard and American Express have all signed up for to help protect consumers.
Unlike Section 75 purchase protection, you can make a chargeback claim for purchases under £100 (as well as for larger amounts). And chargeback doesn’t just apply to credit cards. You could make a chargeback claim for purchases made with debit cards and prepaid cards too.
When can chargeback be used?
You could use chargeback if you paid for something on your card and there has been some sort of breach of contract on the part of supplier. But before you can start a chargeback claim, you’ll have to try and get a refund from the company you bought from first.
If the company refuses to refund you, you could start a chargeback claim if:
- The goods you ordered didn’t arrive
- The product you bought arrives faulty or damaged
- The item that arrives is not as it was described or is counterfeit
- The company you bought from has gone bust
- You’ve been charged fraudulently for a purchase you didn’t authorise – for example, if you’ve been charged for a repeat subscription after cancelling a service
- There was an issue with the payment, for example it’s for the wrong amount, or you’ve been charged multiple times for the same item.
When does chargeback not apply?
Chargeback is a voluntary agreement so your card provider could have its own rules in place. There are also some general conditions and exclusions to be aware of. For example:
Time limits
You typically only have 120 days from the date of purchase to make a chargeback claim. Or in the case of goods ordered online, you could have 120 days from the date of the missed delivery.
If you buy something for the future, such as flights, accommodation or event tickets, the 120-day time limit normally starts from the date you should have received the goods or service, although, this typically extends up to a maximum of 540 days from the date of the payment.
The time limit could be less if you’re claiming for a duplicate transaction, or the amount charged was wrong. Check the terms of your card provider to be sure.
PayPal payments
Chargeback doesn’t normally apply when you pay for something using a payment provider like PayPal. PayPal has its own buyer protection scheme that could help you get a refund.
Check the terms of any payment service before you use it to see how your purchases could be protected. And be aware that Section 75 credit card protection typically doesn’t apply to purchases made with PayPal either.
Paying for deposits
With Chargeback, you can only claim for the payment that was made on the card, not the full cost of the good or service. So if you only paid for the deposit on your card, you’d only get the deposit back.
If you paid the deposit by credit card, you may be able to claim back the full cost of the item through a Section 75 claim instead.
How long does a chargeback take?
There’s no set timeframe for a chargeback claim, but it could take a while. You’ll have to wait for your bank or card provider to contact the supplier’s bank. And if your claim is successful, it can take time to process the refund and get the money back into your account.
If you haven’t had a response on your chargeback claim within eight weeks, you can raise a complaint with the Financial Ombudsman.
In some cases, your bank may give you a temporary refund, so the money is back in your account sooner. But this can be taken back if your claim is then unsuccessful.
How do I make a chargeback request?
If the retailer has refused to put things right, or simply not replied, then you can start a chargeback claim with your card provider. That’s the bank or financial business that issued your card - not Visa, Mastercard or Amex.
Many banks will let you do this online, or through your banking app. The rules and claims processes vary depending on the card provider, so check with them.
You’ll typically need to provide details about the purchase and the issues you’ve had with it. For example:
- The date and amount of the transaction, and the retailer’s name
- A detailed description of what you’ve purchased and what has gone wrong with it
- Any communication you’ve had with the supplier
- Proof of postage if you have returned the goods.
How much can I claim with chargeback?
You can normally claim for the full amount of the purchase.
There’s typically no upper limit for a chargeback claim. And unlike Section 75 credit card claims, you should be able to claim for small purchases too. But because there are no set rules, you should check with your card provider for any limitations.
What is a chargeback fee?
A chargeback fee may be charged by the merchant’s bank or card provider when someone makes a chargeback claim against them.
As a customer, it won’t cost you anything to make a chargeback claim, successful or not.
Chargeback vs Section 75
Chargeback and Section 75 claims are two different methods you could use to avoid being left out of pocket when something goes wrong with a purchase. To help you decide which may be more helpful for you in different scenarios, here are the key differences between chargeback and Section 75 purchase protection:
| Chargeback | Section 75 |
|---|---|
| Is a voluntary set of rules. You don’t have a legal right to make a chargeback claim. | Is the law. It makes credit card providers jointly liable with the retailer if something goes wrong with a purchase. |
| Applies to debit cards, and credit cards under £100 as well as prepaid cards. | Applies to credit cards only. |
| A claim can typically be made for purchases of any amount. | Only applies to credit card purchases over £100 and less than £30,000. |
| Claims normally must be made within 120 days of the purchase, or the date you were meant to receive the goods or service. | Claims can be made up to six years from the date of the credit card purchase. |
| You can claim for the amount you put on your card. | You can claim for the full value of the good or service, even if you only paid for the deposit on your card. |
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Frequently asked questions
How successful are chargeback claims?
There’s no guarantee that your chargeback claim will be successful – it can depend on the strength of the claim you have against the retailer and the evidence you give to support it. It can also depend on the rules of your card provider.
What can I do if my chargeback claim is rejected?
If your chargeback claim is rejected, you can make an official complaint to your card provider. If you’re not happy with their final response, or they fail to respond within eight weeks, you can take the matter to the Financial Ombudsman.
The Financial Ombudsman is a free service. It can look at how your card provider has handled your claim and decide if they could have done more. If it agrees that you’ve been treated unfairly, it can tell your bank to put it right.
What is chargeback fraud?
Chargeback fraud is when a customer deliberately misleads their bank or card provider to get a refund for an item they’ve purchased on their debit or credit card. An example of a fraudulent chargeback claim could be a customer telling their bank that they didn’t receive an item when that’s untrue.
Chargeback fraud is illegal and can be really damaging for small businesses. Not only does it mean they won’t be paid for a good or service they have provided, but they’re also often charged a chargeback fee by their card provider too.
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