The Magic Tale of the Chargeback
Did you know that as a credit card holder, you automatically gain access to one of the most powerful tools for fighting fraud and dishonest business practices? The tool which I am referring to is known as the chargeback, and in my opinion, every consumer deserves to be made aware of this option and how it works. Let’s go ahead and take a look at an incredible story to help illustrate the versatility and usefulness of this particular course of action:
Ronaldo, a hard-working consumer, is looking for a birthday gift for his son, Melvin. Knowing that Melvin absolutely loves riding bikes, but doesn’t yet have one to call his own, Ronaldo decides to remedy the situation by purchasing a bike and warranty from Greasy Jim’s Crappy Bikes for the low, low price of $4,000, making the purchase by using his trusty VISA credit card from CraziBank. He can’t wait to see the look on his son’s face when he rides his new bike for the first time!
And that face truly was priceless, especially when after 20 minutes of riding the bike, it disintegrates for no apparent reason! Melvin begins to cry at the top of his lungs, weeping bitter tears of pain and anguish. What is Ronaldo to do?
First off, he files a mental note to never purchase goods or services from companies that openly belittle their own products in their company name. Second, whilst comforting a crestfallen Melvin, he calls up Greasy Jim’s Crappy Bikes and demands a refund. Greasy Jim informs Ronaldo that his bikes are made of the highest quality materials and would never randomly disintegrate; therefore it is not covered under the warranty and he refuses to refund Ronaldo’s $4,000. Oh no! It looks like Ronaldo is at the end of his rope and is out of luck! OR IS HE!?
That night, during his fitful sleep (which is made even more fitful by the very audible wailing of his crybaby of a son) Ronaldo has a vision wherein he sees a beautiful woman with a magic whiteboard.
She introduces herself as the Credit Education Fairy and writes a single word on the magic whiteboard: CHARGEBACK. After writing this word, she disappears and Ronaldo wakes up from his revelatory slumber and reaches for his phone, calling up CraziBank. He explains the situation to them and declares that he would like to file a chargeback against Greasy Jim for selling him a defective product and refusing to facilitate a return. Within a few weeks, Ronaldo has the $4,000 debited back to his Credit Card, which he uses to purchase a shiny new bike for Melvin from Honest Joe’s Quality Bikes n’ Things and they all live happily ever after.
In short, a chargeback is a dispute filed with the credit card issuer against a particular merchant for failing to deliver a promised good or service. If the merchant is unable to document that they did, in fact, provide the good or service to the satisfaction of the card issuer, their merchant account is debited for the amount paid, plus a chargeback fee, and the consumer’s account is credited for the amount paid. Additionally, consumers can use chargebacks to dispute fraudulent charges on their credit card, and again, if the merchant is unable to document that the charges were legitimate, the money is transferred from their account to the consumers.
Ultimately, we would do well to learn from Ronaldo’s exciting tale and remember that when we’re ripped off in a credit card transaction, we are never left high and dry; and this is thanks to the magic of chargebacks!
Related posts:
- A Tale of Two Lenders
- A Tale of Two Financial Woes
- 750: This Magic Number Will Set You Free
- Credit and Debit Card Blocks at the Pump
- Four Ways to Get Your Money Back from a Credit Card Purchase
Ah, chargebacks. There is a downside to them though – if you’re the vendor and the customer decides NOT to contact you first, you wind up with a random chargeback and nothing to do but convince the customer to undo the chargeback. Eek!
We had this happen at work a few days ago. The family uses one computer and when the daughter bought something from our website, the dad initiated a charge-back a few days later because he saw an unexpected charge on his credit card. We were (I was; I run everything) in the dark because we had filled the order and did everything right. AND, if anyone ever contacts us for a refund, replacement, what-have-you – I’m always quick to remedy the situation. But we got no notice – just the mysterious chargeback.
I emailed the dad (name on account that ordered) and after I talked to the dad and he talked to the mom, they found out that the daughter thought she was logged into her own PayPal account and instead was logged into theirs. UGH. They said they’d resolve it but there’s still the charge-back sitting there. We’ve sent out product and have no money for it – talk about suck.
Any suggestions? It’s out of PayPal’s hands, and because of their privacy laws (with good reason), I have no idea who the card company is or what account the chargeback initiated from… so basically unless I can get this family to straighten things out (which they seem detached from and non-responsive), they just robbed me of product. (?!?)