A Great Source of knowledge About Chargebacks. People who got scammed by fraudsters should know that they are eligible for Chargebacks!
“What is a Chargeback?”
Every year hundreds of thousands of people are scammed by fraudulent brokers and scamster trading platforms. A lot of these victims are often scammed out of money in various turns and are hence really turned off by the idea and they think of cutting their losses and just stopping. However, what some new traders or first time investors might not know is that if you get scammed, there are certain provisions to help you out and recover your funds. And this where the concept of chargeback comes in.
Back in the 1970s, when debit cards and credit cards were still a fresh idea, there was justifiable paranoia about the safety of your money with these plastic cards. That is when the US government introduced the Fair Credit Billing Act of 1974, which was basically the conception of the idea of chargebacks. A chargeback is basically a failsafe method to reverse a transaction, in order to protect consumers from fraudulent companies and individuals; Based on the validity of the complaint.
How does it work?
To understand it simply, a chargeback can be thought of as a refund, but it is a bit more nuanced than. A refund can be initiated by the seller or merchant, but a chargeback is usually initiated by the “Issuer” of the card.
Also, while a refund is a complete return of funds, with no parties having to pay anything extra; there are charges/fees with chargeback that usually the merchant is liable to pay when a chargeback is confirmed by the issuer.
So the process is basically that a customer initiates a chargeback, the banks validate the request, and then the merchant pays for it. The process is quite long, as the customer has to make their case and prove they were wronged and only then are they entitled to a chargeback.
Often if a customer isn’t able to win their case in the first attempt, they can also challenge the same and appeal again.
As mentioned before, chargebacks are authorized, only with a legit reason, and evidence of the wrongful transaction. These reasons have been grouped and listed and are called Reason Codes. These are different for different card networks, but they basically are categorized as three types –
- True Fraud – This is what chargebacks are basically meant for, unauthorized deductions and charges on a card by merchants.
- Friendly Fraud – These are instances where a customer has applied for a chargeback, because they think they haven’t received their receivables, but they are mistaken. Also happens when someone doesn’t know their card has been used by friends or family, and thus it is not fraud on the merchant’s part.
- Merchant Error – These are errors where a part or complete operations of a merchant are found to be at fault, and can be fought effectively.
Based on the fact that Chargebacks are growing at 179% for the past 2 years, it is time more people are aware of this safeguarding and use it to recover their lost funds