Chargebacks Guide: All You Need To Know

In today’s digital world, transactions are mostly conducted еlеctronically across countlеss industries. This shift in the methods of commerce has unlocked an array of convеniеncеs but has also introduced a new set of complexities. In this regard, chargebacks serve as an innovative solution to address issues that may arise within the digital payment realm.

FCS Recoveries is a notable service that handles clients’ fund recovery through cryptocurrency chargeback and credit/debit card chargeback processes, among other methods. The firm boasts a proven track record of successfully recovering substantial sums of money on behalf of its diverse clientele, while its expertise lies in conducting forensic cryptocurrency investigations and card-not-present transaction disputes.

What is a chargeback? When does it occur?

A chargeback represents a monetary dispute instigated by a purchaser who challenges the legitimacy of a transaction levied on their credit or debit card. Via chargeback, the initiator seeks a transaction reversal from their card-issuing financial institution. In simple terms, a chargeback is an official request for a transaction reimbursement made by a cardholder to their respective banking institution. 

Note that refunds and chargebacks are not similar notions as they represent two different forms of fund reclamation, each managed by distinct entities. In the case of a refund, the consumer dispatches the purchased item back to the online seller, aiming for either a product substitution or monetary repayment for their expenditure.

In contrast, a chargeback necessitates involvement from the card issuer of both the buyer and the retailer. Here, the contested money is held back from both the store and the consumer until a decision regarding the transaction’s authenticity is reached.

Chargebacks can be initiated due to a range of reasons. For instance:

  • When a malicious actor wields someone else’s credit card without consent, leading to the cardholder being billed for services they did not authorize.
  • If a cardholder stumbles upon charges on their credit card statement that elude their recognition.
  • If the quality of a bought item or service fails to meet the buyer’s expectations or if the merchandise arrives damaged.
  • When a customer inadvertently places numerous orders for an identical product and desires to reverse the extra charges.
  • In the case of “friendly fraud,” where the customers intentionally dispute valid charges, alleging them to be fraudulent. Their intention is to retain the purchased products without settling the payment.

How does the standard chargeback process work?

Here is a concise overview of how the chargeback process unfolds:

  • Cardholder initiates a dispute with their card issuing bank.
  • The cardholder’s bank determines the validity of the dispute and forwards the request to the retailer’s bank if the complaint is deemed valid.
  • The merchant’s bank notifies the retailer about the chargeback.
  • The retailer decides how to respond to the chargeback and strives to prove the validity of the transaction by providing compelling evidence, such as proof of delivery.
  • The merchant’s evidence is then transmitted to the cardholder’s (buyer’s) bank. If the cardholder’s bank finds the evidence sufficient, the merchant gets the chargeback, and the funds are returned to their bank account. If the evidence is insufficient, the cardholder wins the chargeback, and they retain the funds.

However, sometimes it is not that easy to complete this process by yourself. You may not be proficient enough with the rules. That’s were fund recovery services like FCS Recoveries enter the picture, facilitating this process for clients and helping them with gathering substantial evidence. The firm accommodates leading technology and valuable resources that offer support to law enforcement agencies, cryptocurrency exchanges, and banks, enabling them to expedite investigations and streamline processing time effectively.


You may be interested in: Credit card – definition and meaning