You Need to Know the Difference Between a Chargeback and a Refund
If your credit card was charged for an order that never arrived, or you’re still paying for a subscription you canceled, you have two options for a refund: a refund or a chargeback. The two terms are often used interchangeably, but there is one huge difference between the two: Refunds are authorized by the seller or seller and they are permanent; Chargebacks are permitted by credit card companies and may be temporary.
How credit card chargebacks work
Getting a full refund from a seller is always better than filing a chargeback, but sometimes you have no other choice. The simplest chargeback scenario looks something like this: someone who works for the institution that issued your card (for example, your bank or credit union) reviews your dispute and any supporting documents you submitted, such as receipts and copies of contact details for the merchant . They decide it’s legal and take it to someone at the credit card company (such as Visa, MasterCard, or American Express) for further review. The chargeback reviewer at Visa agrees and they tell the card issuer to pay. You get your money back and everything is ok.
However, Visa may not immediately take your side, and this is where the temporary nature of revolving loans comes into play. They may allow the seller to dispute the chargeback and, as a courtesy, advise your bank to credit your account while waiting for the seller’s response. Depending on the particular credit card company, as well as the response of the merchant and any financial institutions they are associated with, it can take anywhere from 60 to 90 days for their investigation to be completed. (Most credit card companies give sellers 30 days to respond to each request for more information.) If Visa ends up siding with the seller, they will refund the credit and you won’t be charged for the disputed purchase.
From the consumer’s point of view, the good news is that credit cards usually end up on the cardholder’s side. Reviewing chargebacks is a lot of work and not easy to automate; Credit card companies have more resources to pay staff than most merchants, giving them—and therefore you—an advantage. Small sellers may not respond to chargebacks at all.
With that said, you cannot expect a quick and favorable resolution. Some sellers will fight chargebacks to the end, even if they are clearly wrong. The best strategy for turning a temporary repayment loan into a permanent one is to be right: understand the rules that apply to the disputed purchase and provide as much evidence as possible. You should get your money back, even if it takes a couple of months.