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How do chargebacks work?

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Leanne Macardle

Freelance Contributor

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If you’ve paid for goods or services on a credit or debit card and something goes wrong – and the merchant isn’t willing to offer a refund – you’ve got additional protection through the chargeback scheme. Here’s everything you need to know about it.

What are chargebacks?

Chargebacks are a way to reverse a card transaction in the event of a dispute, offering an alternative means to secure a refund from the retailer or service provider. Essentially, your card provider (whether debit, credit or charge card) reclaims the money from the recipient’s bank account and deposits it back into your account. It isn’t a legal right, but all participating providers – Visa, MasterCard and American Express – should offer the service, though exact rules can vary between banking and card networks.

When can I use chargebacks?

You can use chargebacks in any situation where you haven’t been able to get a refund from the company you bought goods and/or services from. It can apply in a range of circumstances, including:


  • if you don’t receive the goods or services you paid for (including in situations where the company has ceased trading)
  • if something you bought is faulty or damaged in any way (you’d need to return the faulty item)
  • if the goods don’t match the description
  • if you’ve cancelled a subscription but are still charged
  • if you’re charged the wrong amount
  • if you’re a victim of fraud and didn’t make the purchase yourself.


There needs to be proof that a breach of contract occurred for you to be able to make a claim – in other words, you need to show that you didn’t get the items or service that you paid for, or that clerical errors occurred and you were charged incorrectly.

When can't I use chargebacks?

You can’t use the chargeback system if you’ve already been refunded the original amount by the retailer. You also won’t be able to make a claim if you’ve yet to ask the retailer for a refund – chargebacks should only be used in cases where you’ve exhausted all other methods of seeking a resolution with the merchant.

How do I make a chargeback claim?

In order to set a chargeback claim in motion, you’ll need to provide your card issuer with evidence of the dispute and your inability to secure a refund from the merchant. This could simply be a written letter or email detailing the problem, though some banks will ask you to fill in a specific claims form as well.


You’ll need to provide information on the name of the retailer, the date you paid them and how you paid (e.g. in store or online), the description of the goods/services, estimated delivery dates (if applicable), and what went wrong. You may also need to provide invoices/receipts and evidence of any correspondence with the retailer so far, and proof of return if the goods were faulty.

What happens if the merchant and cardholder’s bank cannot agree?

Once you’ve provided your card provider with the necessary details, they’ll put in a request to the merchant’s bank to recover the money. However, there’s no guarantee that this will be successful, nor that the retailer will agree that you should have the money back – they may instead argue that you’re the one who is in breach of contract by not paying, and in some cases can clawback the returned money from your account (though they only have 45 days in which to do this, or 20 days if you’ve got an American Express account). This is why it’s important to provide suitable evidence of the issues you’ve encountered.

What happens if my chargeback is declined? What can I do?

If you’re unhappy with the outcome – either because your bank refused the claim or the merchant clawed back the money – you can complain to your card provider, who has eight weeks in which to respond. If this doesn’t work, you can escalate your complaint to the Financial Ombudsman Service (FOS), though you may need a letter of deadlock if you wish to take it further before the eight weeks are up.

What is the difference between Section 75 and chargebacks?

Section 75 is similar to the chargeback scheme in that it offers a chance to have your money returned to you if the retailer refuses to offer a refund. The key difference is that Section 75 comes under the Consumer Credit Act and is therefore enshrined by law: it’s a legal right and makes the card issuer jointly liable with the retailer for any problems that occur, offering much stronger protection and increasing the likelihood of your money being returned. It’s also solely used for credit card disputes in situations where you spend between £100 and £29,999, so isn’t applicable to debit card spending or transactions outside of these limits. In these situations, chargebacks are still your best bet.

Who manages chargebacks?

The chargeback scheme is managed by Visa, MasterCard and American Express, who have signed up to the process and set the scheme rules.

What are the scheme rules for chargebacks?

There’s no minimum spend in order to make a chargeback claim, though there are time limits – you must make a claim within 120 days of the purchase, or within 120 days of the expected delivery/event date if you’re buying in advance. There are some scenarios where the timeline can be longer, but it’s recommended to contact your bank or card provider as soon as the problem has been identified. Remember, there must be evidence that a breach of contract has occurred, and you must have been unable to secure a refund through the original retailer.

Can I use chargebacks on my debit card?

Yes. Chargebacks apply to all goods and services bought on debit cards, as well as credit and charge cards, provided you’re with one of the three key issuers.

Disclaimer: This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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