Stuck with an invoice? Try These Pro Tips for a Successful Credit Card Chargeback
American consumers have discovered a problematic new hobby during the pandemic: credit card chargebacks. And there’s almost no industry where customers love credit card disputes more than travel.
The numbers are “discordant,” says Monica Eaton-Cardone, co-founder of Chargebacks911, a company that protects businesses from chargebacks. In a recent survey, 65% of businesses surveyed reported an increase in chargeback fraud.
“This is a particularly disturbing finding because merchants had hoped that the explosion of chargebacks and payment disputes in the age of COVID would begin to recede as our lives return to normal,” she says. “But clearly it’s a new normal there.”
Customers also end up with unexpected bills
From the customer’s point of view, it’s just as shocking.
Often, travel agencies stick their customers with unexpected bills. These include tour operators or cruise lines requiring customers to accept credit even when the company cancels an excursion or sailing. This summer we even saw air passengers with canceled flights, where the airline charges them Again to arrive at destination.
These accusations are false. A credit card dispute under the Fair Credit Billing Act (FCBA) is often the best — and sometimes the only — way to get the refund you deserve. Credit card chargebacks are complicated and confusing, as I note in my comprehensive guide to credit card disputes. But when an airline, car rental company or hotel charges you fees you don’t deserve, they can also be your best friend.
This is part one of a two-part series on credit card disputes in the travel industry. Today we’re talking practical remedies for travelers stuck with a bill they weren’t expecting. Tomorrow I’ll share stories of customers who used a credit card dispute to get what they deserved.
Your chances of winning in a credit card dispute are pretty decent. Companies fight only 43% of the disputes filed against them. And only 12% of chargebacks are reversed in favor of the business. But there are ways to improve your odds. These involve carefully considering the merits of your credit card dispute, using chargebacks sparingly, and keeping your eyes on the clock.
And here comes a shocker: a dispute may not even be necessary. You may be able to get a refund by asking politely.
Should you file a credit card chargeback?
Experts say chargebacks aren’t the answer to every billing disagreement. Far from it, in fact.
“A dispute is different from a simple refund request,” says customer service expert Shep Hyken. “If the airline or hotel agrees to immediately honor a refund request, that’s a refund. Otherwise, it’s not a credit card dispute.”
The FCBA gives you 60 days to file a chargeback when you receive your credit card bill. But many cards give you 120 days or more to file a dispute, although the law doesn’t protect disputes filed outside the required period.
The rules allow you to dispute charges that you did not authorize. So, for example, if another guest ordered room service from your hotel and put it on your bill, you can dispute that charge. Also questionable: incorrect billing, for example if your ticket costs $120 and your airline charged you $1,200. The other major category is undelivered goods or services. This may mean that you paid for a cruise, but the cruise line canceled and pressured you to accept a voucher, which is a common problem.
Knowing the difference between a refund request and a dispute is important. Experts say you’ll want to give the company time to resolve the issue before contesting the charges. If the company refuses, you can dispute the charges.
Filing a chargeback is easier than ever
Before online banking, you had to call your bank or credit card company to file a chargeback. Not anymore. You can file a credit card dispute on your bank’s website or mobile app.
That’s sometimes a problem, says Rafael Lourenco, executive vice president of ClearSale, a software company that provides e-commerce fraud protection services. “Card issuers are making it easier for customers to avail themselves of a sometimes undeserved refund,” he says. This allows customers to accept this simple solution instead of trying to contact the merchant directly to resolve the issue.
He says that once you file the chargeback, time is on your side. Your cardholder agreement gives you between 120 and 180 days to file a chargeback on a credit card purchase. But merchants need to respond to chargebacks much faster. Visa’s latest complaints resolution initiative has reduced the time it takes for merchants to respond to chargebacks from 45 to 30 days. Merchants barely have time to gather enough evidence, which increases the chances of winning.
If you’re a beginner, you’re probably a winner
If you’ve never filed a credit card dispute and are thinking of doing so, today is your lucky day.
“Banks will almost always side with the consumer if this is their first time disputing a charge,” says Roy Firestein, CEO of Autohost, a company that provides dispute resolution services. “However, people who have sought the dismissal of multiple charges are more likely to lose those cases if enough rebuttal evidence is submitted.”
Some merchants use security software, which generates evidence that they use to counter a chargeback. This speeds up the process but also disadvantages consumers, who still do everything manually.
watch the clock
It seems contradictory: you want to give a company time to solve the problem. But you don’t wanna wait too long, since the clock is ticking. Solution: Watch the clock and be decisive, experts say.
Chloe Choe, who blogs about personal finance, recalls a recently canceled flight. “I contacted the airline several times and was told I would receive a refund on a certain date, only to have that date pushed back twice,” she recalls. Fearing that the airline might try to reduce its clock on its 60 days, she contacted her bank. “I filed a credit card dispute – and I won,” she says.
She says having all the paperwork helped. She had proof that she had contacted the airline. The documents showed that she had tried to get a refund and that the company had promised her a refund. Litigation departments sometimes treat a written promise as the equivalent of a credit score, and you win.
Remember that a credit card chargeback is a last resort
Experts say one of the keys to a successful credit card chargeback is to exhaust all other options. Your bank or credit card issuer may even require that you give the company a chance to respond and resolve the issue.
“Chargebacks should never be your first course of action if you’re unhappy with a purchase or service,” says Gates Little, CEO of banking site altLINE Sobanco. “You must first request a refund from the merchant through their refund policy and process.”
The travel company’s policy is important, he says, because it outlines your rights to a refund. Some travel agencies, including airlines, offer non-refundable tickets. This makes a credit card dispute almost unwinnable.
These pro tips (check your claim carefully, keep your number of claims to a minimum, and watch the clock) can guarantee the success of your next credit card chargeback.
Is a credit card dispute the right choice?
But do we have to go all the way? Eaton-Cardone of Chargebacks911 says maybe not.
“Consumers are scared and times are tough. A lot of families are tightening their budgets these days. So on the one hand, I understand,” she says. “But the problem with filing a chargeback complaint with your bank, instead of first seeking a refund directly from the company, is that chargebacks aren’t just a safe and easy way to get quick refund.”
She says chargebacks can punish businesses in triplicate. First, they lose the physical product. Then they have to give a full refund. Finally, they also have to pay high fees and financial penalties.
Many businesses lose $3 for every $1 lost to chargebacks.
“This is really bad news because some of the businesses that are currently experiencing post-pandemic chargebacks are the same businesses that were there when we needed them during the worst days of COVID,” she says. “It’s grossly unfair.”
Consumers have a responsibility to be honest and ethical. Filing a wrongful credit card chargeback destroys jobs, rewards criminal behavior, and inflates prices for everyone else.
In other words, while these pro tips will help you file a successful credit card chargeback, just because you can do it doesn’t mean you should.