What is chargeback and how do I use it?
When you spend on your debit or credit card, you are protected through something called chargeback. Our guide explains how it works.
Key takeaways
Chargeback allows you to seek a refund directly from your card provider when goods or services you’ve paid for don’t meet expectations
Chargeback is voluntary and applies to credit, debit, and prepaid cards. Don't get it confused with Section 75, which is a legal requirement
It is useful in various financial situations, including overcharging, retailer bankruptcy and unauthorised transactions
Unfortunately, not every purchase always runs smoothly. Sometimes, when you buy goods or services, they may not be delivered or may arrive faulty.
Alongside your protections through Section 75 of the Consumer Credit Act, chargeback offers a way to get your money back.
What is chargeback?
In the simplest terms, chargeback is a consumer protection mechanism. It's your go-to tool when goods or services you've paid for don't arrive as promised.
It allows you to approach your card provider and ask for a refund directly. This process isn't just about reversing the transaction; it's about ensuring you're not left out of pocket when things go wrong.
How does chargeback work?
When you initiate a chargeback, your bank takes on the role of a financial referee. They may withdraw funds from the retailer's account and credit them back to you.
However, it's not a one-way street. Retailers can – and sometimes do – dispute chargebacks if they believe the claim is without merit.
Chargeback is a voluntary scheme. It is not the same as claiming money back under Section 75 of the Consumer Credit Act.
Section 75 is a legal requirement on credit card providers (but not debit cards) – for purchases over £100 and under £30,000 – and means they have equal liability with the retailer to make sure you are treated fairly.
When can you use chargeback?
There are several scenarios where chargeback can be your ally:
Items you've ordered haven't been delivered
You’ve been overcharged for a purchase
The product is faulty or damaged upon arrival
You've received something significantly different from what was described
You noticed unauthorised transactions on your statement
The retailer has gone bankrupt
Before you rush to your bank, though, it's worth trying to get a refund directly from the retailer. Only if they refuse, or worse, if they've gone bust, should chargeback be your next course of action.
What's the difference between chargeback and Section 75?
The table below outlines all the key points of difference between the two consumer-protection mechanisms:
Feature | Chargeback | Section 75 |
|---|---|---|
Type | Voluntary scheme (not legally binding) | Legal protection under the Consumer Credit Act |
Coverage | Debit, credit and prepaid cards | Credit cards only |
Eligibility | Goods/services not received, faulty, fraud | Breach of contract or misrepresentation |
Transaction amount | Any amount (no minimum/maximum) | £100 to £30,000 |
Time limit to claim | Typically 120 days from transaction date | Up to 6 years |
Liability | Card issuer tries to recover funds from the merchant | Credit provider jointly liable with the merchant |
Success guarantee | Not guaranteed. Depends on the bank’s discretion | Legally enforceable if criteria are me |
Cost | Free to use | Free to use |
Retailer cooperation | May require retailer cooperation | Does not require merchant cooperation |
How do I request a chargeback?
If you find yourself needing to request a chargeback, here's what to do:
Contact your card provider and let them know you want to initiate a chargeback
Provide all details of the transaction, including any communication with the seller
Submit your request and wait for the bank to process the refund
If your chargeback claim hits a wall, don't despair. You have the right to complain to your card provider and, if unsatisfied, take your case to the Financial Ombudsman Service
Remember, you typically have 120 days to make a claim, with some exceptions for future services, such as a cancelled holiday you paid for six months in advance.
How long should I wait to receive my money back?
Don’t expect a chargeback to be processed overnight. It can take 30-45 days, sometimes longer. If it exceeds eight weeks, don't hesitate to follow up.
How much can you claim?
In most cases, you can claim the full amount of the transaction. However, different card networks may have their own set of rules, so it's good to be aware of these nuances.
Personal Finance Expert
Our expert says
“It’s always helpful to have a layer of consumer protection up your sleeve when you buy things, especially those which cost a lot of money such as holidays.
"However, the protection you have depends on how you pay for an item – if it’s on credit card you’ll get legally binding cover under Section 75 – but if it’s on debit you’ll still get chargeback.
"While chargeback isn’t as bulletproof as it’s not legally binding, it can be useful if you can’t use Section 75."
Other useful guides
We have a range of guides about credit cards for you to read:
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