Any consumer in the United States can request a "chargeback" - a reversal of a charge to their credit card account after discovering a fraudulent or improper charge to the account.
U.
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credit card holders and debit card users are guaranteed this right under several acts/laws including: Federal Reserve Regulation Z, Truth in Lending Act, Federal Reserve Regulation E and the Electronic Funds Transfer Act.
The laws are enforced by credit card company's rules and regulations.
The chargeback procedure begins with the filing of a "dispute" by a consumer with their bank or credit/debit card company.
The bank that issued the credit/debit card will then charge the disputed amount back from the merchant and give the consumer a provisional credit.
Next an investigation will begin in an attempt to determine if the dispute is valid and also to recover the chargeback amount from the merchant.
A merchant is held responsible for the chargeback unless they can prove that the transaction was legitimate, and is also responsible for any processing fees incurred by the bank.
Sounds fair, but what happens in the case where a consumer's dispute is not valid and is denied by the bank? Not only does the merchant lose the time involved in proving the charge was valid, but many times the merchant is still held responsible for the processing fees as well.
So what can a merchant do to help prevent chargebacks? 1.
When signing up for a merchant account, make sure that your DBA is the prominent company name that you want people to recognize.
This helps to avoid confusion when a consumer's credit card statement arrives and they do not recognize your company's name.
If for some reason this is not possible, make sure that you add a note to your company's receipts.
2.
If operating an online store, always use an Address Verification System (AVS) and Creditcard Validation System (CVV).
This will greatly diminish if not stop fraudulent transactions.
3.
If you notice that a charge has been declined several times, do not process the order.
4.
When possible, take the customer's card and examine it to verify the expiration date and compare the signature on the card to the signature on the receipt.
5.
Settle your transactions in a timely fashion to avoid consumer's seeing a charge on their statement that cleared long after the purchase was actually made.
U.
S.
credit card holders and debit card users are guaranteed this right under several acts/laws including: Federal Reserve Regulation Z, Truth in Lending Act, Federal Reserve Regulation E and the Electronic Funds Transfer Act.
The laws are enforced by credit card company's rules and regulations.
The chargeback procedure begins with the filing of a "dispute" by a consumer with their bank or credit/debit card company.
The bank that issued the credit/debit card will then charge the disputed amount back from the merchant and give the consumer a provisional credit.
Next an investigation will begin in an attempt to determine if the dispute is valid and also to recover the chargeback amount from the merchant.
A merchant is held responsible for the chargeback unless they can prove that the transaction was legitimate, and is also responsible for any processing fees incurred by the bank.
Sounds fair, but what happens in the case where a consumer's dispute is not valid and is denied by the bank? Not only does the merchant lose the time involved in proving the charge was valid, but many times the merchant is still held responsible for the processing fees as well.
So what can a merchant do to help prevent chargebacks? 1.
When signing up for a merchant account, make sure that your DBA is the prominent company name that you want people to recognize.
This helps to avoid confusion when a consumer's credit card statement arrives and they do not recognize your company's name.
If for some reason this is not possible, make sure that you add a note to your company's receipts.
2.
If operating an online store, always use an Address Verification System (AVS) and Creditcard Validation System (CVV).
This will greatly diminish if not stop fraudulent transactions.
3.
If you notice that a charge has been declined several times, do not process the order.
4.
When possible, take the customer's card and examine it to verify the expiration date and compare the signature on the card to the signature on the receipt.
5.
Settle your transactions in a timely fashion to avoid consumer's seeing a charge on their statement that cleared long after the purchase was actually made.
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