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What is the Meaning of a Chargeback?

6 min read

Published February 5, 2025

Table of contents

Key Takeaways

A credit card chargeback is a statement credit you receive from your card issuer following a dispute.
A refund, unlike a chargeback, comes from a merchant. Merchants may have to pay an additional fee to process chargebacks.
If a merchant disagrees with your dispute, it may appeal your chargeback.

Sometimes, credit card purchases go wrong. You might accidentally get charged twice for the same purchase. Or maybe you order something online, but it never shows up. Fortunately, you can reverse the transaction by initiating a chargeback from your credit card issuer. But you may be wondering—what is a chargeback?

Here’s everything you need to know about a credit card chargeback, including when to request one, what to expect after you initiate the chargeback process, and how to avoid chargeback fraud.

Chargeback definition

When you run into certain issues with a credit card transaction, you may initiate a chargeback by disputing the transaction with your credit card issuer.

A “chargeback” refers to a statement credit or other reimbursement you may receive from your credit card company after you dispute a transaction. Chargebacks can protect you from losing money to fraud.

Typically, chargebacks cover the type of problems with a purchase that a merchant wouldn’t handle directly, like an unauthorized transaction.

Difference between chargebacks and refunds

Unlike a refund that comes directly from a merchant when you’re unsatisfied with a purchase, a chargeback comes from your credit card issuer.

If you return a product you’ve bought with a credit card or aren’t happy with the item you’ve received for any reason, your merchant might issue you a refund. For example, maybe you buy a shirt that doesn’t fit well or order a vase that breaks in transit.

If the seller agrees to the refund, they can send the funds from their bank to your credit card network. When your credit card network receives the funds, they issue you a refund as a statement credit.

A chargeback typically follows a credit card dispute, which you might file in response to a billing error or a serious problem with the merchant.

When do chargebacks occur?

Chargebacks occur after a billing dispute with your credit card issuer resolves in your favor. If you notice any of the following billing issues on your credit card statement, you may want to pursue a chargeback:

Unauthorized charges. If you notice unfamiliar charges on your credit card account, a chargeback could help you restore the amount you’ve lost. If fraudulent activity has occurred, make sure you take additional security measures, like freezing your account and requesting a new card.
Duplicate charges. Sometimes, a merchant may accidentally charge you twice for the same purchase. You might dispute one of the charges.
Incorrect charges. You may request a chargeback if a merchant bills you for the wrong amount or you’re billed a recurring payment for a subscription you’ve canceled, like a streaming service.

You might also initiate a chargeback if your merchant hasn’t fulfilled their obligations in a transaction, especially if they’re unwilling or unable to resolve the issue. Here are some examples:

Product or service never received. This occurs often with online purchases—you might order something that never gets delivered. However, it could also happen if you pay for a service, like a haircut, but never receive it.
Product not as described. You might dispute a charge if the item you receive doesn’t match the item the merchant sold you. For example, maybe you purchase an expensive dress but discover that it’s made of a cheaper material than advertised.
Product is defective. Finally, you might dispute a charge if an item you buy turns out to be broken.

A chargeback isn’t always the right option. You shouldn’t, for example, file a chargeback request on an item you no longer need because you don’t have time to return it. That type of issue doesn’t require a chargeback and should be handled with the merchant. Cornell University explains that “friendly fraud” refers to instances in which someone initiates a dispute for an illegitimate reason, intentionally or by mistake. Another example might be mistaking a legitimate charge for a fraudulent transaction and dispute it. In both cases, you would likely have to repay friendly fraud chargebacks.

How are chargebacks processed?

The chargeback process starts when you file a dispute with your credit card issuer. The FTC explains that then the dispute process proceeds as follows:

The credit card issuer pauses interest on the charge while they assess the dispute.
Your credit card issuer contacts the merchant’s payment processor with the chargeback request.
The payment processor withdraws the funds from the merchant’s bank. Typically, the processor also charges the merchant a chargeback fee.
Your credit card issuer issues the chargeback as a statement credit on your account.
Depending on the chargeback reason, the merchant may dispute your dispute.
If the dispute resolves in the merchant’s favor or is otherwise deemed a fraudulent chargeback, you may end up having to pay for the purchase.

How to dispute charges and get a chargeback

But how do you dispute a charge to begin with? Each credit card company may have a unique process, but getting started is usually as simple as contacting customer service.

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With Discover, you don’t have to wait to speak to someone who can help. Customer service is available any time, day or night.¹

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The FTC explains that you have 60 days under the Fair Credit Billing Act to dispute a transaction after it appears on your credit statement. If you have any documentation—like a receipt—to support your chargeback claim, be sure to gather it before you begin the process.

According to the Consumer Financial Protection Bureau, you should provide a written billing error notice to your credit card company after speaking with customer service about the dispute.

You should receive a confirmation letter of your dispute within 30 days. If the dispute doesn’t resolve in your favor, the credit card company has to provide you with a written explanation.

No one enjoys dealing with transaction issues. However, the dispute and chargeback process doesn’t have to be a headache. With help from your credit card company, you can resolve the problem and, when applicable, get your money back.

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