The dangers of credit card chargebacks

While this tactic was only reserved for internet fraudsters, it is now being used by some scammers to their advantage. At the time of the financial crisis in 2008, many banks were pushing credit cards with a variety of purchase protection features to discourage people from defaulting on their obligations.

Sadly, the abusive tactics of the financial crisis have turned them into a different type of scammer – people with too much of a common sense to use a real purchase protection feature.

One of the most frustrating occurrences of online scams is when you provide your credit card details and are never contacted regarding the goods that you purchased.

What is a chargeback?

A chargeback is a form of dispute settlement process by which you can request the bank to reverse the money charged to your credit card.

The process begins when a bank responds to a chargeback request by issuing an official statement to the customer explaining the reason for the reversal.

A customer that is issued a chargeback report and denied the money from his or her account may file a case in the Court of Appeal.

Chargebacks are issued in two stages.

Stage 1 – The customer takes an action to have his or her complaint resolved

Stage 2 – The Customer takes action against the bank for its alleged breach of the contract.

How to avoid chargebacks

Here are some tips to avoid them.

Never pay for online transactions with your credit card.

Use prepaid credit cards. This is more reliable than cash. Pay for the transaction by transfer to a bank account in person or electronically.

Use a secure network to make the payment, like your own email server.

Never give out personal information, banking or log-in details or access to your own computer or account.

Do not use any unverified social media channels or other online sources, like online marketplaces or classified advertisements, for payments.

Protect your computers. Install security software and protect your email account.

Learn about the new regulations. The CCCB’s best advice to protect your business is to always carry out the necessary background checks.

Know your rights

The process for getting your money back or obtaining credit card information from a credit card company is relatively easy, especially if you are a victim of online fraud. The process includes initiating a call to the call centre, sending a fax to the account holder, and filling out the right forms online.

Best place to begin

The first step is to initiate the call to the call centre. Be sure to mention your issue and state that you are aware of the fraud and want to file a chargeback so that they can verify whether your problem actually existed or if the issue is being escalated and then being remedied. If the problem does exist, they will explain the procedure and will forward you to the right person to communicate with.


The modus operandi of fraudsters and hackers is to prey on the innocent people by leveraging their trusting nature and employing threats or false promises to get them to comply and part with their money.

Given the fact that most consumers have no idea what credit card to carry, it is very much likely that one of these fraudsters can prey on them, lie about their credit history, and extort them of their hard-earned money.

Ask yourself this, how many of you actually know the name of your credit card issuer or how to use your credit card in detail. The easy answer is very few of us.