Credit Card Chargebacks & the Law

Credit card chargebacks are a type of consumer protection. They provide an avenue for consumers to contest billing statements that do not match their credit card use.

Identification

Credit card chargebacks are refunds of money from credit card purchases that either were made fraudulently or involved problems with the product purchased. They are protected by both state and federal law.

The Law

According to the Federal Trade Commission's Fair Credit Billing Act, consumers have 60 days to dispute a fraudulent charge in writing. The company involved in the dispute then has 30 days to provide an explanation and investigation into the charge, or must correct the fraudulent charge with a refund. State laws vary, but generally provide additional protections beyond these.

Benefits

Credit chargebacks provide an additional layer of security to credit cards, making them a very good choice when making very expensive purchases such as home appliances or home electronics.

Significance

The protection provided by credit card chargebacks gives consumers peace of mind when making purchases, and encourages the use of credit cards, which are an important aspect of the US economy.

History

Credit card chargebacks were introduced in the Fair Credit Billing Act of 1975, as an amendment to the Truth In Lending Act.

References

• Federal Trade Commission: Fair Credit Billing Act