Dos and Don’ts of Credit Card Chargebacks


When Jeff Campbell checked into the Austin airport for spring break, the last thing on his mind was a credit card chargeback. Instead, he thought about how much fun he would have with his three daughters at Universal Orlando Resort that week.

“Literally at the gate, my airline canceled the flight,” he says. “An agent said they would reimburse that specific flight, but then handed me a business card to call and tell someone.”

His only option was an expensive rental car and about a 17-hour drive from Orlando. He didn’t even bother to ask his airline for a refund when he decided to drive home.

“I disputed the entire charge on my credit card,” he says.

Campbell, a personal finance expert who blogs at Middle class dads moneyjoined the many other travelers who turn to credit card chargebacks when they have a problem while traveling.

Under the Fair Credit Billing Act, consumers can dispute credit card charges for goods and services they did not receive or accept. Your bank will investigate and, if they side with you, you will be refunded.

Monica Eaton-Cardone, Chief Operating Officer of Chargebacks911, a firm that protects businesses against fraudulent chargebacks, says it has become more common for consumers to actively dispute credit card payments and demand refunds from their banks. According to the company’s research, the number of such conflicts has increased by 25% since the start of the pandemic.

Experts believed things would return to normal after the pandemic sparked an initial round of disputes over the canceled vacation. Then came another wave of travelers who were unwilling to accept airline vouchers or cruise credits. Now, industry watchers say chargebacks are increasingly seen as a preferred tool for obtaining refunds from travel agencies.

Take the case of Campbell, for example. As a personal finance expert, he knows how chargebacks work and the limitations of the Fair Credit Billing Act. (I’ll get to that in a moment.) But he didn’t want to bother asking his airline for a refund. He just wanted his $2,300 back. Two months later, his bank returned the money.

The dispute resolution process was no more difficult than in the past, he says. “But it took a lot longer to get a resolution.”

How bad has it gotten? Stephen Fofanoff, CEO of Domaine Madeleine, a small inn in Port Angeles, Washington, says it has noticed a significant increase in credit card disputes since the pandemic began. They follow a similar pattern: customers book the cheapest non-refundable rooms, skip travel insurance, then request a refund when their plans change.

“If we don’t refund them, they threaten us with bad reviews and then file a chargeback with their credit card,” he says.

But a chargeback isn’t a magic bullet for travelers who want a refund. For starters, this only applies to credit cards. If you pay by cash, debit or bank transfer, you cannot get a chargeback.

The Fair Credit Billing Act protects purchases with the wrong date. (For example, you booked a plane ticket for the 23rd of the month, but you received a ticket for the 25th.) This also applies to receiving the wrong number of goods or services (you have booked a rental car but got charged for two) and math errors, like getting the decimals mixed up that turns your $4 latte into a $4,000 cup of coffee.

You have 60 days after receiving the first statement containing the disputed transaction to file a chargeback.

If you have a complaint about the quality of a travel product, as opposed to failure to provide service, the threshold is even higher for credit card disputes. The law requires that the business be located in your home country or within 100 miles of your current billing address, and that the purchase be over $50. You must also make a “good faith effort” to resolve the issue with the seller first.

A credit card chargeback is almost never the fastest or easiest way to get a refund. Even if you’re successful, a chargeback is a long process, and the merchant can still send you to a collection agency or add you to their “Do Not Rent” list. It’s far better to work with the airline, rental car company, or hotel to get your money back.

So when should you immediately file a chargeback? Only when a travel agency charges you fraudulently. Please be patient with any further disputes. If, for example, a company promises a refund and does not send it, you should talk to your bank. (Remember the 60-day limit.)

“Don’t use the chargeback as a weapon,” advises Y. Murat Ozguc, managing partner of the Turkish tour operator Travel Workshop. He frequently deals with chargebacks from customers who don’t recognize his company’s name on their credit card bills. Instead of calling to inquire about their bill, they file a chargeback. They don’t win the argument, but it complicates everyone’s life.

Read the fine print before calling your bank or credit card. Brandon Barron thought he could use a credit card dispute to get a refund of Aeroflot after the airline canceled its flight from Washington, DC, to Kemerovo, Russia this summer. But the airline was unable to refund the money, as it was hit by US sanctions. Then he realized that he had booked the tickets with a debit card.

“Rookie mistake,” says Barron, who works for a timeshare company in Charlotte. “I don’t have much hope for a penny coming back on what amounts to nearly $5,000.”

Bottom Line: Credit card chargebacks can be a powerful tool to get your money back from a travel agency. But use them sparingly and only after exhausting all other measures.

Prospective travelers should consider local and national public health guidelines regarding the pandemic before planning any travel. Information on travel health advice can be found on the Centers for Disease Control and Prevention’s interactive map showing travel recommendations by destination and the CDCs travel health advice web page.

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