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In my case, a big-name tax chain gave me incorrect information which would have cost me thousands of dollars. I had pre-paid, as is their policy, but did not file my return with them due to their bad information. I went to another, more reputable tax business, found that I was right, and received my full tax refund.

After this, I filed a charge-back against the tax chain. The tax chain told my credit card company that they didn't owe me money, and the credit card company closed the case.

So, what's the point of a charge-back, if they simply take the word of the merchant?

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    Did you ask the tax chain for a refund first? – Ben Miller Jan 27 '17 at 2:56
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    @BenMiller - I don't remember, this was awhile back. I'm bringing it up now because I was double-charged by a grocery store (the lady had problems with the card machine), and am looking back to this instance and thinking it's useless to even try. – horse hair Jan 27 '17 at 3:14
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    @horsehair A double-charge is an obvious mistake (although you should contact the store first - chances are they'll happily fix it for you) that you'd likely win. Two massively different situations. – ceejayoz Jan 27 '17 at 3:15
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    The real answer is that it depends on where you live - in some areas the consumer has a lot more rights than the US in relation to chargebacks and the standard of goods and services. – Flexo Jan 27 '17 at 9:02
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    This is especially onerous if you have some kind of agreement with a company for a monthly service. My wife once tried to cancel a service, the only way to do it was e-mail, and they claimed they didn't get the request until after the cut-off period, despite emails showing otherwise. (There wasn't really any clear cut documentation on when the cut off was, IIRC, so it was her word again theirs...) pretty rude awakening when after 3 months your chargeback is denied and a shows up as a large charge on your card! – Michael Jan 27 '17 at 15:17
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When you initiate a chargeback, the merchant has the right to dispute the chargeback. If they can provide proof that the purchase actually took place, the chargeback will fail.

We don't know all the details of your situation, of course, but it appears from what you have said that the tax chain probably has documents that you signed agreeing to the charges. They prepared your return (even if they did a poor job), and so from their perspective, they have decided that they deserve to be paid. Whether or not they did a good job is a matter of opinion, of course; their position might be that they did it correctly, and the second business did it poorly.

The chargeback is a powerful tool, but it is not a magic button that makes a charge disappear. If the merchant can show that a sale did indeed take place and show that the proper amount was charged, the chargeback will fail. For a service, it isn't enough usually to simply state that you were unsatisfied; if you received the service at the agreed-upon price, the charge is valid.

A chargeback is sort of a nuclear option when it comes to getting a refund. There are negative ramifications and expenses every time a merchant gets a chargeback (even if they ultimately win), and so often they will be willing to work something out to avoid a chargeback. You should go to the merchant first, if you can, and ask for a refund before considering the chargeback option. If you file a chargeback without even giving them the opportunity to work it out with you, the merchant will usually want to fight back.

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    @horsehair Chargebacks are pretty serious for a merchant. Each one involves a fee for the merchant (even if they win), and too many of them will cause them to lose their merchant account. The burden of proof is usually on the merchant to show that the charge was valid. – Ben Miller Jan 27 '17 at 3:18
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    +1. The company delivered a service; they spent time and effort on your return, and they are correct to charge you for it. If they have a money-back accuracy guarantee you can apply for refund under that, by whatever rules they use, but that's between you and them after you have paid for the work you told them to do. – keshlam Jan 27 '17 at 4:46
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    Additionally, even a successful chargeback doesn't erase your debt to the merchant, he is free to pursue you in small claims court, or can even send the debt to collections. Credit card companies often side with their own customer, so if the debt is substantial, the merchant may still choose to collect. – Johnny Jan 27 '17 at 5:40
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    @horsehair While we can't be sure what the credit card company does, they are supposed to look at the documents. Chargebacks tend to favor consumers if anything in most cases, Visa/etc. has no reason to favor merchants over its actual customers. – Joe Jan 27 '17 at 16:09
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    Sony's Playstation Network has a policy of banning any account with a chargeback. They want you to deal with their customer service, rather than going over their heads using the chargeback system. – Ben Miller Jan 27 '17 at 20:00
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So, what's the point of a charge-back, if they simply take the word of the merchant?

tl;dr: They don't.

As both a merchant and a consumer I have been on both ends of credit card chargebacks, and have received what I consider to be mostly fair outcomes in all cases. Here are some examples:

  1. A nightclub overcharged me by exactly $100 for a bar tab. I contacted the club but they were short with me and unhelpful. I disputed it with the CC, provided the receipt and was immediately refunded the $100 overage.
  2. I once hired a photographer for 2 photo shoots and had made two payments prior to the first shoot. After some back and forth about scheduling issues with the first shoot date, and a lack of responsiveness to my emails and phone calls, I canceled and requested a refund. The photographer refused to refund anything so I disputed with the CC. Since no services were performed yet, I expected a full refund for both payments but the CC decided to only refund the larger of the two payments I made. I should point out that I did sign a contract saying the down payment was not refundable, so even though I didn't like the outcome, I understand their reasoning.
  3. As a merchant, one of my customers initiated a chargeback for a $5 purchase with their credit card without contacting us first. This really bothered me since we provide a 100% satisfaction guarantee, with a no-questions-asked refund policy. They were one email or call away from getting a refund but instead they went through their CC. I of course allowed the $5 charge to be refunded, but I received a chargeback fee of $20.

Takeaways from this:

  • I strongly urge all consumers who are considering doing a chargeback to try to work with the merchant first, and use the CC dispute as a last resort.

  • In general, you can think of the credit card dispute department like a judge. They hear the arguments presented by both sides, and consider them to the best of their ability. They don't always get it right, but they make their best attempt given the limited information they are provided.

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    In scenario #3, I am surprised that you didn't reject the chargeback, forcing the customer to ask for the refund the expected way - whatever it was in your store. I am saying this because of the chargeback fee and the incorrect use of the chargeback. – Jirka Hanika Jan 27 '17 at 17:27
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    @JirkaHanika - very good observation. The reason was simply naivety on my part. I use PayPal as the payment processor, and at the time I didn't know I would get hit with the fee until after the fact. It hasn't happened again since, but if it ever does, I will initiate the refund through PayPal instead, and then dispute the chargeback with the reason of "Customer already has been refunded." Then I could save the $20 fee. – TTT Jan 27 '17 at 17:31
  • +1 Thanks for sharing your experience on the merchant side of this. – Ben Miller Jan 28 '17 at 4:44
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The point of a chargeback is to force merchants to do the paperwork.

Many merchants don't, and are easy targets for chargebacks, even when they have, in fact, provided the good or service.

You used a tax prep service. They may have given you poor (technical) advice, but such firms are usually very good about doing the paperwork. That's why you lost.

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You may be using the wrong method to get your money back. As others have said, this is not a valid use for chargeback; that is when a fraudulent charge occurred, or when a merchant charges you incorrectly.

However, many cards have various kinds of guarantees, one of which might cover this situation. Particularly in some european countries, such as the United Kingdom which has Section 75 allowing you a recourse, services are included with goods. Goods are typically the only covered elements in the US, though, but check your credit card agreement to be sure.

Second, you can go through the FTC. They will provide you a sample form letter to request a refund of your money, and if the merchant is not cooperative might choose to help you directly (especially if many others are in your situation).

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