Credit Card Chargeback Merchant Rights

Credit Card Chargebacks and Merchant Rights

Getting a Credit Card Chargeback is the worst nightmare a merchant can get. While some chargebacks can be genuine and it will be right if the merchant initiates a refund.

But what to do in case of Fraudulent Chargebacks. Can a Merchant sue a customer? Can the customer go to Jail for Fraudulent chargebacks? In this blog post, we will discuss these vital elements.

Can A Merchant Sue A Customer?

Merchants follow the terms mentioned in the merchant account application. They rely on the verdict of the payment processor or the card brand. If the product is returned in good condition to the merchant there is no reason to escalate the matter. If the product is not returned or returned in improper condition merchant can send a demand letter to the Customer. If the value of the transaction is high (Especially in case of High-Value Ticket Merchant Accounts) then the merchant should take legal measures to get the money back. In case if the customer does not respond to the demand notices then the merchant can take steps to sue the customer. Merchant must inform the payment processor about the fraudulent activity from the customer(For Records only)

Can The Customer Go To Jail For Fraudulent Chargebacks?

Yes, any kind of Fraud can result in legal action. Customers must value the business relationship and should know that sometimes it may not be easy to keep the product and money both. You as a customer has the right to expect good quality product or service from the merchant. Merchant has the right to get paid in return. if you want to keep the product and money both then it may be referred as Theft. Pay for what you like. If you don’t like what you got then return it and get the money back. be ethical.

What Are The Rights Of A Merchant In Any Credit Card Transaction?

  • Merchant Can demand the Product to be Returned in case of Cancellation.
  • If Merchant mentioned reducing return policy on the website then the merchant can issue a partial refund.
  • The merchant can issue demand notice to the customer in case if the product is not returned even after the return is initiated.
  • To avoid chargebacks merchants should switch to alternative payment modes like ACH or Echeck. It is highly recommended to use a chargeback alert service.