When Martin’s flight got cancelled in March, the airline offered him two options: either rebooking the same flight, or receiving holiday vouchers to redeem within the next year. He politely turned down the two options and requested a full refund. Martin spent weeks trying to reach an agreement with the airline but despite repeated promises, his money never arrived. In this scenario, Martin had to ask the bank to make a chargeback of €650 to his credit card account.

What is a chargeback?A chargeback is a reversal of payment onto the credit or debit card, that  comes directly from your bank. Chargebacks are very similar to refunds, with the difference of having the buyer going directly to the bank rather than trying to solve it amicably with the merchant.

A chargeback is commonly filed when a buyer does not recognise the transaction, or the product or service paid for was not received. Unfortunately, as friendly fraud becomes more prevalent, many buyers simply raise a chargeback to get their product or service for free, even when such service or product was received and/or delivered.

However, buyers little know that once a chargeback is raised, there is a process to be followed which may take days or months. Different parties are involved while each party is able to dispute the chargeback with compelling evidence that leads to the end result of winning or losing.

How does it work?

There are four parties involved when filing a chargeback. The buyer, the issuing bank, the acquirer and the merchant.

1. The process starts with the buyer contacting his bank (issuing bank) and claims a chargeback.
2. The issuing bank provides all documentation presented by the consumer to the acquirer, who in return provides it to the merchant.
3. The merchant can then decide whether to accept the claim or file a dispute.
4. In case the chargeback is accepted, the buyer receives his money back on his credit card. Nonetheless, if the merchant decides to dispute, compelling evidence can be provided to prove that the product/service was actually delivery and/or as described.
5. The compelling evidence goes back to the acquirer which in return sends it to the issuer. If the issuer accepts, the claim is dropped and if not, the process starts again until it goes to the card network as arbitration.

When a buyer contacts Instacoins Customer Support, Instacoins always tries to solve the matter and if possible, issues a refund to the buyer where applicable.

Who is liable for chargebacks?

Back in 2015, liability shift went into effect whereby all transactions done using 3D-Secure or VBV (Verified by VISA) over CNP (card not present) transactions held the issuing banks liable for all chargebacks claimed as not authorised or fraud.

Instacoins makes use of such feature and all transactions are mandatory to be processed using 3DS or VBV. No transactions are permitted without and are immediately blocked.

Since chargebacks take long to be solved, an alternative which is also the suggested way forward is to first contact the merchant from where you made the transaction. Instacoins’ dedicated team is available 24/7 on chat or via email, ready to check what went wrong with the transaction.

However, in case of digital assets such as bitcoins, a transaction is only deemed so upon the delivering of the digital currencies to the buyer’s own wallet. Once the buyer decides to do a transfer and sends them to another wallet of his choice, the merchant is no longer held liable and is unable to recuperate such assets.

Instacoins is only held liable upon delivering of bitcoins to the buyer’s own wallet found on Instacoins platform. Once a transfer is done by the cardholder, Instacoins is no longer able to identify to whom the bitcoins were sent, and thus is no longer held liable, including for any chargebacks that may be raised.

Once a transfer is done, and the buyer realises he will not be able to get what was promised, the buyer must always contact the merchant he did the transfer to as it is their responsibility to provide you with a reimbursement. If one is unable to get hold of that said merchant, a police report must be filed against the recipient of the transfer you sent the bitcoins on.

In case a chargeback is received, Instacoins always disputes back and provides enough evidence to show the end transaction and liability of Instacoins stopped upon bitcoins were delivered to the buyer’s wallet. This results in winnings of chargebacks but at the cost of a potentially frustrated buyer and a time-consuming journey — not to mention costs and charges incurred by all parties.

Instacoins urges its clients to do their research before transferring bitcoins or any other digital assets to third party wallets. Clients must know who they are dealing with, and should not trust anyone posing as a “trading manager” or “account manager” (especially on WhatsApp or Instagram), stating they can help them in getting a quick profit or return on their investment. Clients should only send their bitcoin to trusted persons, wallets, websites and services.

Many of these social media scams and unlicensed forex are on the rise especially in such dire times. But..this is a topic for another day.