Chargeback Insurance

Chargeback Insurance

To start, a chargeback is the forcible return of money to a customer, initiated by the customer's issuing bank.  This happens when a costumer demands their money back when they do not receive the services or goods that their money was used for or when a persons credit card or identity is stolen and then used to pay for something that they will never receive and they call the bank and file some paper work, either a complaint or paper work for identity theft, and the money is returned.  A consumer may initiate a chargeback by contacting their bank, and filing a substantiated complaint regarding one or more debit items on their bank statement

The chargeback exists primarily for consumer protection.  Credit card holders have the right to reversals according to Federal Reserve Regulation Z under the Truth in Lending Act of 1968.  Debit card holders are guaranteed reversal rights by Federal Reserve Regulation E under the Electronic Funds Transfer Act.

Merchant ChargeBack Insurance

Chargeback insurance is protection against cardholder fraud on Card-not-Present credit card transactions.  Such cases or scenarios include:  a lost or stolen credit card is used to purchase merchandise, card generators or counterfeit cards is used to buy merchandise, identity theft, in which not only is the identity of a person stolen, but the identity is used in some manner to make a purchase, or in cases of computer of system hacking or otherwise breaking in to where a person pays to have something shipped to them, but before the item is shipped, the address is changed to name a few.  Merchant ChargeBack Insurance will reimbursed the merchant for the loss of profit, and the charge back processing cost.
Charge back insurance covers lender or merchant in situation where the item or service is paid for by credit and there is some legal complication which renders the charge unauthorized.  Chargeback insurance refers to an insurance coverage protecting a merchant who accepts credit cards. The coverage protects the merchant against cardholder fraud in a transaction where the use of the credit card was unauthorized, and covers claims arising out of the merchant’s liability to the service bank.