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Your Credit Card Chargeback Rights

We have prepared this information to advise you generally of your credit card chargeback rights under federal and California state law.

If you wish to examine them yourself, the federal laws are found in 15 United States Code 1666, 1666i, and 1640(e) and in 12 Code of Federal Regulations 226.12(c) and 226.13. The California laws begin at California Civil Code 1747

Under these laws, you may have a right to the issuance of a credit by the bank or other financial institution that issued your Mastercard or Visa card or, if you used an American Express card, by American Express itself. On the back of your monthly statement is the address to which all inquiries and written requests for chargebacks should be directed.

When you apply for a Visa card or Mastercard, it is usually issued by a bank. Your dealings are with the bank, called the "issuing bank" and not Visa or Mastercard. In order to issue such credit cards, a bank must agree to follow Visa or Mastercard regulations, but these regulations cannot take away any of your rights under federal and state laws.

A merchant who takes your credit card prints a receipt and deposits it with his "merchant bank". Under the standard agreement, the merchant maintains a reserve account in the merchant bank to cover chargebacks by dissatisfied cardholders. The merchant bank pays the merchant and sends the receipt to your issuing bank. Your issuing bank then pays the merchant bank and sends you a "statement". There are two categories recognized by federal or state law under which you can resist payment: "billing errors" and "claims and defenses".


There are several types of "billing errors"; mainly:
  • Charges you did not authorize;
  • Charges for undelivered goods or services;
  • Charges for goods or services different from what was represented or of the wrong quantity;
  • Charges for goods that were not timely delivered.

If you believe there was a "billing error", you must, within 60 days following the date of the first statement on which the charge appears (not the date you made the charge; the date of the issuance of the statement appears on the face of the statement), write a letter to your bank setting forth in specific detail your dealings with the merchant (i.e., Did you respond to an ad in a newspaper, receive a telephone call, visit a store? What did the merchant tell you about what you would be receiving? etc.). If you kept a mailer or the ad from the merchant, attach copies to your letter, along with any correspondence between you and the merchant.

If you get your letter to your bank within the 60-day period (some banks extend this to 90 days), you need not meet any other condition. No geographical restrictions apply. You need not make any attempt to resolve the dispute with the merchant, and you can assert a billing error even if you have already paid off the disputed amount. Your bank may ask you to send the merchandise back to the merchant or to the bank itself before it will give you a credit refund. Your bank stands in the shoes of the merchant and will credit your account while it checks to determine whether your claim is valid.


Under federal and state laws, you have up to one year from the date of the statement (far longer than the 60-day limit for asserting "billing errors") to notify your bank in writing of "claims and defenses". However, unlike billing errors, you must meet four additional conditions:

  • The disputed amount must be over fifty dollars ($50);

  • You cannot dispute the charge under "claims and defenses" if you notify your bank after you have already paid off the disputed amount. However, if you have paid off only a portion of the disputed charge, you can still resist payment on the unpaid balance of the disputed charge. For example, if the charge was for $300 and your last payment to your bank was only $50, you can still seek a chargeback for the remaining $250 under the "claims and defenses" category;

  • The transaction cannot be with a merchant more than 100 miles from your home or outside the state of your residence. For example, let's assume that you travelled to New Orleans from California for a vacation. While there, you purchased an expensive vase using your credit card. The merchant hands you a box which you open upon returning home. Inside the box is confetti, but no vase. If you notify your bank within 60 days, you can qualify for the issuance of a credit from your bank under the "billing errors" basis for chargebacks. However, if you wait beyond the 60-day period to assert a claim and defense against your bank, you would be ineligible for the issuance of a credit. In California and in some other states, transactions on the telephone are considered to take place at your home and not at the merchant's place of business, no matter who placed the call. Similarly, in those states, if you fill out an order form sent to the merchant, and agree to purchase by writing down your credit card account number, the transaction also occurs in your home (federal law states that where the agreement is reached depends on state law);

  • Before notifying your bank, you must make a good faith effort to obtain a refund or credit from the merchant. A letter, documented telephone call, or signing a notice of rescission (cancellation) would suffice.

Most cancellations are made because of merchant misrepresentations, but in some transactions, the most common being home solicitation consumer sales, the merchant must give you a written notice which you sign, date and return to the merchant within three (3) business days to cancel the transaction. In California and in some other states, sales by telephone are considered home solicitation sales. If the merchant does not give you the necessary notice, you may have even a longer time to cancel. Before notifying the bank, you may wish to send to the merchant a rescission or cancellation notice.

We do not know whether you have a valid "claim and defense". Unfortunately, notwithstanding efforts by this and other law enforcement agencies, and particularly Visa, to ensure that card-issuing banks honor the federal and state rights of cardholders, your letter asserting a "claims and defenses" basis for a chargeback may be handled by a customer service representative who is poorly trained. In some instances, we have heard of denials of valid claims and defenses which otherwise meet all of the requirements on grounds that the letter was not received within 60 days, the merchant has filed for bankruptcy, or the merchant bank refuses to pay back the card-issuing bank because the time limits regulating dealings between the banks under Visa or Mastercard regulations have expired. None of these are proper or legal grounds for denying a valid claim for a chargeback under the "claims and defenses" category. In short, your letter may fall into the hands of an inexperienced customer service employee of the bank who has not been properly trained about "claims and defenses" and will erroneously deny your claim. To give yourself some protection against this happening, you may wish to attach a copy of this letter to the letter you prepare for your bank.

Finally, even if you cannot satisfy either the "billing errors" or "claims and defenses" requirements for chargebacks, you may still wish to write your bank. Some banks will process these requests upon voluntary compliance arrangements they have reached with other banks. In the event your bank denies your request, and you believe that you have satisfied all of the required conditions, please feel free to write to our Public Inquiry Unit at the above address.

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