Chargeback Period

What is a Chargeback Period?

A chargeback period is the amount of time a consumer has to dispute a charge after receiving goods or services.

Chargeback Period Explained

A chargeback period is also called a chargeback time limit.

Chargeback periods vary depending on a few different factors. These factors include the card brand, dispute reason, and type of transaction.

Issuing banks can also set their own chargeback deadlines, as long as they adhere to the Fair Credit Billing Act of 1974. This Act mandates that cardholders have at least 60 days to dispute transactions.

In general, cardholders have 120 days to begin a dispute.

With many transactions, the chargeback period begins when the transaction takes place. In some cases, there’s a different start date. If a customer completes an online purchase and receives shipped goods a week later, the chargeback period begins on the date of delivery.

Another example is ongoing memberships. If a customer purchases an annual membership in January, they have 12 months to use the service. The chargeback period begins on the final delivery date, which would be December 31st. In this example, the customer can dispute the transaction 120 days or more after the membership ends in December.

Once a customer disputes a transaction, merchants have an opportunity to respond. Their response period is much shorter than the original chargeback period.

For Visa and Discover, merchants have 30 days to respond to a dispute. Mastercard gives merchants 45 days to respond, and American Express gives 20 days.

Chargeback Period Examples

Mary uses her credit card to purchase a blue jacket from an online store. The purchase date is November 1st.

On November 7th, Mary receives her package in the mail. She opens it and realizes that the store accidentally sent a red jacket instead of the blue one she ordered.

Mary’s chargeback period begins November 7th because this is the product’s delivery date. She tries to contact the store to exchange the jacket, but she can’t reach them. After calling and emailing with no success, she calls her issuing bank.

Mary’s bank initiates a chargeback for “item not as described.” They begin the dispute on November 20th, which is within the 120-day chargeback period for this reason code.

The store Mary bought the jacket from has 45 days to respond to the chargeback. This is the allowed timeframe because Mary used a Mastercard for the original purchase.

For our following example, Ming purchases two airplane tickets on July 1st. Her flight is scheduled for December 20th. The airline is relatively small and services three states surrounding Ming’s home state.

On December 5th, Ming receives an email saying that the airline has declared bankruptcy and canceled all of their flights. The email doesn't say anything about refunds.

Ming contacts her bank. She’s worried she won’t be able to dispute the charge because it’s been more than 120 days since the transaction. However, her bank explains that the chargeback period begins on the date she expected to receive services. In this case, that date is December 20th.

Ming’s bank initiates a dispute for “services not rendered.” Because Ming used her Discover card, the merchant has 30 days to respond to the chargeback.