CHARGEBACK AND RETRIEVAL FAQS

What is a "chargeback?"

Occasionally, a cardholder will dispute a charge that appears on their monthly bankcard statement and/or it may be discovered that the proper bankcard acceptance and authorization procedures were not followed at the point of sale. If this happens, the merchant's bank or processor will notify them of the dispute and debit the amount from the deposit account. This is called a "chargeback."

I just received a retrieval request. What do I do with it?

A merchant should immediately gather their originating documentation for this transaction and fax it to First American Payment Systems at 817-317-9106.

I just received a Notification of Chargeback. What is it and what do I do with it?

A Notification of Chargeback is notification to a merchant that a chargeback has been initiated. A merchant should read the reason for the dispute on the letter, and if it is incorrect, immediately fax supporting documentation and the Notification of Chargeback to First American Payment Systems. If the issuing bank accepts the documentation, the chargeback has been resolved and no funds have been deducted from the merchant's account. If the cardholder disputes the reversal, a second chargeback may be initiated. In addition, if the processor has information to contradict the claim, or if the documentation does not support the case, the chargeback will be debited from the merchant's account. First American Payment Systems has a unique way of managing chargebacks. When a chargeback is initiated, the card issuing bank posts a debit to the processor for the amount of the chargeback. Most processors immediately debit the merchant. However, in most cases, FAPS does not post the chargeback to the merchant's account until the entire process is complete. Certain types of chargebacks (for example: Declined Authorization or Non-receipt of Draft) are immediately posted to the merchant, as the merchant has no chance of prevailing in the dispute. Our process provides the merchant time to gather and submit the proper information to dispute the chargeback. If the merchant wins the dispute, no money has ever been deducted from their account. If the chargeback is valid, the merchant is debited.

Why couldn't this chargeback be taken out of my reserve account instead of my regular checking account?

A reserve is set up for security purposes to protect the merchant account processor from losses due to chargebacks. The reserve is usually for merchants who accept non-face-to-face transactions (phone, mail, and Internet orders). The reserve is held in case of default by a merchant.

When will I be notified of a chargeback and when are funds removed from my checking account?

FAPS will mail a Notification of Chargeback when the debit is transmitted to a merchant's bank. If the chargeback is valid, it takes 2-3 business days for a debit to reach the merchant's checking account.

Is the risk of chargeback greater if I manually enter the credit card number?

If the merchant is a general retail merchant where a card is present, but does not get an imprint (manual or electronic), they may lose money through a chargeback when the cardholder disputes the transaction.

Who is going to pay for my bounced check fees because this chargeback was taken from my account?

Per the merchant's contract with the processor, the merchant should keep enough money in his account to cover any chargebacks.

I issued a credit and I still received a chargeback. Why?

In these cases, for some reason the issuer did not see the credit issued by the merchant. Sometimes the credit is issued after the chargeback was initiated and they 'cross'. All the merchant has to do is represent the item and it will be credited to the merchant's account.

I was told that an authorization guaranteed payment.

An authorization will only verify that an account is open and that there are funds available. However, if a card has been stolen and the loss has not yet been reported, any charges made by the criminal can later be charged back by the cardholder.

What can I do to prevent this from happening?

General retail merchants usually do not have problems with chargebacks. Mail, phone, and Internet merchants can minimize chargebacks by making sure the name under which they advertise and the name they use to process are the same, or by printing the processing name in a prominent place on the receipt. Be sure to include a receipt with any product sent to the customer. Reply promptly to retrieval requests. Authorize every transaction and use the AVS if possible. If the merchant uses AVS, they should not ship to an address different than the address verified.