When to Use a Chargeback (And When NOT To)

Chargebacks are powerful but they are not always the right move. Here is my guide based on research and personal experience.

DO Use a Chargeback When:

The merchant refuses to refund for a defective product and you have tried everything else.

The merchant goes out of business or disappears. I used this when a small business shut down after taking my $400.

You are charged for something you did not authorize. Unauthorized transactions are the clearest case for a chargeback.

You paid for a service that was never delivered and the merchant stops communicating.

DO NOT Use a Chargeback When:

You simply changed your mind. Chargebacks are not for buyers remorse. Your bank expects you to make reasonable efforts to resolve with the merchant first.

The charge is small (under $25). The hassle is not worth it and filing chargebacks for small amounts can get your account flagged.

You use the product for weeks and then decide you do not want it. Banks see this as misuse.

You are in an ongoing relationship with the merchant. A chargeback will destroy that relationship. I had a freelancer I worked with who charged me for work not completed. Filing a chargeback meant I could never work with them again.

The Middle Ground

Before filing a chargeback, send a formal demand letter to the merchant via certified mail. This shows the bank you made serious efforts to resolve. In one case, the demand letter itself got the merchant to refund me immediately.