American banking customers have the right to charge back a debit card purchase. Electronic fund transfer, or EFT, payments are covered by Regulation E (12 Code of Federal Regulations 205), which covers any transaction entered into via electronic terminals, telephones, computers or magnetic tape that involves adding or debiting money from your bank account.
Regulation E guarantees reversal rights to debit card holders who have used automated teller machines, telephone bill-payment systems and debit card terminals in stores. This helps protect consumers against fraudulent charges and accidental double billing. A bank may also initiate a chargeback, usually because of a compliance violation. This happens when a chargeback has already been issued and the merchant posts another charge or when a network error led to billing problems when the transaction was made.
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If you notice an unauthorized electronic fund transfer, notify your bank right away. If you do, your liability is limited to $50. If you don't notify your bank "in a timely fashion," you may face unlimited liability. Because what's "timely" is not defined, always check your balance and flag any suspicious purchases or debits. Once you notify the bank, it has its own deadlines for an investigation into any unauthorized EFTs or incorrect debit amounts.
Before Initiating a Chargeback
A chargeback might be initiated for many reasons, including unauthorized transactions, double billing, failure to receive the goods or services you paid for or faulty or damaged goods. But first contact the business that sold you the goods or services. If you can resolve the dispute at that level, you can save time and get a refund faster than waiting for the bank to investigate.
Starting a Chargeback
If you can't resolve the problem with the business that charged your card or you believe unauthorized charges are on your card, contact your bank. Supply the details of the transaction, and keep any hard-copy data, such as receipts, in case they are needed during the investigation. Your bank has a responsibility to fully investigate your claim to ensure it isn't a case of "friendly fraud" -- say, when people hope to reverse charges they made. Friendly fraud can involve claiming not to have received an item or service (for example, returning an empty box, claiming nothing was inside or returning a broken version of the product for a refund) purchasing expensive clothes for an event and returning the merchandise after wearing it or disputing charges after you let someone else use your card.