Chargeback – Canceling a purchase via one’s credit card company:[1]

Canceling a purchase via one’s credit card company illegally or unjustifiably, breaches not only a prohibition of Michsurei Emuna, Mi Shepara, and the laws of Kinyanim, but furthermore makes the person considered a Mazik, as the credit card company often charges an administrative fee to the business. It likewise has the chance of potentially ruining the reputation of the business with the credit card issuer, and hence he also transgresses Motzi Sheim Ra on the business. This is aside for being potentially illegal according to civil law.[2] Hence, a chargeback may only be done in the event of a true Mekach Taus[3], and only after the business is notified and still refuses to issue a refund.[4] One who prematurely cancels a purchase via his credit card company, may be guilty of all the above, and be liable to pay for the loss caused to the business.

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[1] Although businesses who accept credit cards do so under the implicit stipulation that the buyer holds the right to dispute the charge, nevertheless, this may only be done in a case of true Mekach Taus and only after first consulting with the business and asking them for a refund. Accordingly, going back on a credit card purchase outside of the refund policy, would be Michsurei Emuna, Mi Shepara, and illegal, unless due to a true Mekach Taus. See https://stripe.com/resources/more/three-types-of-chargebacks-and-how-to-prevent-them ; https://www.nerdwallet.com/article/small-business/chargeback-fraud-what-small-businesses-need-to-know ; https://www.bartkasperolaw.com/chargeback-law-your-rights-as-a-consumer/

Explanation: A credit card payment should be viewed no different than a messenger, or lender, who has agreed to pay on behalf of the consumer, and the credit cards stipulation with the business is no different than a messenger who stipulated his payment with the seller. However, this does not relinquish the buyer from his obligation to pay for the product once a Kinyan has been made, and hence irrelevant of whatever policy the credit card company has, the buyer still has to follow his business obligations that are implicit in his purchase. To give an example: If the buyer and seller agree to for the payment to be given by another individual, and that individual stipulates with the seller that he will take his payment back in any scenario that the buyer asks for the payment back, then although certainly that stipulation stands, nonetheless, in the event that the buyer asked for the payment back, he the buyer would still remain personally obligated to pay the seller for the goods. Accordingly, chargebacks can cause the buyer to transgress several of the matters brought above, as the issue between him and the seller remain unresolved, and it only resolves the issue between the seller and his credit card company, which is his Shliach or lender. To say it in other words, the credit card company does not transgress anything for issuing a chargeback, as this was explicitly stipulated in the agreement of accepting their payment, however, the buyer remains liable for transgression. The stipulations of the credit card company regarding chargebacks for merchants is a private agreement between them and the merchant and not between the merchant and the buyer. This holds true even in civil law, and hence notwithstanding the chargeback decision of the bank, the merchant always retains the civil right to sue the consumer for payment in court.

[2] https://www.bhlawfirm.com/blog/2022/04/are-there-consequences-for-filing-false-chargebacks/

[3] Such as: https://www.visa.co.uk/how-you-pay-matters/chargeback-purchase-disputes.html#3

• Your order didn’t arrive or the service was not provided
• Your order is faulty or doesn’t match the description
• The seller has gone out of business

[4] “Your first step should always be to contact the seller, but if you’re unable to resolve the situation to your satisfaction, your card provider may still be able to help you.” “With a refund, however, the seller accepts responsibility for refunding you directly, without the need to claim through your bank. You should always request a refund from the seller first before making a chargeback claim.” See https://www.visa.co.uk/how-you-pay-matters/chargeback-purchase-disputes.html#2