Disputed Transaction

A disputed transaction occurs when a cardholder challenges a debit or credit card transaction as illegitimate. The reasons for such disputes can vary widely but typically include allegations of fraudulent activity, non-receipt of goods or services as described, or incorrect billing amounts. When a transaction is disputed, the cardholder contacts their bank to initiate an investigation into the claim.

During this process, the bank evaluates the legitimacy of the dispute by examining evidence from both the cardholder and the merchant. If the bank determines that the dispute is valid, it may issue a chargeback. This means the money initially credited to the merchant is withdrawn and returned to the cardholder's account. This mechanism serves as a form of consumer protection, ensuring that cardholders are not financially penalized for transactions that are erroneous or not as agreed. However, it places a responsibility on merchants to maintain clear and accurate transaction records and provide high-quality goods and services to avoid financial losses due to chargebacks.