What Is a Return Item Chargeback?

A return item chargeback involves a bank returning money to the customer's card or checking account and taking the money out of the seller's account. The chargeback occurs when the customer reports a billing error to his credit card company. The error may be an unauthorized charge, late or undelivered goods or charges for the wrong quantity of goods.

There is usually a time period after a charge during which the customer can report a billing error and request a chargeback, although the period varies by state. There are also some conditions that may have to be set. For example, the state may require the customer to try to fix the error directly with the merchant before filing the chargeback claim, or the charge amount might still have to be on the card, rather than already paid off by the customer.