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    Chargeback  

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    Global payment systems (Visa, Mastercard) require all financial institutions using their services to offer chargebacks. It’s important to understand that a chargeback will work only if the transaction was made using a bank card. For bank transfers between accounts, there is a separate procedure called transaction dispute. Both this procedure and the chargeback service work on similar principles.

    Although Russian legislation only partially regulates chargebacks, the procedure works effectively. All financial institutions using the global payment systems, including “Mir,” carry out chargebacks.

    The chargeback process and when to initiate it

    It’s not always possible to initiate a refund. A chargeback will be successful in four scenarios:

    • Unrecognized payment. Money has been deducted from a person’s card, but they haven’t made any purchases or payments. In this case, it needs to be proven that the cardholder didn’t make the payment.
    • Full payment was made for a product or service, but the person didn’t receive anything. The seller or service provider didn’t fulfill their obligations.
    • The received product or service is of poor quality. This refers to discrepancies with the description or defects.
    • The product was received but doesn’t match expectations. For example, the size is incorrect.

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    When dealing with an unsuitable or subpar product, the first step is to attempt a return or exchange. If the seller is reputable, they will agree to this. 

    Scammers are a different story. They might refer to User Agreements and other documents outlining the refund process. Everyone who places an order accepts these terms. 

    This is why it’s crucial to read everything you sign. There might be clauses in the document that exclude the chance of using a chargeback for a refund. Even in court. 

    Most chargebacks are initiated due to fraud. This is useful when the seller has received payment but hasn’t dispatched the goods, or the received goods are subpar, or the service provider didn’t perform their duty. 

    Initiating a Chargeback for Broker Refunds: Reviews

    Online platforms often suggest using chargebacks if a forex broker, online casino, or bookmaker (binary options or sports betting) has scammed you. It’s important to understand: this will work only in one scenario. If the fraudster: 

    • Is registered as a legal entity;  
    • Stores client funds in a bank account.  

    If an anonymous fraud occurred, and the money disappeared upon deposit without a clear direction, recovering them through a chargeback might pose significant challenges. 

    A chargeback is a refund of a payment made. Replenishing an account with a broker, even a fraudulent one, is not a payment. The trader isn’t buying a product or service. This is why the chance of using global payment system guarantees to recover the initial deposit and subsequent top-ups is very low. It’s easier to dispute the transaction. 

    How Chargeback Scammers Operate

    Continuing the topic of fraudulent brokers, it’s important to address scammers who profit off their victims. They offer chargeback services to everyone. They promise to retrieve any transaction, regardless of how it was made – from a bank account, card, electronic wallet, or cryptocurrency wallet. 

    It’s important to understand: this is impossible. Chargebacks only work with bank cards. 

    There are two schemes that scammers use: 

    • Simpler scheme: Scammers promise to retrieve the entire amount within a few hours or at most, days. They ask for a prepayment percentage of the amount to be retrieved. Once they receive the money, they vanish.  
    • More complex scheme: The chargeback scammer claims they will refund the capital without any upfront payment. They dangle a carrot for a few days, then claim the money is already in a cryptocurrency wallet. To retrieve it, the victim needs to register. Beware: individuals are scammed during the registration process. They are asked to pay $200–$300 to confirm ownership of the wallet and funds. Then, they are coerced into paying commissions, taxes, and are constantly denied withdrawals. The trick is that the wallet doesn’t exist.  

    Many chargeback scammers actively approach potential victims and offer their services. You should ask yourself: “How did a third party learn that I was scammed by a fraudulent broker?” Such a scammer is either associated with a fake intermediary that led to the loss of the deposit, or they obtained information about the potential victim from the intermediary’s owners. 

    How to Initiate a Chargeback

    Before approaching the bank, attempt to resolve the issue amicably. Negotiate with the seller or service provider. Perhaps they will agree to refund the money, exchange the product, fulfill the service, or provide compensation. 

    Whatever the outcome of negotiations, it’s crucial to document them. This will be solid evidence that you attempted to resolve the issue amicably. Present the collected data to the bank that issued your card. 

    Additionally, you’ll need to prove that the funds transfer indeed took place, but the service (or product) wasn’t provided or was of inappropriate quality. You can learn all the details of the chargeback process at your bank, including the required documents, which often vary. 

    If the issuing bank supports your case, they will approach the acquiring bank. The acquiring bank might either refund the money or side with the seller, who will try to prove that they provided the product or service. The seller might refer to User Agreements, positive customer reviews, or photo and video evidence that the buyer received the product (or service). 

    Ideally, the chargeback process works a bit differently. If the issuing bank is on the buyer’s side, they will debit the necessary amount from the acquiring bank and return the funds. This is done without requiring the acquiring bank’s consent. If there are no funds in the acquiring bank’s correspondent account, the issuing bank makes them a debtor. The client recovers their capital from their own pocket. 

    When can you initiate a chargeback? No later than 540 days from the moment of the disputed transaction. The issuing bank might review the application for 45 days. The acquiring bank has 30 days. If an arbitration committee (usually a global payment system) is involved, they will spend 10 days. 

    Ideally, the chargeback process might take around 2.5–3 months. This is why it’s worth attempting to settle the matter with the seller or service provider first. 

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