You purchase a product, but it doesn’t work or you don’t even get it. So you open a chargeback. How are banks able to just claw back the money you’ve sent?
In: Economics
Basically, the retailers have an agreement with the card companies. Part of that agreement includes what happens if a charge is disputed. It gives the card company the right to withdraw money out of the account the funds were deposited into in the event of a dispute. So, when you dispute a charge, you are literally asking the credit card company to withdraw funds from another person’s account and deposit those funds back into yours.
Obviously, there are more legal and financial details that I have glossed over, but that is the basics.
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