A return item chargeback, more commonly known as a credit reversal, allows a consumer who owns a debit or credit card to recover funds from a merchant due to error, identity theft or fraud. The term can also refer to a returned check, where the bank initiates a return item chargeback on a consumer’s check that the merchant has deposited. While legitimate return item chargebacks protect consumers, fraudulent chargebacks can cost merchants significant sums of money, according to BBVA Compass.


When a merchant deposits a check into his bank account, the bank will usually credit his account with the funds from the check. If a consumer issues a check based upon an account with insufficient funds, a closed account or a fake account, or an identity thief has used stolen checks, the merchant’s bank will institute a return item chargeback, where the bank will withdraw the funds from the merchant’s account. The merchant’s bank may assess the merchant a fee for the time wasted in processing the bad check, and the merchant will have to try to collect the funds on his own.

Credit Cards

Under federal law, consumers have the right to chargeback purchases they did not authorize, products or services undelivered or not delivered in a reasonable time frame or products and services different than described, according to the Office of the Attorney General of California. Consumers also have the right to receive a refund if they return a product within a reasonable time frame. They can initiate a dispute with their credit card company that will result in the credit card company reversing the transaction, and the money will be removed from the merchant’s account.

Debit Cards

A merchant can face a return item chargeback if it accepts a stolen debit card or makes inaccurate or fraudulent charges on a consumer’s debit card. When the consumer initiates a claim, the bank that issued the consumer’s card will remove the funds from the merchant’s bank account. At most, the consumer cannot chargeback the first $50 of losses if he notifies his card issuer within two days and $500 if he notifies his card issuer after two days of noticing unauthorized charges, according to U.S. PIRG. Both Visa and MasterCard debit cards offer zero liability protection under certain circumstances.


In many states, an individual who issues a check based upon a closed bank account or an account with insufficient funds will face criminal penalties. Merchants also have the right to collect the original amount of the debt and any fees associated with the return item chargeback. Businesses can dispute the chargeback process with credit or debit card transactions. If the card issuer finds in favor of the merchant, it will reverse the return item chargeback and credit the funds to the merchant.