Risks of a chargeback for a consumer?
What are the potential risks of making a chargeback on a credit card for what you deem to be a legitimate reason in good faith (but with which the merchant might also disagree in good faith)?
Assume the consumer has already paid the item on their credit card bill.
For example, does it hurt the customer’s reputation in some way? (Maybe not a credit score per se, but anything else that might affect them?) Or for example, if the merchant lose, can they (at least in theory) take it to court and recover payments that way, or are they bound to the arbitration by their credit card contracts? Any other risks I can’t think of?
This depends on the nature of dispute, type of goods involved, costs of goods etc. There are 2 distinct contracts.
One directly between Merchant and the buyer. The contract is to provide services and get paid.
The second is between Merchant, Banks, Card Networks, Buyer. This is the card payment made and would be governed separately.
Directly on a single instance NO. However banks do monitor the disputes and if these are more by a single buyer; they would then tend to rule in Merchants favour if the evidence is not sufficient.
The Merchants, Banks, Card Network, Buyer this contract works on whether there was sufficient authentication / authorization by the Buyer. Based on this and the agreement of Merchants with their Banks / Card networks, they have to take the risk of charge banks. This only takes care of contract 2.
If the Merchants believes that charge back is erroneous and the Card Network has ruled in favour of buyer, Merchant can still pursue this in courts as the contract one is for services that he has provided and not got paid.