Credit Card Chargeback

A credit card chargeback occurs when a customer disputes a charge with their credit card company, resulting in the payment being reversed. In dealerships, this can happen if, for example, a customer puts a vehicle deposit on a credit card and then disputes the charge (claiming it was unauthorized or due to a contract issue). Dealerships in Canada need to manage chargebacks by keeping clear documentation of customer authorizations and terms of sale. A fraudulent scenario might involve a buyer using a stolen credit card for a deposit or down payment; once discovered, the dealership loses that money when the chargeback is processed. To mitigate risks, many dealerships will only accept credit cards up to a certain amount or require signed receipts and copies of identification for card transactions. Understanding chargebacks is part of protecting the dealership’s financials and requires prompt response and evidence if a charge is disputed.