A chargeback is the refunding of a credit card transaction back to the card account it was originally paid from. The right to a chargeback is rooted in American legislation. Discover is headquartered in the United States (as are its main competitors Visa, Mastercard and American Express). How each company implements these legal rights in its rules nevertheless varies considerably.
Even though credit cards have been in existence since the 1950s, for years many Americans were still wary of adopting this payment method due to insufficient consumer protection. That changed with the Fair Credit Billing Act of 1974, which was passed to give American credit card holders those rights, including the right to a chargeback. In 1978, the Electronic Fund Transfer Act provided many similar rights to debit card holders.
Although the rights are not identical and are based on separate laws, there are very few distinctions between a Discover credit card dispute and one that involves a debit card.
The Discover Card was originally introduced by the American retailer Sears in 1985, making it by far the youngest of the major card networks. The connection to Sears was severed in 1993, and since 2007 it has been a completely independent company known as Discover Financial Services operating Discover Bank and Discover Card (and Diners Club).
So what is a Discover credit card chargeback?
While it is similar to its competitors Visa and Mastercard, a Discover Card dispute is fundamentally different in one important way. No cards are actually issued by Visa or Mastercard; it’s the cardholder’s issuing bank that does that. It is therefore the bank that handles payment disputes, while the networks are available for arbitration in extraordinary cases.
Discover cards, on the other hand, are issued directly by the company through its corporation known as Discover Bank. Dispute processes are therefore handled internally and directly. However, the situation is not quite as simple as that. Since the early 2000s, there have been a number of banks that issue Discover cards. They are a minority, but in the event that you have a third-party Discover card, your disputes will go through the issuing bank just like Visa and Mastercard.
If, like most Discover cardholders, your card was issued by Discover Bank, they are the ones you must contact to dispute a transaction. Discover can be contacted for payment disputes by logging onto your online account or by calling 1-800-DISCOVER (1-800-347-2683) in the USA. You can also file a dispute by sending a letter to Discover’s Salt Lake City headquarters, but this can be both unsecure and time consuming.
Once you get through to them, depending on the circumstances of your dispute, they may ask you to provide supplementary evidence to support it. At that stage, in line with the Discover Card dispute rules, they will make one of three judgments.
First, your chargeback could be approved as they debit the merchant for the amount of the transaction and return your money to you. Or they may conclude that your case does not qualify for a refund. If that happens, it is very difficult to get them to reopen the case, much less rule in your favour. Therefore, particularly if your case is relatively complex, an expert consultation may be the best way to start off.
Between the two extremes, Discover may opt for a middle path, in which they provisionally credit your account while requesting evidence from the merchant that the transaction was valid. Once they have seen both sides of the matter, Discover will make a decision that only rarely can be overruled.
Every card network categorises payment disputes according to various types and assign a reason code to each one. Discover is no different, and like the others, its reason codes follow a unique format shared with no one else. The Discover Card chargeback code format is a pair of letters, occasionally followed by one or two digits. As opposed to Visa and Mastercard which use four main chargeback categories, Discover (and American Express) use five. Nevertheless, almost all consumer payment disputes will fall into one of just two: fraud and cardholder dispute.
One major difference in how Discover disputes transactions, as compared with other card networks, has to do with timeframes. Whereas other issuers have strict deadlines, Discover simply recommends that all disputes be raised within 120 days of the transaction but may approve a chargeback even after that.