Most people are well aware of how dealing with credit card payments can be quite a nightmare. If a customer issues a refund claim, chances are very real they will get their money back. One Reddit user posted how one of his clients issued a chargeback request twice, even though the first claim was rebutted. Had this transaction been settled in Bitcoin, there would have been no problem whatsoever.

A Double Credit Card Chargeback Claim

It does not occur often someone files two chargeback claims for the same payment. One contractor found this out the hard way, after constructing a pool for a new customer. All of the payments during this process were made with a MasterCard, which is not uncommon. Once everything was said and done, a total of US$100,000 had been paid through a credit card, and the pool’s construction was finished rather quickly.

For some reason, the client decided to initiate a chargeback on the payments after all of the work had been done. Considering how a credit card was used, it has proven rather easy to go through this process. According to the client, the installed elements were defective. The credit card company honored this refund request, and US$100,000 was taken from the contractor’s account.  

The contractor’s company rebutted this claim, and after a thorough investigation saw the US$100,000 returned to them. In most cases, this would have been the end of this story, but this case is quite different. The same client used a lawyer to initiate a second chargeback claim for the payments a month later. As a result, this second chargeback claim has been honored, and the contractor lost the money again.

Disputing the chargeback is the only course of action for the contractor at this stage. However, the client can continue filing chargebacks as long as he wants, and keep this issue going for an extended period of time. Considering how the contractor will need to lawyer up, the costs of going to court could soon outweigh the financial gains. A very unusual scenario, yet one that highlights a larger underlying problem.

On the one hand, there is little MasterCard can do right now. The company reviews evidence and makes its judgment based on the information provided. That means they will honor chargeback claims as long as there is credible evidence. Going to court is the only option available to the contractor, as they can sue the client directly. Under MasterCard’s TOC, the issuer can withhold money, pending an investigation. However, clients who feel they are legally owed the funds can sue the customer in question directly.

If all of these transactions had been paid for in a different manner, there would be no way to continue this game of chargebacks. With a Bitcoin payment, it is impossible to chargeback the funds. Using smart contracts on a blockchain would have been a viable option as well. Funds are transferred once certain milestones of the project have been completed. This concept would have worked for both parties, as one cannot dispute a smart contract either. Relying on credit cards remains a very risky business, that much is certain.

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