Other Types of Chargebacks
Accounts may also incur credit reversals in other forms. ATM reversals occur when an ATM deposit envelope is found to have less funds than represented by the depositor. A chargeback is made to correct the error. This could result due to a counting error or intentional fraud by the account holder, or the envelope or its contents could have been lost or stolen.
Chargebacks also occur when a bank error credits an account with more funds than intended. The bank makes a chargeback to correct the error. If an overdraft results and it cannot be covered in time, the bank could sue or press criminal charges. When a direct deposit is made to the wrong account holder or in a greater amount than intended and a chargeback is made to correct the error. Finally, chargebacks occur when an account holder deposits a check or money order and the deposited item is returned due to non-sufficient funds, a closed account, or being discovered to be counterfeit, stolen, altered, or forged.
Banks may sue account holders or press criminal charges when chargebacks are required due to fraudulent activity and insufficient funds are in the account to cover the chargebacks.
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