The term “return item chargeback” may sound misleading, as it has nothing to do with traditional credit or debit card chargebacks. Instead, it’s a penalty banks may charge when a check you deposit is rejected.

Unexpected bank fees like these can catch you off guard and disrupt your budget, so it’s important to understand these terms and take proactive steps to protect yourself from such charges.

In this guide, we’ll break down everything you need to know about return item chargebacks, answering questions like:

• What does a return item chargeback mean?
• What is the difference between return item chargebacks, credit card chargebacks, and refunds?
• What do you do if you’ve been charged a return item chargeback?
• How do you avoid return item chargebacks?

We’ll also show you how virtual cards can help you avoid various unexpected fees and charges while protecting you from fraud.

What Does a Return Item Chargeback Mean?

A return item chargeback is a fee a bank may charge when a check is returned due to an issue that’s preventing the transaction from going through. Different banks might use various names to describe this fee, such as “deposited item returned fee,” “rejected check fee,” or “bounced check fee.”

As a penalty for an unsuccessful payment attempt, the return item chargeback fee can range anywhere from $10 to $20. Bank of America, for example, charges its customers a $12 fee for returning a deposited check^[1].

Some of the reasons you may be charged this fee include:

• Insufficient funds
• Account freeze or closure
• Incorrect information on the check (wrong date or payee name)

The return item chargeback fee is deducted from the depositor’s bank account. If someone writes you a check and it’s returned, you might be responsible for paying the return item chargeback fee. Simultaneously, the originator might incur a non-sufficient funds (NSF) fee for the same check if it was returned due to insufficient funds^[2].

In some cases, the bank may initially deposit the funds in your account but later issue a return item chargeback, withdrawing those funds and charging you an additional fee. For example, this might happen when you deposit the check too close to its expiration date, causing it to bounce.

What Is the Difference Between Return Item Chargebacks, Credit Card Chargebacks, and Refunds?

Despite the name, return item chargebacks are unrelated to chargebacks involving credit or debit card disputes. The former are strictly between the bank and the customer depositing the check—they don’t involve merchants or card transactions.

On the other hand, regular chargebacks are one of the possible outcomes of a payment dispute, where funds are transferred from the merchant to you due to fraud, payment errors, or other valid reasons.

Finally, a refund is when a merchant voluntarily returns the funds back to you if you cancel an order or return an item you purchased from them. Refunds are a direct resolution between the customer and merchant without involving banks or a formal dispute process.

Below is a table summarizing the key differences between the three:

What To Do if You’ve Been Charged a Return Item Chargeback

If you’re charged a returned item chargeback fee for a failed check, you can take these steps to address the situation:

1. Check your available balance—To avoid overdraft fees or fees for multiple failed payment attempts, make sure you have enough money in your account to cover the fee.
2. Ask the bank to waive the fee—Banks might reverse the fee if this is the first time a check you deposited was returned and your account is in good standing.
3. Reach out to the check writer—Explain the situation and request immediate payment plus reimbursement for the fee. If it’s a business or organization, they may issue a new check or offer compensation.

If you experience repeated issues with the same payer, you can insist on alternative payment methods or advance payment to protect yourself from future fees.

How To Avoid Return Item Chargebacks

Dealing with return item chargebacks is frustrating—not only does your payment fail, but you also get charged a fee. Even worse, you may not even realize you’ve been charged until the money is debited from your account.

By taking proactive steps and following the best practices mentioned below, you can significantly reduce the risk of returned item chargebacks:

• Keep track of your account balance—If you’re writing the check, make sure you have enough funds. It’s recommended that you maintain a surplus in your account to cover any unexpected charges.
• Set up account alerts—Many banks offer notifications for low balances, helping you avoid accidental bounces or overdrafts.
• Verify check details—When sending checks or ACH payments, double-check the account information as well as the date, amount, and signature to avoid errors that could lead to returned transactions.
• Use more reliable payment methods—When using digital payment methods like bank transfers and debit or credit cards, you generally won’t be penalized for returned items or failed transactions.

Other Charges and Fees Customers Need To Know About

While return item chargebacks can catch you off guard, they aren’t the only type of unexpected charges you might incur when dealing with financial transactions. Other common banking and payment-related charges to watch out for include:

• Overdraft fees—Banks may charge a hefty overdraft fee per transaction if your account balance goes negative.
• Unauthorized charges—Fraudulent transactions can happen when your bank or card details are exposed to potential hackers. Getting these funds back requires you to go through a formal dispute process, which can be lengthy and complex.
• Subscription and auto-renewal charges—Many services require a card on file for free trials, but auto-renew at full price if you forget to cancel. Some even make it difficult to opt out, leading to unwanted overcharges.
• Charges due to merchant errors—Some merchants may accidentally charge twice or for incorrect amounts, and resolving these disputes can take time.

These charges are particularly frustrating because they often occur without real-time notifications, making it difficult to track and control spending. Many users discover them only when reviewing their monthly statements, by which time getting refunds can be complicated and time-consuming.

If you want to avoid many of these issues in the first place while enjoying a seamless online payment experience, an effective option is using virtual cards instead of payment methods like checks or debit cards.

Avoid Unnecessary Fees and Charges With Virtual Cards

Virtual cards function like regular payment cards for online transactions while adding a protective layer by keeping your actual debit or credit card details private. They come with a randomly generated 16-digit number, expiration date, and CVV code, and you can use them anywhere regular cards are accepted.

While virtual cards can’t directly prevent return item chargeback fees, they can shield your funds from other types of unexpected charges. With a specialized virtual card provider such as Privacy, you also get bank-level security and advanced card control features that can help you control who can charge you and how much.

Privacy Virtual Cards—Seamless Payment Experience Without Surprise Charges

Privacy is a BBB^®-accredited and PCI-DSS-compliant company trusted by over 250,000 users. After linking your bank account or debit card to Privacy, you can generate unique virtual cards for one-time or repeated use at most local or global merchants that accept U.S. Visa^® or Mastercard^® payments.

Privacy lets you generate three types of cards, each offering specific card controls and protections against unexpected charges:

1. Single-Use Cards—These cards close automatically moments after the first transaction, making them a good choice for one-off purchases or shopping on new or unfamiliar websites.
2. Merchant-Locked Cards—These cards “lock” to the first merchant you use them with, blocking transactions from other vendors. You can use them for subscriptions and other recurring payments.
3. Category-Locked Cards—These cards “lock” to a predefined merchant category, such as retail or education. They can help you with budgeting and controlling your expenses.

You can pause or close your virtual cards at any moment, and Privacy will decline further charges. This feature helps protect you from hidden fees or unwanted charges, such as renewal charges that might occur even after you’ve canceled a subscription.

Privacy also lets you set a custom spending limit on all virtual cards. Transactions exceeding the limit will be blocked, protecting you from overdraft charges or unexpected billing errors.

Convenience Features You Get With Privacy

To make your online shopping experience seamless and more convenient, Privacy offers numerous helpful features, including:

• Browser extension—Available for Firefox, Chrome, Edge, Safari, and Safari for iOS, the Privacy Browser Extension autofills card details at checkout, making online transactions quicker and more convenient.
• Mobile app—The Privacy App for iOS and Android lets you create and manage your virtual cards on the go, helping you track transactions and receive notifications in real time.
• 1Password integration—Privacy's integration with 1Password enables you to create, store, and manage your virtual cards and other sensitive information within the 1Password browser extension, eliminating the need to switch platforms or manually enter card numbers.
• Shared Cards—This feature lets you share your Privacy Virtual Cards with trusted friends and family members without revealing your real card details.
• Card Notes—Privacy allows you to add custom notes and descriptions to each card, making it easier to track merchant names or renewal dates for your virtual cards.

How To Get Started With Privacy

If you’re a U.S. resident over 18 years of age and have a checking account at a U.S. bank or credit union, you can join Privacy in four simple steps:

1. Visit the signup page
2. Enter your KYC details to verify your identity
3. Connect a funding source (bank account or debit card)
4. Request and generate a Privacy Virtual Card

Privacy offers four monthly plans, as shown in the following table:

Resources

^[1]Bank of America. https://www.bankofamerica.com/content/documents/deposits/service/pdf/docrepo/PCH-00-53-5420NSB.pdf, sourced, February 12, 2025

^[2]Federal Register. https://www.federalregister.gov/documents/2022/11/07/2022-23933/bulletin-2022-06-unfair-returned-deposited-item-fee-assessment-practices, sourced, February 12, 2025

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