Return item chargeback

Return item chargeback is a fee that banks apply when a deposited cheque is returned. The bank deducts this fee from the customer’s checking account. This fee is also called a deposited item returned fee or returned cheque fee. It applies only when a cheque is invalid or cannot be processed.

Return item chargebacks are not the same as card transaction chargebacks. They have no link to credit or debit cards and do not affect merchants. In card disputes, a cardholder challenges a transaction and the bank debits the merchant’s account. That process protects consumers.

Return item chargebacks, however, are used by banks to hold customers accountable. They help ensure that anyone depositing a cheque has checked that it is valid.