Force Majeure Chargebacks

Force majeure chargebacks refer to a type of chargeback claim initiated by customers when they argue that unforeseen circumstances covered by a force majeure clause in a sales agreement have relieved them of their obligation to pay. The term "force majeure" translates to "superior force" and is a legal concept that refers to events outside of the control of the parties involved, such as natural disasters, wars, or in recent times, global pandemics like COVID-19.

These chargebacks have been particularly prevalent during the COVID-19 pandemic, affecting sectors like travel and hospitality dramatically. Customers who booked travel, accommodations, or events that were later canceled due to government lockdowns and restrictions often sought refunds through chargebacks, citing force majeure clauses. These clauses typically state that if certain extreme events occur that are beyond the control of either party, the obligations of the affected party are suspended, and they may no longer be bound by the terms of the contract.

Handling force majeure chargebacks can be complex, as it involves legal interpretation of contract terms and the specific circumstances of the cancellation or non-performance. Merchants are advised to clearly state their policies regarding cancellations and force majeure in their sales agreements and to communicate proactively with customers during such events to find mutually acceptable solutions before disputes escalate to chargebacks. This approach can help manage expectations, maintain customer relationships, and potentially mitigate financial losses associated with such chargebacks.