Legal Definitions - charge-back

A charge-back is when a bank takes back money that it had given to a customer. This usually happens when a check that was deposited into the customer's account bounces or is not valid.

John deposited a check for $500 into his bank account. The bank credited his account with $500, but later found out that the check was not valid. The bank then took back the $500 from John's account. This is an example of a charge-back.

Another example could be if a customer disputes a charge on their credit card and the bank takes back the money from the merchant's account. This is also considered a charge-back.

These examples illustrate how a bank can take back money that it had previously given to a customer or merchant. It is important to make sure that any checks or charges are valid before depositing or accepting them to avoid charge-backs.