Question

Tammy is talented at craft but lacks the cash flow management skills required to run a business. She opens a store, Tammy's Craft Corner, with the help of her son David—a business major. Jane purchases a picture frame from Tammy using a credit card. She notices a crack in the frame and returns it to Tammy. Jane contacts the credit card service provider for a refund. The credit card company removes the sale amount from Tammy's account which is referred to as a(n) _____.

A. incentive
B. liquidity
C. overdraft
D. charge back

Answer 1

The credit card company's removal of the sale amount from Tammy's account after a returned purchase is known as a charge back. This reversal of funds protects the cardholder from charges for disputed transactions like defective merchandise.

Step-by-step explanation:

When Jane returns the cracked picture frame and contacts her credit card provider for a refund, the credit card company removes the sale amount from Tammy's Craft Corner account. This action is referred to as a charge back. A charge back occurs when a credit card transaction is reversed, and the funds are returned to the cardholder by the credit card company. This typically happens after a dispute is initiated by the cardholder for reasons such as defective merchandise or services not received. It's important to note that a charge back can result in a loss of revenue for the business owner and additional fees.