Chargebacks are designed to protect consumers from erroneous or fraudulent transactions. When a chargeback is initiated, the bank effectively reverses the transaction and refunds the customer, deducting the amount from the merchant's account. This process often involves an investigation to determine the validity of the claim. Chargebacks can be problematic for merchants as they result in lost revenue and potential penalties from payment processors for excessive chargeback rates. Additionally, if a chargeback is filed without valid evidence, it can lead to further complications, including chargeback fraud.