HMV might have refused to honour gift vouchers, but customers can use chargeback facilities to get their money back – and not just in this case, writes CONOR POPE,Consumer Affairs Correspondent
When it comes to demonising credit-card companies as price-gouging monsters who lure us in with the promise of easy money, Pricewatch is rarely found wanting. But credit cards can also come to our aid in unlikely ways.
Two weeks ago, HMV announced that it would not accept Irish gift vouchers, after the company went into administration in the UK. It assured Irish consumers and its employees that it would continue to trade as normal. It then emerged that, as it had not actually gone into receivership in Ireland, it had no real basis to reject vouchers. Suddenly, it shut up shop here and brought in the receivers.
The way it treated its staff was appalling but it was the holders of worthless gift vouchers that made most headlines. The only comfort the National Consumer Agency and the Department of Enterprise could offer such people was to point them towards the chargeback facilities offered by credit- and debit-card companies.
This little-known system offers consumers who buy anything with their credit or debit cards a huge level of protection when it comes to buying everything from vouchers to couches, and while it can take time, the process is simple.
Chargebacks allow you to ask your card provider – typically the bank that has issued the card and not Visa or Mastercard – to reverse a transaction if there’s a problem with something you’ve bought. It applies to all cards, including credit, debit and Laser cards, although the exact rules may vary between the cards. It has no legal basis but is enshrined in the practices of card suppliers around the world.
“The banking term is chargeback but it would be best known to consumers as a dispute-resolution process,” says Una Dillon of the Irish Payment Service Organisation. “There are hundreds of reasons a chargeback process can be implemented.”
Reasons for complaint
You can instigate the chargeback process if a transaction was not authorised by you or if it was put through more than once. So if your card is fraudulently used you can get your money back without difficulty.
Sometimes it is not fraud but human error that leads to a double transaction or amounts that are higher than they should have been hitting your card. “Most consumers never check their statements but if they did they would be surprised at how many errors there can be,” Dillon says. “The payment systems are very highly evolved and extremely complex and generally speaking they work but ultimately they rely on consumers and shop assistants doing everything right.”
Dillon says it is “very important to check statements to make sure the value of the purchase is correct and look out for anything you don’t recognise”. She cites the example of a someone buying an item for €20 and a shop assistant inadvertently keying in €200 or indeed the opposite – an item costing €200 but charged at a rate of €20. “A shop might make a mistake like this and then try and rectify it by charging €180 to a person’s credit card retrospectively but they cannot do this as the second payment has not been properly authorised.”
If an error like this is made, the retailer has little choice but to suck it up.
Chargebacks also apply if a supplier doesn’t deliver the goods or services you paid for – and that supplier can be based anywhere in the world. You can also apply to your bank for your money back.
If you buy goods and they are delivered but are either faulty or not as described you can get a refund through the bank, once you have returned the dodgy product. Sometimes returning an item is impossible. If you buy a blue sofa but the retailer delivers a red one and then refuses to take it back and insists that you take it, you might think you have no choice. You do. You cannot be expected to return the sofa – given its bulk – and it is the retailer’s full responsibility to come and get it. If they don’t, you apply for a chargeback. Scenarios like this frequently see people ending up with their money back and a couch, albeit one that doesn’t match the curtains.
There are other ways chargebacks can come to your aid. As with gyms, hotels are also going under as a result of the recession and many consumers have found themselves painfully out of pocket. Unless, that is, they use their cards to buy. If a merchant has ceased trading – as is the case with HMV – and owes you something, you can get your cash back. Even if the company has no money, you still get the refund and it is the merchant’s bank – not the merchant – that takes the hit.
Even if you have got some of the service you can claim anything outstanding. In 2011, the Dublin gym chain Total Fitness went into liquidation, owing more than 10,000 members around €1.6 million. The liquidator wrote to them saying that as unsecured creditors they could whistle for their money. But members who paid using credit cards were able to reclaim the unused portion of their membership thanks to the chargeback mechanism. If someone paid €800 for a full year’s membership but only three months had expired when it closed, the were able to charge back the balance of 75 per cent, or €600.
The chargeback process is not simple but it does work. If you have an issue with a transaction, you first contact the retailer or supplier. If you are getting nowhere with them, you contact your bank, giving details of the transaction you are disputing and request that they follow it up with the supplier’s merchant. This is the bank that processes card transactions for the shop or the company that debited your card.
Stick to your guns
Don’t be surprised if they push you back towards the retailer as that action is easier for them (and, to be fair, it is a much faster process for the consumer if it works). Once your bank accepts it has to deal with the issue, it contacts the merchant’s bank and outlines your concerns – what happens next depends on the problem.
If you are disputing that you bought a product or claiming that it was faulty or not as advertised, the merchant’s bank writes to the merchant looking for more details. The merchant then has around 60 days to respond. The retailer still has the money but during the process you can insist that the sum that has been debited from your card is frozen so you do not pay any interest.
There are no guarantees your bank will be able to recover the money through chargeback, or that the trader will accept that you were justified in taking the money back. The trader could argue that you are in breach of contract for not paying.
The main requirement for getting your money back is evidence that there’s been a breach of contract. There is also a time limit on claims – typically 120 days – which starts from the day you become aware of a problem. So it is important to act fast once you know there is a problem.
