If you have made a purchase only to discover that the company you dealt with has gone bust, or disappeared before you received your goods, you may be able to claim your money back through the Chargeback scheme.
When you use a credit card to pay for goods or services worth between Ј100 and Ј30,000 you are protected by law if the company you use goes under, or if you do not receive what you have paid for.
This protection is thanks to the joint liability placed on your credit card provider by Section 75 of the Consumer Credit Act .
Unfortunately the same legal protection is not extended to debit card payments, or credit card payments under Ј100; but the less well known Chargeback scheme could still help.
What is the Chargeback scheme?
The Chargeback scheme is an agreement between card issuers to return your money should something go wrong with your debit or credit card transaction.
This scheme can be used to get your money back if an order you make fails to arrive, the company you buy from goes bust, or if goods or services you receive are not as described or are in an unsatisfactory condition. But it can only be called upon if the retailer cannot or will not help.
The Chargeback scheme is not enforced by law in the same way as Section 75 protection for credit cards.
Chargeback is designed to 'plug the gaps' of Section 75 credit card protection by offering similar cover to debit card purchases and smaller credit card transactions.
However the main difference is that Chargeback is a voluntary scheme based on rules set by card issuers such as Visa and Mastercard.
What transactions does Chargeback cover?
The Chargeback scheme will cover purchases of any value made on credit or debit cards.
This means that debit card transactions are covered by the Chargeback scheme - even though they are not covered by Section 75 cover.
Credit card transactions of any value are also covered by Chargeback, but if you can use Section 75 protection to pursue your refund you will have a much stronger case.
What type of transactions are not covered?
There are some transactions that may not be covered by the Chargeback scheme - for example when you use PayPal to purchase something.
This is because your card transaction is deemed to have been with PayPal rather than the merchant themselves.
If you find yourself in a situation where you have used PayPal to make a transaction but have not received your goods or services as promised, then you will need to try claiming through the limited PayPal Dispute Resolution Process if the retailer is not able to help.
If the Paypal Dispute process fails you may be able to make a claim through the Chargeback scheme, as long as you can show that you used your card to buy the disputed goods through PayPal.
However as there is no legal obligation to return your money, the outcome will rest on the decision of your card provider.
How can you make Chargeback claim?
To make a Chargeback claim you will need
to contact your card provider within 120 days of discovering the problem.
With online purchases, this date is usually considered to be the delivery date of your order, while if you have booked tickets for flights or a train it would be your departure date.
If you have made the purchase in person, in store, then the 120 day period would start from the date of the transaction.
However, in almost all cases you will need to have attempted to resolve the issue with the retailer before you can complete a Chargeback request.
Regardless of the specific process you are likely to need proof of the transaction, ideally in the form of receipts or online order confirmation.
If you do not have these, then you should be able to use account statements as proof of the transaction to pursue the claim.
Once all attempts to reclaim your money from the retailer have failed you are free to visit your nearest bank branch, or to contact your bank by phone and tell them that you want to make a claim through the Chargeback scheme.
You may find that some staff members at your local branch or call centre are unaware of the Chargeback scheme, as it is not something that is as widely publicised as the Section 75 protection you receive from your credit card.
If you find this is the case you will need to ask to speak to with a supervisor or suggest they check with a manager regarding the procedure for the Chargeback scheme.
Each bank's process for completing the Chargeback application is likely to be slightly different; some may ask you to complete a claim form while others may just ask you a series of questions about the transaction.
How long will it take to get your money back?
When you raise a Chargeback request you should be informed how long it will take to resolve, regardless of the procedure your card issuer uses.
The time it takes for your money to be returned will vary depending on which bank you have made the claim through, and how straightforward the circumstances are.
Some banks will re-credit your account when you initially request the Chargeback but reserve the right to take the money back if your claim is unsuccessful, others will investigate the claim before making a decision.
What if my claim is rejected?
If your Chargeback request is rejected by your card issuer then you are entitled to be told why.
However, as the Chargeback scheme is not supported by any legal obligation you may struggle to force the bank to overturn their initial decision.
If you feel that your claim has been poorly treated then you are still free to complain to the bank about the process and ultimately take your case to the Financial Ombudsman.
However, you cannot take your bank or card provider to court over failing to honour a Chargeback as there is no legal backing to the scheme.
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