If you’ve bought something using your credit or debit card and you have a dispute with the retailer or supplier, money is taken without your permission or the goods don’t arrive, you may be able to get a refund from your bank or credit card issuer through something called ‘chargeback’. It’s not a legal right — unlike Section 75 of the Consumer Credit Act — which is consumer protection that covers purchases between £100 and £30,000. How does chargeback work?
The basics of chargeback
If you pay for something using your credit or debit card and you don’t receive the goods you paid for, the company goes bust or you’re charged the wrong amount, you can ask your bank or the company that issued the card to reverse the transaction through ‘chargeback’. The rules say:
1. There is no minimum purchase amount on charge. It doesn’t matter if you buy something costing £5 or £50 — you’re still covered by chargeback.
SAVVY TIP: If the item you’re buying costs more than £100, you’re probably better off making a claim under Section 75 of the Consumer Credit Act because this gives you legal protection.
2. Although it’s a voluntary scheme, all the major credit and debit card providers have signed up to it. Mastercard and Visa credit cards and Mastercard, Maestro and Visa debit cards are covered by chargeback schemes, as are American Express credit cards.
SAVVY TIP: Debit cards under the Switch brand, which were phased out a while ago, didn’t used to be covered by chargeback, only Visa debit cards were. When Maestro replaced Switch, it came under the chargeback scheme. It’s worth knowing that over 97% of debit cards are Visa.
3. There are time limits. You have to make a chargeback claim within the time limits and these vary from card provider to card provider. For example, Visa cards have a time limit of 120 days from the date of the transaction. Time limits vary from 45 days to 180 days.
4. It’s not a guaranteed refund. Chargeback is the process by which credit and debit card companies try and recover the money you’ve paid from the retailer or supplier’s account. However, if the card company can’t get the money back itself, it won’t pass it onto you.
5. Chargeback claims can be disputed. You may receive a refund from your bank but be told that it could be taken out of your account again if your chargeback claim is disputed. You should be told how long the retailer or supplier has to dispute the transaction and therefore when you can be confident that the money is actually yours.
6. Bank staff may not know about chargeback or apply the rules fairly. There’s some evidence that banks staff either tell customers that they don’t have the right to chargeback, when in fact they do, or that they’re not aware of chargeback in the first place. Don’t be put off if the bank or credit card issuer’s first response is that you don’t qualify for chargeback.
SAVVY TIP: If your bank or credit card company turns you down, complain to the Financial Ombudsman Service. It’s free for consumers to use and, if the service finds in favour of you, it can make the bank or credit card company compensate you.
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