How chargebacks can get your money back

By Benjamin Salisbury and Emma Lunn


If you used plastic to pay for goods or services that fell short of the seller's promises, your card could come to the rescue in the form of a chargeback. With a chargeback, you can ask your card provider to reverse a card transaction if there is a problem with goods you have purchased.

Chargebacks could come into play if goods you ordered and paid for do not arrive or are faulty, or if the retailer has gone bust. Chargebacks also help if you are erroneously double-charged for a single transaction, or if fraudulent charges were made on your account (after your credit card is stolen, for example).

Chargeback and Section 75
You likely have heard of Section 75 of the Consumer Credit Act, a legal consumer protection that requires credit card providers to refund customers for faulty goods and broken merchant promises. Chargebacks, however, come into play when Section 75 doesn't apply.

For example, if the goods cost less than the £100 threshold required for Section 75, a chargeback can help. Plus, unlike Section 75, chargebacks apply to purchases on debit as well as credit cards. Some card networks, including Visa and Mastercard, also cover prepaid cards under their chargeback schemes.

However, in contrast to Section 75, chargebacks are not enshrined in law, but are part of the rules of a voluntary scheme that participating banks subscribe to. As a result, chargebacks don't create the automatic joint liability on the card company that Section 75 does.

Also, the chargeback process is not as well known by bank staff, so if you have trouble progressing your claim it's worth asking to speak to a manager.

Chargeback rules
The main credit card networks (American Express, Mastercard and Visa) all offer chargeback schemes, but their processes vary slightly.

There is generally no spending limit on chargeback claims.

"Chargebacks enable cardholders to ask their card issuer to reverse a transaction on their credit card, irrespective of the value," Simon Hall, senior PR manager at Virgin Money, said in an emailed response to questions. "When they spend more than £100 on their credit card, then Section 75 is also available for consideration."

However, there will often be a time limit on initiating a claim. Visa's limit, for example, is 120 days. The clock starts ticking on the day you become aware of a problem.

For example, if a retailer goes bust, it will be the day you find out they won't be delivering the goods in question. If the problem is misrepresented or missing goods, the clock starts the day the goods arrived (or were supposed to arrive). Claims must be made directly through your bank or credit card provider, not to American Express, Mastercard and Visa.

How the chargeback process works
Santander spokesman Andy Smith explains how the chargeback process works at Santander in an emailed response to questions: first, you must call the bank's contact centre with details of the transactions you want to dispute. "If the customer visits a branch, they will be referred to the contact centre," Smith says.

Then, you will be asked to provide the date of the transaction, the amount of the transaction, the merchant name and a description of the dispute. "For certain types of disputes, the customer will be asked for additional information and may be asked to contact the merchant," Smith says.

After you provide the necessary information, the contact centre will investigate the matter. The main requirement for getting a refund is proof that the merchant breached its contract.

"The main requirement is to have all of the key facts and information to support the claim with us within the 120-day limit," said Hall.

As long as you have a valid reason for requesting a chargeback, the process will begin straight away, in most cases, Hall said.

"Where a chargeback is to be processed a completed declaration is required," said Hall. "Once the declaration is received from the customer providing details of the requested refund, the chargeback would be processed and, if not already done, the refund would be applied at this stage."

If the card issuer accepts the chargeback as valid, you will be refunded, generally within 48 hours. It's then up to the card-issuing bank to attempt to get the money from the merchant's bank.

Potential chargeback complications
Your bank charges the merchant's bank the disputed amount. If the merchant's bank disputes the chargeback, things can get complicated. The disagreement may then escalate to arbitration with the credit card network (American Express, Mastercard or Visa), which will make the final decision as to which party is liable..

Is there a chance your bank will revoke your refund if the merchant protests?

"Only after the full review would the customer be re-debited, if there was proof of their involvement," Smith says. "In some circumstances, we may decide to write off the transaction and not debit the customer."

At Virgin Money, Hall said it's possible that a customer could be re-debited, "if the merchant provides information demonstrating the customer has accepted the position in relation to the transaction."

Tips for chargeback success
Richard Koch, head of policy at the UK Cards Association, says chargeback claims should be made through your debit or credit card issuer.

"When making a claim, it is important you contact your card issuer as soon as you identify the problem or are concerned about any transaction," says Koch. "Your card issuer is required to provide evidence about what has gone wrong to make a chargeback claim.

"It is important to note there is a time limit to make a claim, and your card issuer will need to start the chargeback process within 120 days of the transaction or when you were due to receive the goods or services."

You cannot be refunded twice for the same transaction, so if you have received a refund from the retailer already, you will not be able to make a successful chargeback claim.

One final option: if your card provider rejects your chargeback claim, and you think it did so unfairly, you can take your case to the Financial Ombudsman Service within six months of your final correspondence.

See related: Understanding your credit card contract: A 5-minute guide to the small print, Your wallet was stolen. Now what?

Updated: 24 March 2017