Chargeback: your credit card's built-in protection

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.”