Community Municipal News

Chargeback rights explained

News Desk

Part 1

What are your rights when an online transaction goes wrong?  

The worldwide pandemic, and associated lockdown, have brought about many changes in consumer behaviour. One of which is the surge in online shopping.

As South African consumers adapt to the new normal, where traditional ways of shopping are discouraged in favour of online shopping (the number of card-not-present transactions (card transactions that occur while the buyer and seller are not in the same place) has increased exponentially.

The Ombudsman for Banking Services, Reana Steyn, has advised that her office is receiving disputes daily regarding these transactions. “These types of transactions have become an integral part of most South African consumers’ method of transacting. In the event of disputes with merchants regarding such transactions, most consumers are completely in the dark about their rights and obligations”, Steyn advised.

She added that the OBS notes that the process and rules relating to disputing online transactions are often misunderstood. “This leads to further frustration for consumers,” says Steyn.

She adds that an important part of the mandate of the OBS is to proactively promote consumer awareness of banking matters. The Ombudsman has identified that there is a significant need to raise awareness on what a chargeback is, the purpose thereof, and the circumstances when a chargeback can be raised.

Chargebacks should only be filed by a cardholder (consumer) in extreme situations and should not be used as a first option when seeking a refund from the merchant. The exception to this is instances of fraudulent transactions.

What is a chargeback?

Chargebacks are a consumer protection mechanism. A chargeback is a reversal of a credit or debit card transaction that is initiated by the bank following the request by the cardholder (consumer).

Upon receipt of a chargeback request from the cardholder, the cardholder’s bank will investigate the matter. If it is established that the cardholder’s request is valid, the funds of the transaction will be debited from the merchant’s account and returned to the cardholder.

Issued for and on behalf of Ombudsman for Banking Services by My Press Portal

The Ombudsman for Banking Services (OBS), also referred to as “the OBS”, resolves individual complaints about banking services and products. We do this in an impartial, independent, confidential and speedy manner.

Part 2 will be featured in the next edition.

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