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Chargeback rights explained

News Desk

Part 2

Reasons for chargebacks

The Ombudsman pointed out that the purpose of a chargeback is to protect cardholder against abuse by merchants. It is important to note that chargebacks cannot be used by cardholders to defraud merchants.

Some examples of reasons why cardholders typically file for chargebacks include:

  • Products or services are not as described (do not fit the description of what was advertised);
  • Reasons for a not as described chargebacks include damaged or defective merchandise, counterfeit merchandise (if it was described as genuine and turned out not to be) or misrepresentation of the terms of the sale;
  • It also includes items that are received in a damaged state, merchandise that is missing pieces, or tickets that arrive after an event has already occurred. However, it is important to note that items that products which are sold as-is (voetstoots), or the condition of the product is pointed out at the point of sale, are not eligible to be disputed;
  • Another reason for chargebacks when the product is not as described is where the merchandise is not the correct size, colour, quantity (as stated/ordered), or the quality of workmanship does not fit the description of the advertised product; and
  • An example of a chargeback when the product is not as described is where the contract terms and conditions are not as described. For example, the return policy or money-back guarantees were changed without the cardholder’s consent.
  • The merchant is unable to provide the service. This is typically when the merchant has gone out of business or has voluntarily ceased operations with no plan to compensate consumers;
  • The cardholder is not notified that the date of service was unilaterally changed or postponed;
  • The ordered goods did not arrive on schedule, or by the mutually agreed extended delivery date. This may apply even if the situation was beyond the merchant’s control (if the goods did not arrive due to travel delays or quarantine);
  • The cardholder’s flight has been cancelled and the transaction was debited by an online travel agent; and
  • A cardholder typically requests a chargeback if the merchant provides a reasonable alternative instead of a monetary refund but the customer declines and a refund is not provided in a timeous manner. In this instance, the validity of the chargeback will depend on the merchant’s terms and conditions which are usually provided at the point of sale.

Time Limits and the process to be followed for a chargeback claim

It is very important to note that if a cardholder wishes to raise a chargeback, it needs to be filed within 120 days from the transaction processing date, or the delivery date of the goods or services.

Card scheme rules, of MasterCard and Visa, require that the cardholder first lodges a dispute directly with the merchant before approaching the bank for a chargeback. The exception to this pertains to cases of fraud.

The cardholder may also be expected to return/attempt to return the goods to the merchant or cancel the service before requesting a chargeback.

Written documentation (a letter, an email or a dispute form) must be provided to the cardholder’s bank. The cardholder needs to describe the nature of the dispute, and detail all relevant information; this includes the date of the transaction, the amount involved, and proof of dispute sent to the merchant.

Part 3 will be featured in the next edition.

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