How do credticard companies take back money

  lofty29 10:50 19 Feb 2008

Just to satify my curiosity, I have seen on various threads about consumers getting their money back from failed purchases via the CC companies how do they achieve this? can they just dip into a buisiness account, and take the money. suppose the buisiness does not want them to take it????

  Belatucadrus 11:31 19 Feb 2008

I suspect it has a lot to do with how much the business wants to continue trading, if Mastercard or Visa remove their credit card services, the business would in all probability take a hit they could ill afford. It's a case of who has the biggest stick, they provide a service on their terms and if they chose to back the customer instead of the supplier, unless there's some legal wrangle, the card company gets it's way.

  HondaMan 11:34 19 Feb 2008

They do what is called a "chargeback". Don't asik me what it is, but if you link your credit card co to this thread, someone may be kind enough to answer.

  Totally-braindead 11:39 19 Feb 2008

I think Belatucadrus may have the answer there, it certainly makes sense to me.

  spuds 18:25 19 Feb 2008

This might help to explain things click here

  interzone55 21:15 19 Feb 2008

The do a Chargeback against the retailer, used to happen quite a bit when I worked in a shop in Manchester Arndale.

We would have quite a lot of scallies using stolen cards, often they would involve mates who worked on the tills.

If the genuine cardholder noticed the dodgy transactions the CC company would simply deduct the disputed amount from our business account - debiting against any payments due.
We had about a week to appeal before the chargeback was actioned, so it was my job to show that we acted in good faith, so I had to find the disputed transaction slip (not an easy job when we took about £100k a day in December) and prove that we took a signature. If we had followed procedures adequately we were spared the chargeback and the CC company simply absorbed the costs in their fraud provisions.

I remember we had about 75 chargebacks in a week once, and they were all US credit cards that had been stolen from a sorting office in New York and posted to the UK and maxed out in a week across Manchester. We nearly lost about £50k that week, but managed to recover all the charges because every transaction had a signature.

Things are not quite as simple for the fraudsters now we have Chip & Pin...

  lofty29 09:05 20 Feb 2008

Thanks guys, I was more interested in the case of people who had a dispute over dodgy goods who could not get their money back from the retailer but achieved the same via the credit card companies, but assume the process is virtually the same

  interzone55 09:21 20 Feb 2008

Due to the system of "shared liability" the CC / Finance company has 50% liability for the quality of supplied goods. They have to reimburse the customer then seek redress from the supplier.

I had a faulty car bought on finance, have a long and tiresome legal process the County Court awarded in my favour and I was refunded my deposit and payments by the finance company. When the repo man came round to collect my car he congratulated me as I was the first person he knew of who'd won a refund from this particular finance company and I'd opened a massive can of worms.
The finance company immediately launched a claim against the manufacturer (both belong to the same parent - it's like your left hand suing your right hand), and the manufacturer had launched a claim against the dealer for failing to carry out satisfactory repairs.

  HondaMan 10:42 20 Feb 2008

I think you will find that they are, to coin a legal phrase, "jointly and severally liable", which in simple terms means each is liable for the whole amount, but the customer only gets his money once! If the retailer doesn't / won't pay, as happened to me, then the CC company has to pay the whole sum and hope to recover from the retailer. There is no 50/50 split.

  spuds 18:05 20 Feb 2008

Agree with HondaMan post @ 10.42. If the retailer, supplier cannot or will not pay or provide a service, purchased via a finance arrangement (not personal loan finance), then the credit card or finance company have the responsibility of dealing with the matter, and cover the claim in full. 'Equal Liability' under section 75 of the Consumer Credit Act, can be a little misleading.

  Forum Editor 18:51 20 Feb 2008

that the customer doesn't 'get his/her money back' in these circumstances, because it isn't his/her money which has paid for the goods - the money belongs to the card company.

The customer is eventually liable to repay the card company for goods purchased with the card, certainly, but when you use a credit card you are borrowing the money from VISA or Mastercard - it's their money that buys the goods, not yours.

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