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Can a credit card payment be reversed?

Credit cards provide consumers with significant protection when they are seeking a refund for a good or service. In fact, they offer greater protection than cash or debit card payments.

That’s thanks to Section 75 of the Consumer Credit Act, as well as chargeback. Here are details on what they are, as well as how consumers can seek to reverse a credit card payment in order to successfully obtain a refund.

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What is chargeback?

Where the cost of a good or service paid for by credit card is less than £100, consumers will need to recover their money through chargeback. This is where a retailer’s bank withdraws funds that were deposited by the consumer and transfers them to the consumer as a refund.

Chargeback applies to a variety of scenarios, including where goods do not match their description or were not delivered. Otherwise put, there has to be evidence of a breach of contract by the retailer.

Notably, the retailer may dispute the chargeback. As a result, there is no guarantee that the amount paid will ultimately be recovered, while there is no joint liability between the consumer and the credit card issuer.

Chargeback claims can be initiated by contacting the card issuer. It’s required that they’re submitted within 120 days from the date the transaction was made. It is therefore important that consumers seek to begin the process as soon as is reasonably practicable.

Now what about this Section 75 bit?

Where the cost of a good or service is between £100 and £30,000, Section 75 of the 1974 Consumer Credit Act applies to credit card transactions made in any country. This provides consumers with significantly greater protection than under a chargeback scenario, since the credit card issuer must take the same responsibility as a retailer if a good or service is not as described.

Section 75 also applies to amounts spent on a credit card that are under £100, but where the cost of the good or service exceeds £100. Does that sound a bit confusing? Here’s an example: If a good costs £250 and an individual pays a 10% deposit of £25 and the remainder in cash, Section 75 would still apply. However, if two products are bought which individually cost less than £100 but together cost more than £100, Section 75 would not apply.

Crucially, there must be a direct link between the debtor (i.e. the consumer), the creditor (the credit card company) and the supplier (i.e. the retailer) in order for Section 75 to apply. Payment systems such as PayPal and Google Payments may disrupt this link, and could mean that Section 75 does not apply to a transaction.

As with chargeback, consumers should contact their credit card issuer directly and as soon as possible when seeking to obtain a Section 75 refund. 

What this means for you

Using a credit card to make payments for a good or service which costs £100 or more can be an excellent idea. It provides significantly greater protection than other payment methods should a good or service not be provided as promised.

Even for goods and services that cost less than £100, credit cards still provide some possible protection for consumers, although chargeback is not a legal requirement for credit card issuers. However, with credit cards also offering a variety of other benefits including convenience, cashback and rewards, using them on a regular basis for a variety of goods and services seems to be a worthwhile move for many consumers to make.

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