If you are a victim of credit card fraud, redress is available in the shape of 'chargeback'
I wrote about card skimming and cloning last week and this week I want to look at an area that is directly related and linked to both, and that is, what happens if you are the victim of bank card fraud?
What redress and compensation are you entitled to? The answer will depend on who you bank with and the type of fraud committed.
The good news is that there is a baseline number where you know the maximum amount you can lose, and that number is €150.
When fraudulent activity occurs on a bank card of yours, the ‘Code of Best Practice of the European Banking Debit Payments Industry on Credit-Based Payments’, states the maximum amount a cardholder can be held responsible and liable for on transactions involving lost or stolen cards is €150. You won’t be held liable for any amounts exceeding this amount, provided, you report the card lost or stolen.
However, there are cases even when your card was stolen, where you are held liable for the full amount taken and that is when you didn’t take care protecting its pin number.
According to the Financial Regulator, you may be held liable for the full cost of the fraud in this instance. How might a bank prove this is the case? If they were able to show there were no unsuccessful attempts when your card was used is one example. So make sure there is no indication of your pin number in close proximity to where you keep your card.
The redress scheme for refunding money back into your account is not known by many, and is referred to as Chargeback.
It is a terrific feature to have as part of your debit or credit cards because of the protection it offers. It doesn’t just protect you when your card was used after it was lost or stolen but it entitles you to a refund of monies if you bought an item using your card from a retailer and they subsequently don’t deliver the goods or services you paid for.
If the goods delivered were faulty or not as described in their online brochure or catalogue, you are also entitled to a refund using this chargeback feature. It reverses the transaction that was authorised (faulty or non-delivery of goods described correctly or not) or not authorised (stolen or lost).
If you were reviewing your current account for example and noticed a transaction you know you didn’t carry out, you should immediately contact your card provider, give them details of the amount involved, date it was debited, where it was used etc. and they will follow your query up with the retailer’s bank.
This chargeback facility is particularly useful if you have paid a deposit or paid for something in full and the company ceases trading, because even if the company goes out of business and has no money to give back to you, you still get a refund of the money given, because it is the company’s bank, not the company itself, that has to take the hit.
If you were getting married for example and you were booking a venue, you should use your credit card as the source of the booking deposit. I specifically refer to this because I remember reading last year about a hotel in Sligo that was forced to cease trading on the same day it had a meeting with the Revenue.
The owners of the hotel advised every couple that had paid a deposit, and apparently there were as many as 100 that would receive no refund of deposits. However, if any couple had paid by credit card, their deposit would have been returned.
So, no matter how substantial or otherwise the purchase, your best course of action to protect the amount you paid and purchased, is to use your credit or debit card.
Of the two, I would choose the credit card option as all credit cards provide the chargeback facility whereas some debit cards provide it as well, but don’t cover every instance of loss.
If you buy a good or service online for example, and it wasn’t delivered, and you used a Laser or Maestro debit card to buy it, the chargeback facility isn’t avilable. So, when buying anything online, use your credit card.
Your best course of action, before requesting a chargeback, particularly if you bought something that wasn’t delivered or was damaged when received, is to contact the company you bought it from, and try find a solution with them. If you are getting nowhere and they won’t refund your money, or deliver the goods you ordered, then absolutely contact your bank and request a chargeback.
A chargeback request can be made up to 120 days after the card transaction in question, so you have around four months to dispute a transaction where your card was compromised from either being stolen or lost. The same time period applies to goods or services purchased, and the 120 days starts from the agreed date of delivery.
The retailer where your card was used is given the opportunity to defend your chargeback request so your card provider will first refer the query to the retailer’s card processing company. They then contact the retailer advising them of the queried transaction and request any required documents.
When this happens, the retailer has c. 60 days to respond to the request otherwise the funds will be debited from their account, money refunded to you and the case closed.
Liam Croke is MD of Harmonics Financial Ltd,
based in Plassey. He can be contacted at email@example.com or www.harmonics.ie