Virgin getting very HEAVY re completed credit card refunds. Sad to see.

[Rob.au]

On what legal basis have they said this? It's not under the ACL. Contractual grounds possibly

ACL covers general responsibilities on providers of goods and services. There are some obligations for refunds under ACL, but the general position seems to be that in this instance a travel credit satisfies the ACL.

Credit card scheme rules are contractual agreements that underpin the schemes. Typically there are four main players - Cardholders, Issuers (who provide cards to cardholders), Merchants and Acquirers (who provide services to Merchants). Many banks are both Issuers and Acquirers, but for each transaction it comes down to who the Cardholder got their card from and who the Merchant has their Merchant Agreement with.

Issuers and Acquirers have direct contractual relationships with the card schemes they issue cards for/provide merchant services for, and these will include signing up to the scheme rules. Their T&Cs with their respective customers will uphold the scheme rules.

In a situation like this, the power of chargebacks come from the scheme rules, not from ACL and certainly not from any T&Cs of the merchants. As oz_mark said...

Chargebacks don't exist because of the ACL. They exist to give confidence in the particular payment method.
Decisions on chargebacks are made within the scheme rules.

The scheme rules can't break any local laws, but they can certainly add additional requirements. If you want to accept card payments, you agree to the rules, and the rules are pretty clear.

In the Visa rules - for example - Dispute Condition 13.1: Merchandise/Services Not Received applies.

"The Cardholder participated in the Transaction but the Cardholder or an authorized person did not receive the merchandise or services because the Merchant or Prepaid Partner was unwilling or unable to provide the merchandise or services."

"Before the Issuer may initiate a Dispute, the Cardholder must attempt to resolve the dispute with the Merchant or the Merchant’s liquidator, if applicable"

There's obviously a dispute process but ultimately if the Merchant can't provide an allowable objection - and in this situation there doesn't appear to be any (a cardholder is not required to accept a credit, for example) - the Acquirer deducts the amount from the Merchant's account and returns it to the Issuer to return to the Cardholder. If there's no amount to deduct, then the Acquirer covers the loss and becomes a creditor.

As has been pointed out - this protected many consumers with Ansett, who got refunds through chargebacks. My mother still refers to the Ansett example all the time, all these years later... boy did that experience do wonders to instill confidence in the card scheme and its rules.

 

[MEL_Traveller]

As has been pointed out - this protected many consumers with Ansett, who got refunds through chargebacks. My mother still refers to the Ansett example all the time, all these years later... boy did that experience do wonders to instill confidence in the card scheme and its rules.

An airline going bust is different to an airline that is prevented from carrying passengers. It's the latter that airlines are going to try to use in disputing chargebacks.

 

[Rob.au]

An airline going bust is different to an airline that is prevented from carrying passengers. It's the latter that airlines are going to try to use in disputing chargebacks.

Doesn't make a lick of difference in the card scheme rules. The service wasn't provided and it doesn't matter why the Merchant was unwilling or unable to do so. To dispute a chargeback raised under this provision, the Merchant has to prove that the service was provided.

Each scheme has its own rules - I only linked Visa above - but this is a fairly basic principle amongst them.

Just sticking with Visa further here - they released a bulletin about managing disputes during COVID-19, where their stance remains crystal clear and the usual rules still apply.

https://usa.visa.com/dam/VCOM/global/support-legal/documents/managing-disputes-through-covid-19.pdf

They firstly expect the cardholder to try to resolve the dispute with the merchant first, and they expect Issuers to ensure cardholders go through the process required by the scheme rules.

"Merchants can offer a credit or voucher for future use if that is acceptable to the cardholder, but should process a refund promptly if the cardholder declines the merchant’s offer."

You'll notice there's some commentary in there about flights cancelled due to government restrictions, but none of Virgin's flights were prevented from operating by government restrictions. What happened was that government restrictions on individuals reduced demand for flights, which then caused cancellations. All these scenarios are covered in the bulletin and in VA's current situation, they favour the cardholders, though cardholders may well have to persevere due to the overlapping scenarios.

Probably of most interest to Visa cardholders who now hold Virgin Australia credit vouchers is this:

"Question 8: A merchant notifies the cardholder they are cancelling the service and offers a voucher for future use. Even though the cardholder has a right to dispute the transaction and receive a refund, the cardholder agrees to accept the voucher. If the merchant then files for bankruptcy before the cardholder uses the voucher, does the issuer have a right to file a dispute?

Answer: Yes. Since the issuer had the dispute right to get a full refund, the acceptance of the voucher does not change those dispute rights. The cardholder would have to file the dispute in the appropriate time frame which is either 120 calendar days from the transaction date or 120 calendar days from the last date that the Cardholder expected to receive the merchandise or services, not to exceed 540 days from the transaction date."

That should give you reasonable confidence to sit it out for a couple of months beyond your flight date and see what the landscape is like first. I know I'd rather see Virgin come out of VA and end up using my credit on flights. But if things don't look great, I don't have any aversion to using the card scheme rules and letting the Acquirer be the unsecured creditor. I pay the credit card fees - they take the risk.

 

[MEL_Traveller]

https://usa.visa.com/dam/VCOM/global/support-legal/documents/managing-disputes-through-covid-19.pdf


You'll notice there's some commentary in there about flights cancelled due to government restrictions, but none of Virgin's flights were prevented from operating by government restrictions. What happened was that government restrictions on individuals reduced demand for flights, which then caused cancellations. All these scenarios are covered in the bulletin and in VA's current situation, they favour the cardholders, though cardholders may well have to persevere due to the overlapping scenarios.

I read the same rules but can come up with different outcome to yours! If I put myself in the position of being an airline, I see nothing in those rules that says I can't validly dispute the chargeback because my flight schedule has been severely impacted or caused by government action.

The EU has determined CV-19 is an extraordinary circumstance: border and transit ports have been closed, social distancing, isolation requirements, 'do not travel' advice, OHS for crew. Yes, I could still fly my empty plane. But I'm not sure anyone thinks that would be a reasonable position.

I have no issues with Q8. But I don't see the issue of bankruptcy being relevant to the issuing of a voucher for an airline that plans to resume operations.

 

[serfty]

The EU has determined CV-19 is an extraordinary circumstance: border and transit ports have been closed, social distancing, isolation requirements, 'do not travel' advice, OHS for crew. Yes, I could still fly my empty plane. But I'm not sure anyone thinks that would be a reasonable position.

Yes, as an "extraordinary circumstance" no 'compensation' is payable - however full refund for cancelled flights is mandated by the EU should a passenger choose.

IATA are not happy:

Airlines Disappointed with European Commission Guidelines on EU261

IATA and Airlines for Europe (A4E), reacted with dismay to the European Commission’s new guidelines on the application of the EU261 passenger rights regime

www.iata.org

EU directive attached

 

[MEL_Traveller]

Yes, as an "extraordinary circumstance" no 'compensation' is payable - however full refund for cancelled flights is mandated by the EU should a passenger choose.

For sure. But the key issue - for me - is that the EU determined this is not simply a 'choice' by the airline to reduce flights. Grounded planes are the result of government action (or at least events beyond the airlines' control). Without an EU261 or DOT overrides, and with our ACL suggesting a voucher is ok, that would leave pax in Australia to rely on the underlying contract.

 

[serfty]

that would leave pax in Australia to rely on the underlying contract.

Yes, but I felt that the difference between compensation and refund needed to be made clear in the EU context.

 

[MEL_Traveller]

Yes, but I felt that the difference between compensation and refund needed to be made clear in the EU context.

That's right. EU is saying this is outside the airlines' control, but our (EU) consumer law says you must still refund. Australia is saying outside airlines' control and our (AU) consumer law doesn't say you must still refund (voucher is ok). So you're potentially left with the contract. And airlines have different wording in their contracts.

 

[jakeseven7]

My boss was successful in extracting a J class refund from the old VA, but was secured before the business collapsed obviously. Said it hit his credit card yesterday, so they administrators couldn’t stop it obviously!

 

[knagelli]

I have the same issue but with a different merchant, I ended up contacting the Executive Customer Care team with Amex, which is listed on the AFCA website. They agreed with me that a future credit is not an acceptable substitute when it's the merchant who failed to provide the service and issued a refund after it was originally rejected by the disputes team.

Are you able to share the link to find this contact information. I suppose the below is what you are referring to :

Info about finding Financial Firm

Info about finding Financial Firm

www.afca.org.au

 

[glasszon]

Are you able to share the link to find this contact information. I suppose the below is what you are referring to :

Info about finding Financial Firm

Info about finding Financial Firm

www.afca.org.au

Yes, that's correct. But keep in mind that my dispute was relating to a hotel stay rather than a flight, so it's not a perfect match and YMMV.

Before you approach the executive care team, make sure you have exhausted your options with the call centre and its supervisor first, as once the executive care team opens a case, people within the call centre and live chat wouldn't be able to do anything until the case is resolved.

 

[knagelli]

Yes, that's correct. But keep in mind that my dispute was relating to a hotel stay rather than a flight, so it's not a perfect match and YMMV.

Before you approach the executive care team, make sure you have exhausted your options with the call centre and its supervisor first, as once the executive care team opens a case, people within the call centre and live chat wouldn't be able to do anything until the case is resolved.

Thanks for suggesting this. Yes I did try going down that path and ended up with a sorry , we can't help you. You can complain to AFCA if you are not happy with our resolution.

I already have travel bank credits ( dead money ) , so no harm in trying out this way . Let's see what they come back with. On a different note , I guess it is time for me to rethink about Platinum card's annual fees.

 

[freebo]

My circimstances are:

- Booked a return business class flight SYD-LON with VA - flight was operated by Etihad
- Travelled to London no problem
- Shortly before I was due to return Ethiad cancelled my flight when Abu Dhabi shut to transit passengers, no alternative was offered
- Had to book an alternative flight home, at huge expense
- Asked VA for refund which they agreed to but didn't arrive, I disputed half the total ticket cost with Amex, for over $3k, then VA went into VA

Currently Amex has refunded me the amount but does Virgin have any grounds to dispute this?

They did not deliver the service, I was effectively stranded on a VA-codeshare flight, not my choice to cancel and I've had nothing from them at all.

 

[knagelli]

- The day before I was due to return Ethiad cancelled my flight when Abu Dhabi shut to transit passengers, no alternative was offered
- Had to book an alternative flight home, at huge expense (QF on the LHR-DRW-SYD) flight

If I think about the two points , I believe you stand chance to claim travel insurance based on circumstances stated.

 

[Peter D]

At what stage does a booking for a future event become a failure to supply?

Our contract with the airline is a ticket to travel from A to B on a particular date. The terms of the ticket does not guarantee much in the way of time, flight or even a selected seat. All can be varied within reason. I suppose in the case of an unusual event one could even be sent via another airport.

If the airline cancels the ticket and doesn’t issue the contracted compensation then I suppose a failure to supply has occurred and then a charge back may be justified.

If they haven’t notified the traveler then presumably one can turn up at the airport and expect to be taken to one’s destination, all be it at a different time and may be via another airport.

Both QANTAS and Virgin are currently operating a domestic service. If one originally wanted to be in say Sydney on a particular day and they can get you there, has there been a failure to supply.

Whether we may still want to go or not is irrelevant.

 

[knagelli]

Both QANTAS and Virgin are currently operating a domestic service. If one originally wanted to be in say Sydney on a particular day and they can get you there, has there been a failure to supply.

Well sydney is a safe example but say I wanted to be in Uluru/Darwin and I already paid the charges for direct flight which on the day of booking was 2/3 times the charge for 1-stop or 2-stop flight. As per current restrictions , if we say airline is justified to divert me to a different route and take me to destination then how can they justify the premium paid for a direct flight when they did have cheaper options for non-direct flights.

 

[Rob.au]

I read the same rules but can come up with different outcome to yours!

I don't see how you've come to that, but that's okay, you're free as a cardholder to choose not to lodge a chargeback request with your issuer - that's definitely your choice to make. It's quite clear that others are making different choices and are being successful, as per the card rules.

Of course it's important for Cardholders who want to lodge a chargeback to follow the rules and request the refund directly from the airline first.

The EU has determined CV-19 is an extraordinary circumstance: border and transit ports have been closed, social distancing, isolation requirements, 'do not travel' advice, OHS for crew. Yes, I could still fly my empty plane. But I'm not sure anyone thinks that would be a reasonable position.

As has already been called out, this relates only to the EU Transport Compensation provisions, which go over and above a refund (including mandatory compensation payments of between €250 and €600 depending on flight distance), and have no equivalent in Australia or relevance to this discussion. They still mandate refunds for cancelled flights (and the assistance provisions apply too - it's just the compensation component that gets waived when extraordinary circumstances exist).

 

[glasszon]

Thanks for suggesting this. Yes I did try going down that path and ended up with a sorry , we can't help you. You can complain to AFCA if you are not happy with our resolution.

I already have travel bank credits ( dead money ) , so no harm in trying out this way . Let's see what they come back with. On a different note , I guess it is time for me to rethink about Platinum card's annual fees.

So the disputes team denied your claim? Yes, definitely worth escalating it to the Executive Customer Care team, they will do everything they can to help, as Amex has an obligation to lodge a chargeback as long as a valid reason exists, it's not optional.

 

[knagelli]

Amex has an obligation to lodge a chargeback

The chargeback was lodged and closed saying VA is not willing to accept the chargeback and that I will have to do away with their refund policies , which is my case is travel bank credit.

 

[MEL_Traveller]

As has already been called out, this relates only to the EU Transport Compensation provisions, which go over and above a refund (including mandatory compensation payments of between €250 and €600 depending on flight distance), and have no equivalent in Australia or relevance to this discussion. They still mandate refunds for cancelled flights (and the assistance provisions apply too - it's just the compensation component that gets waived when extraordinary circumstances exist).

This has not been called out.

The relevant issue is that the EU has agreed that this is an extraordinary event and directly contradicts the argument that airlines are making the commercial choice to cancel flights - as you proposed in one of your earlier posts.

If the EU is agreeing this is beyond the airlines' control, the argument would probably also be successful in Australia. That means that ACL doesn't apply for the automatic right to a cash refund.

The EU and DOT have stated a cash refund is still required. Australia doesn't have the same protection where the event is outside the airlines' control.