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

[Jack_OC]

My question was what is the basis for saying chargebacks are “fraudulent” and “illegal”. Do you understand what those words mean?

 

[mickismick]

My question was what is the basis for saying chargebacks are “fraudulent” and “illegal”. Do you understand what those words mean?

I've always interpreted the term "chargeback fraud" as actual fraud per the name. What OP has done is defined as chargeback fraud as they entered a contract that they now disagree with (change of mind) and have initiated a chargeback. Is my interpretation of chargeback fraud being actual fraudulant behaviour incorrect?

In this case, my interpretation is that OP entered a contractrual agreement with a supplier, and when OP didn't get his/her full refund back (as they weren't entitled to it per ACCC's advice), they initiated a chargeback.

As this chargeback breaks a legal contract that they entered, I used the word illegal. I should have used the term that OP "breached the contract". Is it against the law? No. Is it breaking a legal contract? Yes.

So I redact the illegal part, but my understanding of chargeback fraud is still the same. Happy to be corrected.

 

[hydrabyss]

I'll keep this reply short for you, as clearly your attention/comprehension span is very limited, based on your earlier post.

Hilton have never cancelled a hotel room on me. For any reason.

And whenever I have cancelled (probably 100 times, for many reasons) I click the little button that says CANCEL BOOKING and I get 100% of sum paid, back in cash to my card - not a Hilton IOU. No email threats. It is called CUSTOMER SERVICE.

I have been a Hilton Diamond for 10 years, so this has had no bearing on my status.

Sorry I missed this post. I am just pointing out many companies don't reply kindly to chargebacks.

 

[glasszon]

The topics has really went off course. From a practical viewpoint, generally collection company will only take debts that can clearly be proven so to not get into any legal trouble and to maximize the chance of recovery.

Given there will be plenty of bad debts to go around after this coronavirus is done and dusted, I don't see VA will be able to offload those disputed transactions to a collection company, assuming VA is still around at that time, so all VA is doing now by threatening collection is to generate bad rep with the customers. I don't foresee the type of customers who initiate chargebacks will now suddenly freak out and pay VA again.

 

[amaroo]

Call your CC and just do it.

 

[Happy Dude]

So why don't VA dispute the chargeback with the credit card and force the chargeback to be reversed? That's what happened to a lot of affected pax in the Bestjet debacle. Banks even sent letters advising that successful chargebacks could be clawed back, and plenty were (only to be reversed again). Even closing the account by the pax didn't provide protection for the chargeback apparently.

 

[N860CR]

So why don't VA dispute the chargeback with the credit card and force the chargeback to be reversed?

That would be the correct process. VA advises the bank that the charge is valid based on “xx_x” so the chargeback should not proceed. The bank then rules on evidence. VA know the banks will not rule in their favor (as they didn’t provide the service paid for), so they don’t bother following the correct path and bully the customer after the fact.

A little blurb on the ACCC website does not constitute a ruling nor a fact.

 

[amaroo]

So why don't VA dispute the chargeback with the credit card and force the chargeback to be reversed? That's what happened to a lot of affected pax in the Bestjet debacle. Banks even sent letters advising that successful chargebacks could be clawed back, and plenty were (only to be reversed again). Even closing the account by the pax didn't provide protection for the chargeback apparently.

VA = worth the effort. Everyone is reading the news.... there is no chicken little - the sky really is falling in!

 

[CaptJCool]

There’s a thing called voidable preferences under liquidation....

Given Govt changed fhe law to ban creditor actions to force liquidation, it’s upto Virgin. Deep pockets of overseas shareholders or Govt loan ? Muses

Reassurances have been provided by Govt that “we want a strong 2 airline policy”. Suggests they will be there on the other side. After all there’s a lifeline with $750 pw per employee. Pity all the ABN Labour hire arrangements ....

 

[odysseus]

So why don't VA dispute the chargeback with the credit card and force the chargeback to be reversed? That's what happened to a lot of affected pax in the Bestjet debacle. Banks even sent letters advising that successful chargebacks could be clawed back, and plenty were (only to be reversed again). Even closing the account by the pax didn't provide protection for the chargeback apparently.

They may be. Some banks give the credit immediately you lodge the dispute so as not to put the customer out of pocket while the claim is investigated. If they decide in the vendor's favour, the charge is reinstated. Based on the OP's description it sounds like the credit was given swiftly, potentially before VA had time to respond. I've usually seen them allow the seller a month to provide documentation to support the charge, but give the refund upfront to the customer pending the outcome.

 

[Happy Dude]

That would be the correct process. VA advises the bank that the charge is valid based on “xx_x” so the chargeback should not proceed. The bank then rules on evidence. VA know the banks will not rule in their favor (as they didn’t provide the service paid for), so they don’t bother following the correct path and bully the customer after the fact.

A little blurb on the ACCC website does not constitute a ruling nor a fact.

Neither did Bestjet, who simply stopped paying the airlines for tickets, but that didn't stop the banks from reversing successful chargebacks, even though the airlines (usually reluctantly) provided written evidence of non-payment.

It seems as though VA would have a reasonable chance of convincing the banks that chargebacks are not always applicable (in some cases at least).

 

[bigbadbyrnes]

what happens if chargebacks are enacted for existing tickets if they go into voluntary administration?

 

[ozstamps]

what happens if chargebacks are enacted for existing tickets if they go into voluntary administration?

Again many newer members here did not live through the Ansett collapse.

MANY were saved via credit card companies doing just that.

And many of our armchair self-appointedfinancial/legal "experts" here do not seem to realise, that card companies do not treat all cardholders the same.

Others here have disputed the card charge, and also will prevail.

As I posted, I've had my same credit card for 40 years, and spent very many millions on it. ALWAYS stay in credit, never missed a payment.

There are those who churn and burn new cards regularly to get the 50,000 sign up points etc. Good for them. I can't be bothered. The Card can however, see that activity, and will side accordingly, in borderline issues etc.

My card may well wear all this internally without my knowing - not my affair. I got my money back in full for tickets that were cancelled on me and for flights I never took. That keeps me happy.

 

[bigbadbyrnes]

MANY were saved via credit card companies doing just that.

That's good news - so chargebacks are able to be initiated after a company enters administration or liquidation.

 

[ozstamps]

I repeat - card companies do not treat all cardholders the same.

And by the same token, not all banks act the same way.

Some relevant light reading from the time -

Travel agents bank on court action

www.theage.com.au

Travel agents are considering suing the banks, particularly National Australia Bank, over liability for thousands of dollars in customer refunds for flights racked up on credit cards before Ansett collapsed in September.

As the ramifications from the collapse continue to reverberate throughout the travel industry, the Australian Federation of Travel Agents confirmed on Friday it was examining the possibility of legal action over who should pay amounts owed to customers left stranded.

NAB refused to specify an amount, but said it had already lost "tens of millions" from the so-called "chargeback" losses from Ansett flights that were not provided as a result of the collapse. The bank has used its absorption of the losses to argue for curtailing the Reserve Bank's reform agenda for credit cards.

NAB and other banks have warned that the Ansett collapse is an example of the risks posed to the financial system if companies that are not as financially strong as the banks enter the credit card market.

NAB's submission to the RBA blacks out a reference to the bank's chargeback losses to Ansett, claiming the information is confidential.

Under credit card rules, the merchant acquirer, or the bank that provides credit card processing facilities, is obligated to refund customers who pay for services on credit but do not receive the service paid for.

But in the case of travel agents, in many transactions they are deemed to be the merchant and not Ansett, where credit card companies are well down the list of unsecured creditors.

Peter Culham, of South Coast travel agency Travelscene, is battling NAB over $11,000 in flights that were not provided by Ansett (and Canada 3000 and Connection Holidays) but processed through his credit card merchant facility with the bank. Mr Culham, who has written to the Australian Competition and Consumer Commission to complain over NAB's handling of the matter, said NAB had already debited the sum from his account without his authority.

 

[ozstamps]

Some more light reading on the Ansett mess - from RBA -

https://www.rba.gov.au/payments-and-infrastructure/credit-cards/iii-submissions-vol1/g6-aba-supplement.pdf

Among the many significant consequences of the Ansett insolvency are consequences for participants in credit card schemes, particularly Ansett’s acquirer for the schemes, those cardholders who pre-purchased Ansett tickets with their cards and those who received card-linked Ansett Global Rewards loyalty points.

The episode thus has important implications for some of the RBA’s deliberations on card scheme rules, particularly in respect of proposals to liberalise entry into credit card acquiring. The liability of National Australia Bank, in its capacity as acquirer to the Ansett group of companies and for travel agents doing business with them, has yet to be determined, indeed cannot at present be determined.

However, based on early estimates, ABA believes that the ultimate loss suffered by NAB will be very substantial. This cost will be a combination of the amount of the charge backs, to the extent that they are not recoverable from the merchants, and the actual operational expense of processing the charge backs.1

This money will be repaid, via their credit card issuers, to people who pre-paid for Ansett tickets using their credit cards, Of course, that travel will evidently not now be delivered. This refund is guaranteed by the rules of the credit card schemes to all people who present an unused flight coupon and request a refund.

 

[Must...Fly!]

So, moving on to the current year of 2020...

I found this post on OzBargain and I thought it could be helpful to members here as it explains some things I (and others) were trying to get across in the earlier part of the thread. It seems the person who wrote it is in the industry, so more clued in to what actually happens as opposed to educated guess work (no offence intended to anyone trying to put their opinion/thoughts forward).

In recent weeks I have seen a lot of posts relating to (mostly) travel related events being cancelled and posters asking how they can get a refund instead of a Credit or Voucher.

In the comments its almost certain that someone will comment
"Contact you bank and do a charge back"
"just charge it back"

The reason I am posting this is to point out a few issues with suggesting this or taking this action in the current climate.

Firstly lets look at your rights as a consumer in the current climate you can see the rules here:
https://www.accc.gov.au/consumers/consumer-rights-guarantees

One thing to be aware of is that the fact that most of these cancellations are a result of Government decisions, this in some ways reduces your rights under consumer guarantees.

So If an airline offers me a voucher can i just charge it back?
Well let me explain (from working in the industry) how Charge Backs work:
1) Consumer contacts bank and raises a dispute
2) Consumers Credit Card is credited with funds within 3-5 Business days if claim fits into bank criteria.
3) Money is reversed from merchant and merchant is advised of reasons for reversal
4) Merchant is asked to provide evidence that the transaction is legitimate (signed contracts, Acceptance of terms and others)
5) Bank reviews evidence and either closes in Customer or Merchants Favor
IF FOUND IN MERCHANTS FAVOR THE MONEY WILL BE TAKEN BACK FROM CUSTOMER

So, can you charge it back to the Airline if they only offer you a credit?

Short Answer: NO

Long Answer: The airlines are permitted under the law to offer you a credit in place of a refund due to the cancellation being a result of government action. Any attempt to charge back will fail, the airline will appeal and they WILL 100% WIN and you will be out of pocket and there is a pretty good chance you will be blacklisted by that airline.

Charging back to your card will not end up working in your favor long term, almost every operator (airline, accommodation and so on) will have measures in place to fight charge backs and if you ever want to use them again you risk not being able too due to your reversal of the payment against their terms and conditions.
Anyways i am anticipating some heated comments below

But thought i would share some insight as these facts seem to be ignored or glossed over in comments on certain posts

Lets Talk about Credit Card Chargebacks (COVID-19 Related)

www.ozbargain.com.au

 

[Jack_OC]

I've always interpreted the term "chargeback fraud" as actual fraud per the name. What OP has done is defined as chargeback fraud as they entered a contract that they now disagree with (change of mind) and have initiated a chargeback. Is my interpretation of chargeback fraud being actual fraudulant behaviour incorrect?

In this case, my interpretation is that OP entered a contractrual agreement with a supplier, and when OP didn't get his/her full refund back (as they weren't entitled to it per ACCC's advice), they initiated a chargeback.

As this chargeback breaks a legal contract that they entered, I used the word illegal. I should have used the term that OP "breached the contract". Is it against the law? No. Is it breaking a legal contract? Yes.

So I redact the illegal part, but my understanding of chargeback fraud is still the same. Happy to be corrected.

Sorry, just to reiterate as many seem to have trouble with this part, we are talking about a situation where the airline cancelled the flights. This is not a case of the customer changing their mind.

As some have pointed out, these are unusual circumstances, and there is a view that airlines are within their rights to refuse refunds in this situation. That view may turn out to be correct, but it’s far from black and white.

In any case, someone requesting a chargeback in accordance with the criteria set by the credit card issuer is clearly not acting fraudulently. I previously posted the relevant criterion published by Citibank. They state that a customer can request a chargeback if the merchant is unable or unwilling to deliver the service. VA is definitely unable and/or unwilling to deliver the service in the OP’s case, so this criterion is met. Even if it turns out the conclusion is that VA can keep the money, there is simply no way that anyone could characterise a chargeback request as fraud in this situation.

 

[Pushka]

I wish we had the US Department in Australia.

https://www.transportation.gov/sites/dot.gov/files/2020-04/Enforcement%20Notice%20Final%20April%203%202020.pdf

 

[ozstamps]

So why don't VA dispute the chargeback with the credit card and force the chargeback to be reversed? That's what happened to a lot of affected pax in the Bestjet debacle. Banks even sent letters advising that successful chargebacks could be clawed back, and plenty were (only to be reversed again). Even closing the account by the pax didn't provide protection for the chargeback apparently.

Bestjet were a MEGA DODGY Travel agent with Banned as Director Spivs acting as de-facto Directors. Anyone who gave/gives money to cowboy outfits like that, DESERVES issues.

I booked direct with Virgin - the airline supplier, who simply did not deliver what was paid for, they cancelled my flights, when not required to by any law, never advised me of this, and never added a travel credit, hence I got a full card refund. Very different to booking via cowboy Spiv travel agents.

In the end it seems that Bestjet clients got their money back via credit cards.

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