Chargebacks: Some Banking Institutions Are Flaunting the Law

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R&eacute ;chargeback: some banking institutions flout the law

Chargeback is a tool that is supposed to make life easier for consumers, but some are facing a refusal. Banks that issue credit cards often give incorrect information.

Anne-Christine Bélanger telephones at their credit card issuer, Desjardins, to find out how the chargeback works.

Anne-Christine Bélanger buys RPM EXPÉRIENCE tickets online, in December 2019, to give them as a gift to her spouse. She pays $379 for eight laps in exotic cars.

But since the pandemic began, she hasn't heard from the dealer. She ends up believing that her tickets are lost and that she will never see the color of her money again.

Until she comes across a report by The invoiceon RPM EXPÉRIENCE where she hears this:

“I remind you that if you buy your tickets remotely with a credit card, as long as the service for which you paid has not been offered, you can always resort to chargeback.

— François Sanche, animator The Invoice

Anne-Christine Bélanger is watching a report from “The Invoice” about RPM EXPÉRIENCE.

This information gives him hope. She calls her credit card issuer, Desjardins, to find out how the chargeback works. She quickly becomes disillusioned.

“[The customer service agent] asked me, 'This is for an expense from what date?' I obviously mentioned December 2019. She said to me: “Let's see, it's much too late, ma'am, it's not possible […] it's 90 days . It's like that". »

— Anne-Christine Bélanger

During a second call, this time in front of the cameras of La Facture, Anne-Christine Bélanger learns that there is another deadline, a maximum deadline of 540 days. She no longer understands anything.

Desjardins refused our request for an interview, but the institution confirms by email the existence of deadlines of 90 days and 540 days depending on rules set by payment networks, such as VISA or Mastercard.

“For a purchase made well in advance – for a show that would be several months away, for example – the process with the payment networks provides that a dispute can be made within 90 days of the scheduled date of the event. , while remaining within 540 days of original purchase. Note that these are much rarer cases. »

— Valérie Lamarre, public relations, Desjardins Group

But beware, Desjardins is talking about dispute rules here, which have nothing to do with chargebacks.

This response from a banking institution subject to the Consumer Protection Actr is unacceptable, according to Me Claudia Bérubé. Saying to a consumer, “Unfortunately, it's been over 90 days, over 540 days since your transaction was completed…” If […] the consumer respected the law […] and the financial institution adds a time limit that does not exist in the law, it is illegal. […] A merchant who provides information that is false or misleading also commits other practices that are prohibited by the Consumer Protection Act.

Me Claudia Bérubé.

“The Consumer Protection Act is a law of public order, which means that we cannot derogate from it or provide for rules other than those provided for therein and which would infringe the rights of consumers. »

— Me Claudia Bérubé, lecturer at the Faculty of Law of the University of Sherbrooke

When you make a purchase remotely, online or by telephone, when you pay by credit card and the merchant does not fulfill his main obligation, in other words he does not deliver the goods, you can ask the issuer of our credit card to reimburse us.

The financial institution has the obligation to credit the account of its customer if the latter respects the parameters of the chargeback. It is the law.

“Chargebacks were designed by lawmakers to make life easier for consumers, especially those who ultimately deal with an insolvent merchant or one who has gone out of business. Financial institutions that issue credit cards are obviously more financially sound, which justified the legislator to integrate this innovative measure with the emergence of e-commerce. »

— Me Claudia Bérubé, lecturer at the Faculty of Law of the University of Sherbrooke

To see if this type of misinformation from banking institutions is common, we decided to do a test with three other consumers.

All had tickets to participate in different running events , constantly postponed since the beginning of COVID-19. All of them are potentially entitled to a chargeback.

They play along and call their banking institution in front of our camera to request a chargeback.

TD's customer service agent replies to Marie-Josée Goudreault that she is not entitled to the chargeback, that it is out of time.

Marie-Josée Goudreault is a client of the Toronto-Dominion Bank. She bought her tickets in November 2019. The TD customer service agent tells her that she is not entitled to the chargeback, that she is out of time.

To make a claim, you can just do it within [within] 90 days of purchase, a TD customer service agent told him. The banking institution also applies internal rules and ignores the law on chargebacks.

The Toronto-Dominion Bank also refused our request for an interview, but told us by email that the institution abides by the law.

“We are sorry that one of our customers received incorrect information when she contacted our call center, and we are taking steps to ensure that our contact center teams have the necessary information and resources to to prevent such a situation from happening again. When it comes to consumer protection, rest assured that we follow the laws in force in the regions we serve. »

— Caroline Phemius, Public Affairs Director, TD Bank Group

Isabelle Reid, for her part, is a client of Visa Laurentian Bank. Her call jumps from one service to another, but she finally gets the directions. The customer service agent tells him that he must first contact the merchant to request a refund. If after two weeks the merchant still hasn't refunded her or hasn't responded, then she can request a chargeback.

“At least I have a plan, I'll see what happens. I'm continuing, but we'll see in two weeks what people are going to say. »

— Isabelle Reid

Isabelle Reid is a client of Visa Laurentian Bank. Her call jumps from one service to another, but she ends up getting the right course of action.

Three months later, when the deadlines prescribed by law have passed , Isabelle Reid received neither reimbursement nor response from Laurentian Bank. We followed up with the financial institution to find out why it did not respond to its client's chargeback request. Laurentian Bank acknowledges having made a mistake.

“We should indeed have responded to the correspondence from the client. We are sorry that our internal protocols were not followed and have made fixes so that this situation does not happen again.

— Merick Seguin, Senior Advisor, Media Relations, Laurentian Bank

Isabelle Reid, she received a call from the bank. He was finally credited to his account.

Pierre-Luc Ouimet is a National Bank Mastercard customer. He gets a positive response to his chargeback request.

Pierre-Luc Ouimet, a National Bank Mastercard customer, is luckier. He has to wait long minutes on the phone, but he gets a positive answer after explaining that the race he was supposed to participate in 2020 has once again been postponed, without a specific date.

You will have your credit for that amount on your next statement, a National Bank customer service agent told him.

Four chargeback requests, four banking institutions . In two cases, clients received incorrect information.

“It's sad because it deprives the consumer of his rights. The consumer thinks […] "unfortunately I have exceeded my deadline", when this deadline was added, invented by financial institutions, probably to limit chargeback requests. But that is not the intention of the legislator. The intention of the legislator is to allow the consumer to recover his money. »

— Me Claudia Bérubé, lecturer at the Faculty of Law of the University of Sherbrooke

30 days:

As a consumer, you must grant a 30-day grace period to the merchant to accomplish his main mission, if you have not received the good or service on the expected date. You can then cancel your contract at any time, as long as the service or good has not been received. This step can be done orally or in writing.

2 weeks:

If two weeks after canceling your contract, the merchant does not does not refund or does not respond, then you can turn to your credit card issuer to request a chargeback. Please note: this request must be made in writing.

60 days:

After this two-week period, you have two months to turn to your credit card issuer and request a chargeback. Please note: this request must be in writing and must contain the following information:

  • the name of the credit card holder;
  • credit card number and expiration date;
  • merchant name;
  • the date of conclusion of the contract;
  • the amount debited from the credit card account;
  • the amount that the trader is obliged to reimburse;
  • description of goods or services for which the chargeback is requested;
  • reason for cancellation;< /li>
  • the date of cancellation of the purchase;
  • the method of transmission of the notice of cancellation.< /li>

Note that prepaid credit cards do not allow you to request a chargeback.

Source: Office de la protection du consumer

If you believe that you are entitled to a chargeback and your banking institution refuses to credit your account, you can always file a complaint with the Consumer Protection Office against your banking institution. You can also send a formal notice to your banking institution and even sue it for small claims.

The report by Annie Hudon-Friceau and France Larocque is broadcast at The Invoice on Tuesdays at 7:30 p.m. and Saturdays at 12:30 p.m. on ICI Télé.