The Consumer Lawyer

Chargeback claims: your questions answered

Close-up of a lot of plastic bank cards.

When buying goods, I always advise that you use your credit or debit card, as these methods of payment afford you a layer of protection if something goes wrong. With a credit card transaction, you will have the benefit of Section 75 protection (if all requirements are met); I have dealt with this in another article. With a debit card transaction, you have the benefit of the Chargeback Scheme (you also have this benefit with credit card payments).

Here’s all you need to know about making a Chargeback claim:

What is the Chargeback Scheme?

It’s a scheme offered by debit, prepaid or credit card providers. It means you can claim a refund from your bank or card provider if something goes wrong with a purchase when you use your card.

However, unlike Section 75, chargeback is a voluntary scheme, and is not underpinned by any law.

When can I use Chargeback?

There are a number of circumstances when you may be able to use Chargeback to recover the money you have spent. Generally, there must have been a breach of contract (or breach of consumer laws) on the part of the trader. Examples of when you can use it are:

  • If your purchase doesn’t arrive
  • You pay for a service that isn’t provided
  • Something you’ve bought is faulty
  • The company you buy from goes bust and you can’t get money back from them
  • The goods or services you’ve paid for aren’t as described, or are in an unsatisfactory condition
  • You’re charged more than agreed for a purchase, or are charged more than once
  • Your card is used fraudulently.

Do I have to approach the trader/retailer first?

Yes, and this is an important first step as your bank/card provider will reject your claim if you haven’t done this. You therefore can only use Chargeback if the trader refuses to give you a refund, or is unable to help (for example, if they have ceased trading).

Is there a time limit for making a claim?

Yes, typically 120 days from the transaction processing date, or from when you expected to receive the goods/service if it’s being delivered. It is important you contact your bank as soon as you identify the problem because the clock may have already started ticking.

There are some scenarios where the Chargeback timeline is longer than the usual 120 days or starts from a different date. If in doubt, contact your bank.

Can you use Chargeback for purchases of any size?

Yes, when you make a Section 75 claim, the purchase price of the goods/services must have been between £100.01 and £30,000. However, there is no such rule when it comes to Chargeback claims.

Using PayPal

The Chargeback Scheme doesn’t usually apply when you use PayPal because your card transaction is with PayPal rather than the seller.

How long does it take to get your money back?

Some banks re-credit your account straight away but reserve the right to take the money back if your claim is unsuccessful.

Lots of people get caught out by this as they assume that when the money is credited back to them, the matter is over, however this is not the case as the trader is afforded the right to appeal and, if successful, the money is taken back out of your account.

What if your claim is rejected?

If your Chargeback claim is rejected, ask for a written explanation as to why. If after receiving this you feel the decision is unfair, you can make a claim to the Financial Ombudsman Service, but you must do this within six months.

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