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 Credit card users could get protection through chargeback scheme

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Join date : 2009-10-04
Age : 32

PostSubject: Credit card users could get protection through chargeback scheme   Tue Dec 22, 2009 10:49 am

SINGAPORE — In the aftermath of two spas’ sudden closures recently — leaving their customers stuck with packages they cannot utilise or instalment repayments to their banks they must continue servicing — there has been intense debate on how credit card users can be better protected.

Unbeknownst to many, a solution appears to be already in place, albeit not widely tapped on.

According to the global operating regulations of card companies such as Visa and MasterCard, which MediaCorp obtained copies of, a process exists for consumers to reverse a credit card transaction if they do not receive goods or services that have been purchased from merchants.

This is exactly what some of the over 500 customers of Wellness Village Spa — and possibly now, affected customers of Simply Spa International — have been fighting for, through the Consumers Association of Singapore (Case) and the Small Claims Tribunal.

The scheme, called chargeback, is in place for various reasons and can help both merchants and consumers.

The former are eligible to ask for chargebacks, for example, when there are machine processing errors. Businesses can actually claim the sum from the cardholder’s bank later.

Card users, meanwhile, can obtain full refunds or the sum of unused portions, provided they can prove the goods and services were not delivered. When invoked, the card—issuing bank refunds the sum to the card—user and makes a counter—claim on the merchant’s bank directly.

But there is a 120—day time limit on claims — starting from the day you become aware of problems.

And there is an even bigger caveat. The card companies told MediaCorp these are just "guidelines" — the decision whether to extend such protection to card users ultimately lies in the hands of individual banks.

A MasterCard spokesperson said: "MasterCard does have a set of rules and guidelines governing the chargeback process that takes place between the card—issuing banks and the merchants’ banks.

"However, since MasterCard’s direct relationship is with the financial institutions and not with cardholders, its rules and guidelines do not govern the cardholder recourse process for disputed transactions.

"This falls under the agreement that cardholders have with their issuing bank."

The companies say that the terms and conditions listed in credit card application forms would usually remove all liabilities that banks have to undertake, in the event of non—deliverance of promises made by merchants.

What do banks here say?

Chargebacks are not uncommon, though, in other countries such as the United Kingdom.

When asked last Thursday if they provide chargeback protection for customers, many banks in Singapore with one exception did not respond by press time.

OCBC Bank head of credit cards Alice Goh had said it would "consider the merits of each case carefully" when a customer is "able to prove non—usage of services or non—delivery of product".

"If there is cause to justify that the customer is eligible for a refund or waiver of remaining repayment plan, the bank will provide the customer a recourse," added Ms Goh.

Yesterday, a UOB spokesperson responded to say it assists its customers according to "a set of dispute resolution rules (put up by Visa and MasterCard) to govern credit card billing disputes between member banks on behalf of their cardmembers".

So far, several banks, including Citibank and DBS, have already agreed to waive outstanding instalment repayments of those affected by the Wellness Village saga. — TODAY

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