I’ve been an advocate of credit card purchases for a very long time now, long before I started talking about them on livefromalounge.com. There are many reasons credit cards bring to the table over other modes of payments, including rewards and fraud protection. One of the biggest reasons to use credit cards, dispute protection.

What is a credit card dispute?

A credit card dispute occurs when a cardmember contacts their card-issuing bank to request a return of their money paid to a counterparty, in exchange for a product or a service. Cards on the Visa, MasterCard, Diners Club and American Express networks, amongst others, offer this feature in order to protect their credit cardholders from fraudulent activity on their cards.

Disputes can happen for multiple reasons, for instance, when a product is different from the description, for instance. Or when a purchase is made without their authorisation (fraud) and so on. In the case of travel,  a dispute could be raised for a cancelled flight, for instance, where the refund was not provided. For instance, we raised a dispute when Jet Airways went under in 2019, for an international ticket which was never refunded. Another time, back in 2016 or so, I was double-billed by British Airways for a ticket, and I had to go over to Citi to get it refunded by raising a dispute.

When is a dispute the appropriate thing to do?

The rule of thumb to raise a dispute is when you think you’ve been wronged. For instance, you can dispute when you order a Pizza but get a Salad instead. Or when you pay for a product and got a defective one. But first, you need to reach out to the merchant and ask them to make it right or make a refund. If they don’t help you or don’t seem interested in helping you, then you head to the credit card firm to make a dispute.

Usually, the credit card company will apply a temporary credit to your account, while they investigate the claim you make. If your claim can be confirmed, the credit issued to you becomes permanent. If your claim can’t be confirmed, or if the merchant provides information contrary to your claim, the card issuer will reverse the claim and you will be liable to pay again. Merchants cooperate with card companies in this case because business is long term and they don’t want any strikes on their account with the banks.

Credit card companies usually become the mediator in such cases, or in some cases adjust against funds due to merchants. For instance, in the case of Jet Airways, money was being held back by Credit Card issuers, and this helped them refund disputed transactions.

Are credit card companies entertaining disputes due to CoVid-19?

CoVid-19 is a unique curveball in the history of our times. Travel companies are getting literally zero inflows at this point of time in terms of bookings for the future, but the people who want a refund are all piling up. Airlines, who have to pay their employees and leases during this time, are looking for a way out from their payments to customers. A unique strategy applied is to provide them with a credit shell, which allows for these airlines to hold on to the customer money in exchange for future travel. Not in the interest of the customer for sure.

Disputing the transaction, because the service was not provided to you, does check the boxes of a legit reason to file a credit card dispute. But will it work or not, is something up in the air at the moment. Thinking from the Bank’s perspective, if they approved all these transactions, well, they are definitely seeing these losses coming on their books, some of them at least.

I did not have any live bookings to do experiments with and report back, so I’ve been waiting for someone to raise a dispute and tell me how it worked out. I’ve heard from a couple of readers and it is a contrary output to each other,

Success with Amex

Meanwhile I contacted Amex through which I had paid for these tickets, I requested them to dispute the charges as due to a Pandemic the airline should refund the money instead of holding in a credit shell. Amex wanted some documents which I have submitted they are disputing the charge and have given a temporary credit for the amount to my credit card until a resolution is achieved.

Failure with HDFC Bank

We understand that your are expecting a refund from the aforesaid merchant establishment. In this regard, we would like to inform that travel companies / airlines have revised their refund policies in the form of Future Credit Vouchers (FCV), Wallet refunds, Credit Shells, etc. These modes of refund are beneficial for customers as these reduce cancellation penalties, handling fee etc from the travel companies/airlines and the transaction remains open for future utilization. Incase your still disputing the transactions , we would like inform you to contact the merchant directly and revert with recent dated refund proof from the merchant to take up the case with the concern merchant / merchant’s bank for resolution.

Why the difference of approach?

First, let’s appreciate the fact that some of these banks are also working under lockdown, so they are working with reduced staff strength. To top it off, they are going to have to reach out to travel companies which have overloaded call-centres at the moment and also a lot of employees working from home because they can’t be in an office.

Under the circumstances, banks, whose lap this dispute may land in, could contest that since airlines are providing vouchers, there is really no money lost in the process. Not just that, a situation may occur where banks issue you a refund and you already have a voucher from the airline. What then? It is very uncoordinated at the moment.

Also, we have seen abroad, in some cases banks also siding up with travel brands suo moto, so no may not be surprising at all.

What should you do?

If you make up your mind about filing a dispute, make sure to first have a firm no, perhaps twice over from the airline/OTA or whatever travel counterparty you have in writing. It is only then that you would be able to receive a complete chargeback if needed from the credit card issuer. Different banks will have a different process, so do expect pushback from the bank if they discourage you from a chargeback request as well.

Bottomline

There is no one way to say if your credit card dispute will go in your favour or against you. Those banks are overworked at the moment, and perhaps it would be easy for them to say no to you, but if you think you have a good case or an unsatisfactory resolution, by all means, go for it.

If anyone has filed for a chargeback, can you confirm “are credit card disputes successful” in the times of the coronavirus?

P.S. Chargebacks don’t work if you’ve paid using net banking, debit cards and so on, so please don’t make a comment if you haven’t made your purchase with a credit card. [Update: Check Comment 1 for the process with Debit and Forex Cards]

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