How your bank can help when online purchases go wrong

When online purchases go wrong, it can cost you a lot of money. This is especially true if you buy an expensive item that is damaged when delivered or if you inadvertently buy from a scam site masquerading as a real online retailer’s site.

It is therefore also not surprising that online purchases account for the biggest single category of consumer complaints received by the office of the Consumer Goods and Service Ombud, despite e-commerce only making up about 5% of total retail sales in South Africa.

The ombudsman, Lee Soobrathi, says while his office is mandated to mediate disputes between online merchants and consumers, there is another, more immediate, avenue of redress available to consumers when online transactions go wrong: their banks.

“Any consumer who uses a debit or credit card to conclude an online transaction can contact their bank for assistance in getting their money back if they suspect fraud, or if the goods or services differ materially from what was advertised,” he writes in his latest newsletter.

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Chargebacks especially useful for purchases from other countries

This is especially useful when dealing with merchants who operate in other countries, he says. And as with everything, time is of the essence, especially when fraud is suspected.

His office teamed up with the Ombudsman for Banking Services under the auspices of the newly created National Financial Ombud Scheme to educate consumers on the options available when online purchases go wrong.

Soobrathi says all banks offer a consumer protection mechanism known as a chargeback. A chargeback is a reversal of a credit or debit card transaction initiated by the bank on request of its customer, the cardholder.

“Upon receipt of a chargeback request from the cardholder, the cardholder’s bank will investigate the matter and if it is established that the cardholder’s request is valid, funds will be debited from the merchant’s account and returned to the cardholder’s account.”

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When can you file for a chargeback from your bank?

He says you can file for a chargeback from your bank if:

• Products or services are “not as described”. Examples of this include:
  • Damaged or defective goods, counterfeit goods (if you were led to believe the product was genuine) or misrepresentation of the terms of the sale, as well as more benign reasons, such as merchandise that is not the correct size, colour, or quantity as stated, or if the quality of workmanship is not as described.
  • Items that are broken on receipt, merchandise that is missing pieces, or tickets that arrive after an event has occurred. However, it is important to note that items that are sold ‘as is’ (‘voetstoots’) or have been properly documented regarding their condition are not eligible for chargebacks. In this case, it is better to use an escrow facility until you have inspected the goods.
  • Contract terms and conditions that are not the same as described. For example, if the return policy or money-back guarantees were changed without the cardholder’s consent.
• The merchant is unable to provide the service because it has closed down or voluntarily ceased operations with no plan to compensate its customers.
• The merchant unilaterally changes or postpones the date of service.
• The goods you ordered does not arrive at the promised time or the mutually agreed extended delivery date. This may apply even if the situation was beyond the merchant’s control, for instance if the goods did not arrive due to travel delays or quarantine.
• The cardholder’s flight has been cancelled and the transaction was debited by an online travel agent (OTA).
• A cardholder may also request a chargeback if the merchant provides a reasonable alternative instead of a monetary refund, but the customer declines and a refund is not provided within a reasonable period. In this instance, the validity of the chargeback will depend on the merchant’s terms and conditions. Cardholders should contact their bank directly to initiate the chargeback process.

ALSO READ: How to protect yourself when buying online

Beware of fraudulent online purchases

In the event of fraud, you must immediately report the disputed transaction to your bank. Do not approach the merchant, Soobrathi says.

“As a cardholder, it is your responsibility to ensure your account is used properly. If you do not recognise a charge on your account, never assume it is fraud. Firstly, consult the people with access to the card and see if they authorised it without your knowledge.”

He says you must contact the merchant to verify any purchase you do not recognise as it is possible that you simply do not recognise the business name or have forgotten that you ordered something.

He also has these tips for consumers regarding chargebacks:

• Read the terms and conditions carefully before buying anything. Do not just click on “accept” if you do not agree to abide by their policies.
• Before requesting a chargeback, double check what you originally agreed to as you are bound by those terms, even if you did not read them. Remember, chargebacks are there to protect the consumer from fraud, not buyer’s remorse.
• Cancel subscription services long before the next billing cycle runs to give the merchant plenty of time to terminate your agreement. The process could take a while and therefore you must not expect it to be cancelled in a day or two.
• If it is a dispute and not a fraudulent transaction, give the merchant sufficient time to initiate a refund but remember you must raise a chargeback within 120 days of the transaction.
• Decrease your fraud risk by not letting anyone borrow your card, keep personal information safe and shop on HTTPS sites with a secure Wi-Fi connection.
• Sign up for services like Mastercard 3D SecureCode and Verified by Visa to prevent unauthorised use of your cards.
• Use an escrow service (offered by many banks and some payment platforms) for secure transactions while you await delivery.

When you cannot expect chargeback for online purchases

Soobrathi says consumers must remember that banks are within their rights not to entertain requests for a chargeback if:

• The cardholder has “buyer’s remorse”.
• The return process seems too cumbersome and that is why you want a chargeback.
• The cardholder was not patient enough to wait for (or did not understand) the delivery schedule.
• The cardholder did not act promptly and the return time limit has expired.
• A family member made the purchase, but the cardholder does not want to pay the bill.
• The cardholder forgot about or did not recognise the transaction.

You can also not raise a chargeback as a cardholder if:

• A cardholder was charged a “no-show” penalty for failing to cancel a reservation according to the merchant’s cancellation policy.
• A cardholder missed a flight (for any reason) and as a result missed a subsequent separate non-refundable service, such as a cruise or prepaid hotel reservation.
• The cardholder accepted a reasonable alternative for future service from the merchant, such as a voucher or merchant-branded gift card and you then have a change of heart and ask for a refund which is denied.

ALSO READ: Online shopping is the new norm

CGSO’s three-step verification process can protect you

To avoid having to request a chargeback from your bank, make sure you complete the CGSO’s recommended three-step verification process, Soobrathi says:

• Compare: Is it a good deal? A product that is advertised at a significantly lower price compared to similar products on another site may be used, or modified, or it may exclude the batteries or accessories required to operate it. If you buy a product, check the dimensions. This sounds obvious until the miniature desk or the too-big-for-the-room sofa arrives.
• Verify: What do other people say about this merchant? Do an online search, including running their details through Trust Pilot (good for US-based vendors) and HelloPeter (bearing in mind that fraudsters change trading names often). If you are tempted by an ad served up to you on social media, ask in the comments if anyone else has bought from this vendor and whether they were happy with the service and the product. Never take the pictures at face value.
• Confirm: Double check that you are on the merchant’s official website by checking the URL. Soobrathi says you must pay attention: one missing or added letter in the URL is all it takes to redirect you to a fake website that looks exactly like the real deal. When booking car hire, flights or accommodation be aware that if you book on an aggregator website (a company acting as a booking agent for multiple companies) and want to cancel or change your booking, you are bound by their (often punitive) refund and cancellation policies and not the actual service provider’s. Always check the cancellation policy on the website before accepting the terms and conditions. If you cannot find it, or do not agree with it, do not proceed.