In late 2019, Sfiso purchased a luxury trip to Europe, arranged through a Dutch tour company. He was due to travel in June 2020, but after the World Health Organisation declared COVID-19 a worldwide epidemic, it became clear that the trip was not going to proceed as planned.
In March 2020, the tour company emailed Sfiso, to say the trip would need to be postponed, and that they could offer him a replacement trip on the same dates the next year.
Sfiso was not convinced. He did not think anyone would be travelling by June 2021, and he asked the tour company for a full refund of his $20,000 deposit. The tour company refused, saying they were entitled to postpone the trip.
Sfiso had used his credit card to pay the $20,000 deposit, so he asked his credit card provider to reverse the $20,000 payment, saying he had not received the service he had paid for.
Initially, the credit card provider granted the chargeback request, and credited the $20,000 to Sfiso’s account. However, a month later they reversed their decision and recharged the $20,000 to Sfiso’s credit card.
Sfiso brought a complaint to FSCL.
Sfiso was not satisfied with the credit card provider’s decision or their chargeback process.
He argued that the tour company was not providing the service he paid for, so he should be eligible for a full refund.
Sfiso also said the credit card provider had not given him any indication that the initial $20,000 credit could be reversed. He thought the payment was final, and he had been shocked to discover the credit card company had reversed the chargeback without warning.
Our view: Sfiso was not entitled to a full refund
We reviewed Sfiso’s chargeback request, and agreed with the credit card provider’s final decision: Sfiso was not entitled to a full refund of his $20,000 deposit.
The credit card provider could have reversed the transaction if Sfiso had paid for a service he had not received. Sfiso certainly had not received his tour of Europe, but this did not necessarily mean he had not received the service he paid for.
Sfiso had paid the tour company to provide a tour in accordance with their standard terms and conditions. So long as the tour company had complied with their terms and conditions when postponing the trip and refusing the refund, Sfiso would not be eligible for a chargeback.
We reviewed the tour company’s terms and conditions, and found they contained a force majeure clause. This clause let the tour company postpone a trip if the company could not meet their obligations to Sfiso for a reason outside their control. And the COVID-19 pandemic certainly qualified as an event outside the tour company’s control.
After the trip was postponed, Sfiso was still entitled to cancel his trip, but the normal cancellation terms would apply, and the tour company would be entitled to retain a cancellation fee: 30% of the total cost of the trip.
So, we decided the credit card company had ultimately reached the right decision. The tour company was entitled to retain Sfiso’s 30% deposit.
Our view: Sfiso might be entitled to a partial refund
Although we thought the tour company was entitled to keep a cancellation fee, they were not entitled to retain all the money that Sfiso had paid them.
We found that the $20,000 Sfiso paid to the tour company was, in fact, 38% of the cost of his tour. The tour company was only entitled to retain a 30% cancellation fee, so we thought Sfiso was entitled to have his credit card company charge back the remaining 8% (around $4,000).
This overpayment seemed to have been overlooked by both Sfiso and the credit card provider, so the possibility of charging back the $4,000 had not been assessed as part of the chargeback process.
Our view: Credit card company was not clear that the initial $20,000 credit could be reversed
We found there were serious deficiencies in the way the credit card provider handled Sfiso’s chargeback request.
When we reviewed the credit card provider’s correspondence with Sfiso, we found that they had clearly indicated to Sfiso that the $20,000 credit to his account was final, and that the money was his to spend.
When Sfiso discovered a $20,000 debit in his account the next month, he was understandably quite distressed. In our view, this unclear communication warranted some substantial compensation for stress and inconvenience.
We discussed our views with the credit card provider and Sfiso, and the credit card provider offered to pay Sfiso $5,000 (8% of the cost of his trip plus $1,000 compensation for stress and inconvenience). Sfiso accepted the settlement offer.
Insights for consumers
If you have not received goods or services which you paid for using your credit card, you may be able to apply to your credit card provider to have the transaction reversed.
However, service providers or merchants will often have standard terms and conditions which allow them to modify or amend their services, at least in certain circumstances. If the service provider’s terms and conditions cover your transaction, you may not qualify for a chargeback, even if the service you received was not the service you expected.
We recommend you carefully review your service provider’s terms and conditions before you contact your bank or credit card provider about a chargeback, to avoid any unpleasant surprises.