Chargeback is procedure enables you to obtain a refund of money paid using a debit or credit card in the event that the service or product that you bought was not acceptable due to poor quality or there was a failure to provide a service that was promised or you were the victim of a fraud or scam or your card was used without your knowledge. When awarded, the chargeback is paid back by the bank that issued the card under section 75 of the Consumer Credit Act 1974, ‘Liability of the creditor for the breaches of by the supplier’- the creditor liability the Act refers to refers is the bank liability as the entity that in fact has issued the payment card.

Any chargeback request has to adhere to certain requirements which must be met.

• The purchase or payment must have been made using the credit/debit card.
• Once you have contacted the bank you can ask to open a case for chargeback so that the bank can investigate the nature of the transactions.  
• A chargeback request can be submitted in relation to a single transaction or to a set of transactions, on the condition that all the requirements in order to seek a chargeback are met.

If the chargeback request relates to fraud there are specific procedures an individual is entitled to request. There are some differences between the chargeback procedure that is currently in operation and the chargeback procedure that was introduced under section 75 of the Consumer Credit Act 1974.  The revised procedures refer to different situations that you might be facing and may vary from case to case, consequently the different implications result in different final results. Whilst the chargeback procedure under section 75 of the CCA 1974 is a legal protection, depending on the circumstances, you may be able to claim back only an amount between £100 and £30,000. However, at present, the two procedures are running concurrently.  In some other circumstances, money paid and lost is not covered by the Act. This means that the bank will be entitled to use discretion on whether to grant a chargeback or not depending on the specific characteristics of the case and the accompanying evidence submitted.

Also, there are time constraints, a chargeback request must be submitted within 120 days, however, this time limit is complicated by the fact that the 120 days runs from different periods depending on the nature of the default. In some cases it runs from the moment you realise that you are a victim of fraud in other cases it is 120 days is from the moment of the transaction, in the case of an online payment it runs from the moment the payment was delivered. Regrettably, recovery of money lost to financial fraud is frequently protracted and difficult to navigate.  Legal Law Limited’s lawyers in the Forex and financial fraud team strongly recommend seeking the advice of specialist lawyer if you are a victim of a scam; doing so may make all the difference if you find yourself targeted by financial fraudsters such as a Ponzi scheme or cybercrime. Often the victim’s lawyer has to legally argue that the contract signed is a contract for services and not merely form of gambling in order for the protection of the law to take effect.  

The recent benchmark manipulations committed in the Foreign Exchange market (Forex) have highlighted the poor controls and weak governance. The regulators handed out £2 billion in fines between 2012 and 2015 for Libor, Forex and gold benchmark irregularities.  The FCA promises a higher degree of accountability will be enforced in the future.