Our investigation

After examining the credit card provider’s rules, we concluded that chargebacks were not limited in the way the bank claimed. We approached Visa and Mastercard and they both said a chargebacks was available in Wiremu’s situation. We concluded the bank acted wrongly by not initiating the chargeback request.

The probability of successfully recovering the transactions was low, but not non-existent. If the merchant had not responded to the chargeback, the funds would have been recovered. The merchant had responded promptly to Wiremu’s complaint so we thought it likely it would have resisted a chargeback. We also knew Mastercard and Visa would accept a copy of a trade ledger as proof that trading had taken place, and it wasn’t clear whether his evidence of defects was sufficient to challenge this. We recommended the bank pay him 25 per cent of the value of the transaction in recognition of the fact.

Outcome

While Wiremu thought 50 per cent was fairer, we remained of the view that 25 per cent was appropriate given the low probability of successfully recovering the funds.

He accepted our final decision recommending 25 per cent reimbursement of the value of the transactions.