Bank transactions cancellations

Fabian

Hi all there, I am new over here and have a question.

I trade as a private seller online on a few e-commerce sites. From time to time, it occurs that I have to cancel a transaction because the goods are not as you expected/were promised or the service is not as expected. Or just you did not authorise that transaction on that account. But, besides the online world, I had also to cancel a transaction with the city council 2 years ago.

I have personally found quite confusing and inconsistent the approach that my bank's customer support (HSBC) has on the subject.

Sometimes, I have the transaction cancelled on the spot, during a phone conversation with customer support, sometimes I had to wait for months, filling forms and forms, justify, explaining and declaring with my signature that I had not authorised the transaction.

Sometimes, I was even told that no, it is never possible cancelling a transaction (!!!).

Do any of you know which are the rule and regulations (if any) for cancelling transactions from bank accounts?

Is it up to the single bank, to the law, to the common practice?

I was expecting a synoptic table where I could find the regulations of cancellations according to the type of account and payment.

Something like: how it is possible to cancel a transaction made with a credit card, a debit card, a check, direct money transfer (bank to bank)? Do things change with personal and business bank accounts (maybe biz bank acc. are not a proper subject for this forum)?

Thanks for any reply and/or hint.
Fabian

Astaroth

Things do change between personal and businesses as companies get much less protection as they are considered big enough and sensible enough to look after their own interest where as the law frequently sees private individuals as needing protection from 1) con men 2) the banks 3) themselves

koswix

Hi Fabian,

Hope this helps.

how it is possible to cancel a transaction made with a credit card, a debit card, a check, direct money transfer (bank to bank)

Transactions amde with credit or debit cards:
To understand how these can be cancelled, you first have to understand how they are made. It's not quite as simple as we would like to think...

Stage 1: You give retailer card details and they put it through their machine and ask your bank for an Authorisation. The bank checks a few things first (do you have enough money for the transaction, has the card been reported lost, is the transaction 'normal' for your spending habbits etc).


Assuming that's all OK'd, there is now a legaly binding agreement between the bank and the retailer. The retailer has not received any money at this stage, be they have a guarantee from the bank that they will get it.

The retailer now has 7 days to complete the transaction (transactions are normally all held and done in one batch every night or every few days), and that's when the money is actually transferred to the company.

So - if you want to cancel a transaction, what happens? Well the short answer is that you can't. THe bank is legally obliged to hand over the money once that Authorisation has been granted. IF the transaction is not genuine (fraud, or just a mistake by the company) you have to wait for the money to go out of your account, and then dispute the payment with your bank. This can take a few weeks to resolve, longer if it's a complex fraud case.

However the retailer can cancel the transaction - they can reverse the authorisation on your account, as they have a legal right to cancel the agreement with your bank. The reason you can't cancel the agreement is to prevent theft - you go and buy a big shiny new TV for £1,000, get it home, call the bank and cancel the transaction and now you've got a free TV!

HSBC's Customer Service Representatives are notoriously bad at telling customers the right thing in these situations - and I've personnally witnessed them lying to customers just to get them off the phone. That's why you get inconsistent answers from them, as most of them don't actually know the process. The bank doesn't train them how these things work, they just tell them the absolute basics to do their job. After all when 40% of new staff leave their employment within a year they need to keep the training short and cheap!



Cheque
Two answers:

Cheque issued without a guarantee card : phone the bank and stop the cheque, they normally charge up to £10 for this. You can stop these cheques up to 3.30pm on the day they debit your account.

Cheque issued with a guarantee card: You can't cancel it as it is a guaranteed payment (same rules as plastic cards above, basically). However it's worth noting that the value of the cheque must be within the guarantee limit of the card. IF you have a £100 guarantee card and guarantee a cheque for £100.01, the cheque is NOT guaranteed, not even the first £100. None of it is safe and the chequq can be cancelled.

Bank to Bank Transfers
There's loads of different transfer options available, I'll try to cover the main ones here.

BACS (Bankers Automated Clearing Services): Often referred to as 'Bill Payments' by the banks, these are 3 day transfers from bank to bank. These are also how most salaries are paid in the UK. The process is as follows:

Day 1: instruct bank to send payment. at around 9pm your bank advises BACS of the payment.
Day 2: Bank sends money to BACS. BACS advises receiving bank that money is in transit.
Day 3: BACS credits money to receiving account.

Now technically you can reverse a payment up until about 8:30pm on the day you instruct the bank to send it, however the Bank's own procedures prevent customers from doing this. If you ask really nicely, though, the person at the call centre may take pitty on you and reverse it.

It is important to note that the above DOES NOT APPLY to transfers within the same bank that are done in real time. For instance, if you transfer cash from your HSBC bank account to someone elses HSBC bank account, or First Direct account, the money goes into the receivers account immediately. Therefor there is NO cancellation period, as the receiving person can withdraw the money immediately.

If you miss the cut off for cancelling your ownly option is to ask the person you sent the money to to give it back. They have no legal obligation to do so, however, and it is at their discretion. If you sent it to the wrong account details, your bank can send a letter to the receiving bank asking for the payment to be reversed. Again there is no legal obligation for the receiver to give it back, so you are dependant on their good will. Also, the bank will not tell you any details about who the money has gone to (for obvious Data Protection Act reasons).

EFT (Electronic Funds Transfers): These are same-day transferes between UK accounts. These can be cancelled by the bank up until the funds physically leave your bank. This can be as soon as 5 minutes after you instruct the payment, or as long as several hours. Depends on a number of factors, all of which are outside of your controll. Again the banks preocedures prevent you from recalling these, but in extreme circumstances they have been known to try and do. Recovery of funds if they've allready gone is the same as above.

International Transfers: Exact same as EFTs.


Wow! that's a big post! Hope that helps

Fabian

Thanks Koswiz,

I could not hope in a better answer.

I will print it out and teach HSBC customer service what to do next time I need them. :-)

For the bank to bank transfer, I meant the Direct debit. I forgot the right name in English. You probably know well whether it is the same thing or not.

Thanx
Fabian

Fabian

yes, and banks carefully avoid telling you that you are not protected as you were a consumer...I wonder when do we then need a company bank account? When we want to use the name of the company in the checks only...

Cheers
Fabian

chica_fi

Direct Debits are a slightly different matter again, as you have signed a mandate permitting the company to take a payment from your account more or less whenever they wish - although they should be notifying you in writing if it will be debited a different amount or date from what you expect.

You can do a direct debit indemnity claim if you wish to try to reclaim the money after it has left your account, but this does mean the banks have to do some correspondance between themselves, something they're not always keen on! Which is perhaps why if you've asked to do this in the past they've tried to fob you off. Usually if you do an indemnity claim to reclaim a DD already paid your bank will immediately (ish) refund you and then fight it out with the bank / company who took the DD from your account. They will often reserve the right to then re-debit the amount if they cannot recover it from the destination account.

koswix

Direct Debits
A Direct Debit is made up two parts. The first part is the Authority - that is you authorise a company to take funds from your account. This authority covers any amount from £0.01 right up to millions of pounds.

The second part is the payment. The payment is requested by a company, and takes 3 days. In the day to day running of this payment you have no real controll over it - although you can cancel the authority, you cannot change when or how much is taken.

Timescales:
Day 1: Company advises bank that they are taking money
Day 2: Bank deducts money from your account.
Day 3: Bank credits the companies account.

It is physically possible to stop the payment up until about 8pm on the day of debiting (Day 2), but again banks do not publicise this and their procedures normally state that you must cancel the payment by midnight on Day 1.


As Chica_fi says, DDs are covered by the Direct Debit Guarantuee. This is an agreement that all banks & companies that use DDs offer. It sets out some minimum service expectations to you the customer. It covers things like how and when the company must inform you of the date and amount of payments, and most importantly what happens if something goes wrong. See http://www.bacs.co.uk/BPSL/directdebit/generalpublic/yourrights/ for more details.


If a payment is taken in error (wrong amount, date etc.) you need to contact your bank who are required to issue you with a full and immediate refund. 'Immediate' means in about 3 days for most banks.

Banks do not reserve the right to re-debit your account. If you recalim a genuine payment you will still be liable to pay the company that money, and they will pursue you through whatever means they feel appropriate - this could include debt collection agencies! So by no means is it a way to get out of paying bills. If you owe the money, you owe the money.


Standing Orders
Are just like BACS/Bill Payments listed above, except that they're arranged in advance, normally to a regular schedule. These are entirely controlled by you, the company has no knowledge of them. It's up to you to tell your bank how much money to send and when to send it.

Cancellation is the same as DDs in terms of timescales, but recovery of money is the same as BACS/Bill Payments.

MarkyMarkD

Excellent posts, koswix - thanks!

Glad

Hi, Martin’s asked me to post this in these circumstances: I’ve asked Board Guides to move threads if they’ll receive a better response elsewhere (please see this rule) so this post/thread has been moved to another board, where it should get more replies. If you have any questions about this policy please email [EMAIL="abuse@moneysavingexpert.com"]abuse@moneysavingexpert.com[/EMAIL].