Credit Card Refunds

Chasb_2

I have had a problem getting a refund as the credit card I used has been closed.
It was from LV for a cancelled insurance policy after a house move and amounted to £88.
I didn't have the card and LV knew only the last 4 digits - from that I could not work out the issuer.
They refused to refund in any other way or to give a credit note. Eventually LV told me the first 4 digits and from that I could work out the issuer and retrieve the money.
LV said it was due to their money laundering rules.
I thought this unreasonable and provided several examples of organisations refunding to a different card and/or giving cash/cheque etc.
I complained to the Financial Ombudsman - and they agreed with LV on the basis that they had a policy and adhered to it.
The Ombudsman said they don't comment on the efficacy/quality of the policy - that is for the FSA to do. As far as Ii can see the FSA don't work with consumers and don't take complaints from them. They refer people to the Ombudsman.
My complaint is that LV money laundering rules stop them giving people money they owe them even when it is clearly not money laundering and so are unfair/unreasonable.
I also don't think much money laundering is done in £88 chunks.
Has anyone had similar issues?
Any ideas how to get this sorted (not the specific case - I have my £88 - the generic - companies "hiding" behind Money Laundering rules to avoid giving customers their money back).

Buzby

It is nothing (really) to do with money laundering - but there is a slight connection. Any payment by card incurs a service charge that is usually met by the merchant, anything from 2.5 to 6% of the charge.

If a refund is made, it must go back on the same card as this proves that the payment is going to the same authorised user who incurred the charge in the first place - even requiring a PIN in a retail environment. For the firm though, a refund means they also get back (from the card issuer) a % of the fees already paid - so you get the agreed amount, but they get this discounted.

So - whilst you think you have closed the account, it still will be available for this very purpose and you need to contact your card issuer to repay any credit amount showing on your account. A CC account cannot be 'closed' by the cardholder in any meaningful way, and it can take up to 2 years before it has truly been deactivated. Only then can you argue than any refund to the cancelled account would be pointless.

grumbler

I agree that their rules are stupid.
Personally, I would go online small claims court route (a letter before action has to be sent first).

grumbler

Buzby wrote: »

If a refund is made, it must go back on the same card...

Rubbish.
The OP "provided several examples of organisations refunding to a different card and/or giving cash/cheque etc."
I can provide many examples too. I have dozens accounts with bookies and all bookies easily do this, including all UK ones.

Chasb_2

Grumbler - it's beyond small claims court - I have the money - it's a principle thing now! I wrote to the Chief Exec of LV before going to the ombudsman and got no joy!

Buzby - interesting - I suspect you are correct. Easy to tell me and the Ombudsman it's Money Laundering - in reality it's about fees. I don't mind them needing to get their fees back. They should tell me to make a note of the card I paid with in case I need to process a refund! I suspect in a lot of cases the company and/or the credit card issuer pocket the refund. (Actually - i must be wrong - financial companies wouldn't be that mendacious would they?)

grumbler

Sorry, I've missed the bit that you've got your money back ultimately.