Credit Card companies withdrawing money from private bank accounts without authorisation - legal?

gitebusiness

I run a small holiday business in France which has been severely affected by Covid, with most of our clients having to cancel because of fight cancellations, so beyond anyone's control.  These clients all booked and took out holiday insurance before Covid restrictions were imposed.  As per our Ts&Cs, because they have cancelled the holiday and not us, I have sent them all receipts for their deposit payments in the expectation that their insurance companies would reimburse them.  Many haven't (typically, finding any excuse not to pay up), so our clients have gone to the credit card companies to seek reimbursement - this has been done but in each case the Credit Card company has come to our bank and simply taken the money from our account without clarification or our permission.  Surely this isn't legal - no one can take money from someones account without their permission / authorisation ?   I should add that our clients, many of whom we know well, have not authorised this and don't want this to happen as they want to help us.  I would be grateful for anyone has any thoughts on the legality of this.  Thank you

[Deleted User]

It's legal. 

If you disagree with the chargeback, you now need to present your evidence to the card provider in each case.

anna42hmr

looks like as a business you are seeing the other side of chargeback or section 75 claims (depending on if credit card or debit card and how card holders are raising them) but essentially yes it is legal and you now need to provide your reasons and evidence that it is not valid and should be rejected to the card providers (i.e. booking terms and conditions, evidence of the card holder cancelling the holiday themselves etc).

eskbanker

gitebusiness said:

our clients have gone to the credit card companies to seek reimbursement

[...]

I should add that our clients, many of whom we know well, have not authorised this and don't want this to happen as they want to help us.

When your clients approach their credit card companies seeking reimbursement, these companies have the option of using chargeback (costs borne by you) or section 75 (costs borne by themselves) - which do you think they'll choose?

Have you examined your merchant services agreement to understand what your bank is and isn't entitled to do?

Having said all that, if your Ts & Cs state deposit retention on customer cancellation (and don't compromise any statutory rights of the customer) then neither chargeback nor s75 claims should be upheld as valid....

bradders1983

Odd that your clients claim not to have authorised it because, quite frankly, they must have.

anna42hmr

bradders1983 said:

Odd that your clients claim not to have authorised it because, quite frankly, they must have.

Guessing they are assuming by asking their banks to get the money back, they are assuming (wrongly) that the bank will always foot the bill.  As prior poster states its down to banks and agreements how they are processing the claim.   

bradders1983

Yes i have seen people on here be surprised when it is explained to them how a chargeback works, do they just think the money comes from a vast pot the bank keeps aside for such a thing?

But yes, if a company is still trading it should be a chargeback, imo. S75 claims for when a company has gone bust.

[Deleted User]

gitebusiness said:

I run a small holiday business in France which has been severely affected by Covid, with most of our clients having to cancel because of fight cancellations, so beyond anyone's control...  I should add that our clients, many of whom we know well, have not authorised this and don't want this to happen as they want to help us.  I would be grateful for anyone has any thoughts on the legality of this.  Thank you

Usually card issuers ask card holders for evidence that a refund has been sought and either refused/not responded to. If this is so, how is it happening out of the blue? 

Thrugelmir

gitebusiness said:

 As per our Ts&Cs, because they have cancelled the holiday and not us, 

Did they actually cancel their holidays? Or is that an assumption on your part. 

born_again

bradders1983 said:

But yes, if a company is still trading it should be a chargeback, imo. S75 claims for when a company has gone bust.

S75 covers many things. Breech of contract & Misrepresentation ii it's main point.
Chargebacks only cover certain rights. Not everything. As well as being time limited, 120 days up to a max of 540 for future dated purchases. While S75 is 6 years as a rough guide.
The fact a company has gone bust does not stop a chargeback. The money comes from their merchant bank in that case. How they then get it back is up to them.
.

Asghar

gitebusiness said:

  I should add that our clients, many of whom we know well, have not authorised this and don't want this to happen as they want to help us.  I would be grateful for anyone has any thoughts on the legality of this.  Thank you

Your clients would have authorised this when they requested their money back from their bank.

Or in doing so, did you and they think that their banks would just compensate them for their lost holidays? You keeping your money, your clients getting their money back with the banks losing out.