Laws on refunds

mattyprice4004

Our old card machine couldn't handle CNP transactions - we had to have the customer and card in front of us to do the refund. 
Also, they can choose to only refund to the original card if they want, we would only do this as part of AML compliance. 

It's up to the business if they want to make an exception for you, but if you paid in person with a certain card then there's no problem with them requesting you return in person and with the same card (or a replacement card from the same provider). 
If you moved away, that's on you not them I'm afraid. 

user1977

mattyprice4004 said:

If you moved away, that's on you not them I'm afraid. 

I doubt a court would agree with that, assuming the customer is legally entitled to a refund (we can't tell from the OP whether that's the case here).

Sandtree

HeinzVarieties said:

Sandtree said:

Just_Some_Boy said:

Hi everyone,

Is it a legal requirement that refunds for card payments are given in the way they were originally paid, using the original card that the payment was made on?  Or is this just typical practice?  I'm guessing it might be a legal requirement for money laundering purposes, but would like to check.

Without boring everyone with the detail, a service provider has told me that the only way they can refund me is by using the same card I paid for the service on, and by putting it into their terminal.  This is really difficult for me now as I no longer live within reasonable travelling distance, so I'm exploring whether there really is no other way they can refund me (they're claiming that it's a legal requirement for them to do it that way and no other).

Thanks in advance for any help and advice.

There is a legal requirement for the company to have appropriate anti-money laundering processes in place. What is "appropriate" isnt defined in law which helps as it means the application can keep pace with technology without a new act of parliament each time however does mean everything is left in a rather grey area. 

Refunding to source is widely accepted as appropriate AML practices and so whilst not directly legislated it is almost indirectly.

there is a secondary consideration, if they process it as a refund to source they get the merchant fees back whereas if they send money to a different account they are out of pocket for the merchant fees.

This isn't true.  Only certain organisations are beholden to the Money Laundering Regulations.

8.—(1) Parts 1 to 6 and 8 to 11 apply to the persons (“relevant persons”) acting in the course of business carried on by them in the United Kingdom, who—

(a)are listed in paragraph (2); and

(b)do not come within the exclusions set out in regulation 15.

(2) The persons listed in this paragraph are—

(a)credit institutions;

(b)financial institutions;

(c)auditors, insolvency practitioners, external accountants and tax advisers;

(d)independent legal professionals;

(e)trust or company service providers;

(f)estate agents;

(g)high value dealers;

(h)casinos.

Note that general retailers are not included in that list.

The reason a retailer will insist on refunding to their original source of payment is their their card fees will be refunded and it completely protects them against any subsequent chargeback requests.  If they refund in cash a chancer could try their luck with a chargeback.

They tell their staff this guff because the staff are more likely to comply when "it's the law" and their customers are more likely to swallow it too.

According to Money laundering supervision for high value dealers - GOV.UK (www.gov.uk) a "high value dealer" is any business that may accept or make a payment of over €10,000 in cash including by bank transfer and including in instalments. 

Obviously not going to move your average cornershop into the scope of the regulations but could potentially bring general retailers into scope... back in my mail order days our average customer bought sub £100 a month but we did have customers running balances of well over the limit and paying by BACS.

Jiniku

We are currently having a debate about credit card refunds at work as more payment methods have become available. We have successfully refunded to an Applepay customer though. t was helpful to see comments about charges not being refunded if the refund is to another card, thanks.

It used to be easy, refunds went back onto the card they came from but this is harder and harder to do. We have customers who close/ switch/ update bank accounts (or say they have) and ask for a refund onto a different card. We also have more and more cards not signed on the back as people use contactless more and more, if we get a signature for a refund, we often have nothing to compare it to. We try to say no but can’t find any definitive answers as to why we cannot do it. If you Close an account, will it re-open if a credit is received on it so the customer can get that refund transferred to their new account?

Also is there a way of knowing which type of card the original card used was or which bank it was from? I know an Amex card starts with a 3, master card begins with a 2 or 5 and visa debit/credit with a 4 but we only show the last 4 digits on receipts for security/GDPA so how can we be sure if it was a Visa card, Visa debit, MasterCard, Apple Pay or google pay or another card type? 

born_again

Jiniku said:

We are currently having a debate about credit card refunds at work as more payment methods have become available. We have successfully refunded to an Applepay customer though. t was helpful to see comments about charges not being refunded if the refund is to another card, thanks.

It used to be easy, refunds went back onto the card they came from but this is harder and harder to do. We have customers who close/ switch/ update bank accounts (or say they have) and ask for a refund onto a different card. We also have more and more cards not signed on the back as people use contactless more and more, if we get a signature for a refund, we often have nothing to compare it to. We try to say no but can’t find any definitive answers as to why we cannot do it. If you Close an account, will it re-open if a credit is received on it so the customer can get that refund transferred to their new account?

Also is there a way of knowing which type of card the original card used was or which bank it was from? I know an Amex card starts with a 3, master card begins with a 2 or 5 and visa debit/credit with a 4 but we only show the last 4 digits on receipts for security/GDPA so how can we be sure if it was a Visa card, Visa debit, MasterCard, Apple Pay or google pay or another card type? 

Surely you only refund to the card that has the last 4 digits. It does not matter who supplies the card.

sheramber

Jiniku said:

We are currently having a debate about credit card refunds at work as more payment methods have become available. We have successfully refunded to an Applepay customer though. t was helpful to see comments about charges not being refunded if the refund is to another card, thanks.

It used to be easy, refunds went back onto the card they came from but this is harder and harder to do. We have customers who close/ switch/ update bank accounts (or say they have) and ask for a refund onto a different card. We also have more and more cards not signed on the back as people use contactless more and more, if we get a signature for a refund, we often have nothing to compare it to. We try to say no but can’t find any definitive answers as to why we cannot do it. If you Close an account, will it re-open if a credit is received on it so the customer can get that refund transferred to their new account?

Also is there a way of knowing which type of card the original card used was or which bank it was from? I know an Amex card starts with a 3, master card begins with a 2 or 5 and visa debit/credit with a 4 but we only show the last 4 digits on receipts for security/GDPA so how can we be sure if it was a Visa card, Visa debit, MasterCard, Apple Pay or google pay or another card type? 

I have just checked 4 receipts that I have in my purse. All 4 state the card type above the last 4 digits of the card.

JetpackVelociraptor

Jiniku - these are definitely questions you should be asking your merchant services provider, as it is largely their terms and conditions that will govern what you are supposed to do. If you're not sure, phone them up and ask! If you do something at request of a customer that later turns out to be fraudulent, and the merchant services company say you've not followed their terms, your company will be out of pocket. To the best of my understanding, if you refund to an old card the refund will be processed to the customers' bank account as normal, but I do not know what happens if they've moved accounts entirely.

This depends on how large your company is and your position in it - it may be you should be asking your manager instead!

unholyangel

Bradden said:

I beleive it used to be due to the Consumer Credit Act .. before the days of debit cards. As the credit card company were technically the creditors the were due the refund not the customer. They shouldn't have to insiist on you coming in to branch. Presumable they have your cardnumber already and  just need the CVV code to authorise the refund. PDQ's are perfectly capable of cardholder not present transactions. If they say they do not have your card number then they have no way of knowing how you paid originally. 

You having an agreement with another party to finance the transaction does not change who the parties to the contract are (and therefore, who is legally due any refund). Plus, I believe it was charge cards (rather than credit cards) which predate debit cards. The CCA doesn't predate debit cards, nor the concept of debit (or credit for that matter) transactions. 

Remember that up until a few decades ago, buying on credit was generally something to be ashamed of. Especially if you didn't pay when due. 

 It was AML considerations (if not the legislation itself, at least at that point). Specifically i remember media attention about people buying loads of clothes or something with a stolen card, taking them back but asking for refund by cash. 

However there are exceptions/it's not a hard rule, because card numbers can change, accounts can be closed/moved. Most retailers will have a workaround (bank transfer or cheque perhaps, so it's traceable), but sometimes the front lines are staffed by dopes who don't realise there are exceptions.  

Consumer rights says it must be to same method payment was made  unless the consumer agrees otherwise. 

Of course, all this is assuming the OPs returning under a statutory right. If its a contractual right then it may well have terms and conditions attached to it.