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Merchant Refund Refusal

Answered by: 
Andy Zavoina

Question: 
We have a customer who placed an order for a product, the company contacted them to say it no longer had the product, but could make a substitution for a different product at a higher price. The customer agreed and was charged for substitution. No merchandise has been received and the company has refused to refund them. Do we, as the bank, have to just give him his money back? We cannot go through Mastercard now because this is past the 120 days for charge back rights.
Answer: 

For Reg E purposes you are concerned with the consumers authorization, not the satisfaction for the goods and services offered. This means that for a debit card, under Reg E, there is no claim. The authorization was given by your customer.

The answer would be different if this was a credit card. Under Reg Z the satisfaction for goods and services does matter. There could be a claim had a credit card been used. If you want to pay a claim that is up to you. I would base my decision on the profitability of the relationship and I would not want to set a precedent for future claims, but under Reg E, you are fine without paying a dime.

First published on BankersOnline.com 5/18/09

First published on 05/18/2009

Filed under: 
Technology
Filed under technology as: 
Claims
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