Visa / Mastercard chargeback Protection for debit card purchases

There's valuable hidden protection on Visa or Mastercard credit and debit cards, whether from Barclays, HSBC, Lloyds or any other bank. It's called 'chargeback' and means if you don't get the goods you bought, you may be able to get your money back.

This full Q&A guide shows you how to maximise protection, when you're not covered and includes a free template letter for claiming.

While every effort's been made to ensure this article's accuracy, it doesn't constitute legal advice tailored to your individual circumstances. If you act on it, you acknowledge that you do so at your own risk. We can't assume responsibility and don't accept liability for any damage or loss which may arise as a result of your reliance upon it.

What is Visa / Mastercard Chargeback?

A law made in the seventies means your credit card company must take responsibility if things go wrong in a purchase — eg, goods are faulty, or the retailer goes bust. However it only covers purchases of over £100 made on a credit card. Read our full guide to these Section 75 refunds.

The idea is pay on the card — whether for a flight, kitchen, computer or anything else — and the card provider's responsible too. Yet even if Section 75 doesn't apply there's a different scheme — known as Chargeback — that you can fall back on if you used one of the following cards...

It's important to know this is part of Visa and Mastercard's internal rules (there are also similar rules with Amex) and NOT a legal requirement (which Section 75 is).

Key differences between chargeback and Section 75:

	Chargeback	Section 75
Do banks legally have a responsibility?
Does it apply to all consumer rights?	No, it's more for when goods don’t arrive or are faulty, rather than future issues
Is it free of time restrictions?	Within 120 days of issue
How much can be claimed?	No limit (min £10 for Mastercard)	Between £100 and £30,000
Can you appeal to the Financial Ombudsman if unsuccessful?

Chargeback successes...

What chargeback can be used for?

Importantly, as it's asking for money back from the supplier's bank, not the supplier itself, the money should come back even if the retailer has gone bust — though this isn't guaranteed. If a transaction hasn't been completed properly, the onus is on your bank to get the money back and you should get a refund.

Some possible reasons for claiming a chargeback are:

• Company goes into administration — the company you purchased from has gone bust
• Quality of item — the goods were not as described or were defective
• Non delivery — the goods were not received as promised
• Technical issue — expired authorisation or a processing error by the bank
• Clerical error — being charged multiple times or being billed for the incorrect amount
• Fraud — you have been the victim of fraud and did not authorise the purchase

How does chargeback work?

Complain to your bank not more than 120 days after realising there's a problem, and ask to dispute the transaction (Visa customers get 180 days for international transactions). Your bank can then put the procedure in motion to claim the money back from the supplier's bank. It's also good practice to contact the seller (and may speed the process up).

It's worth noting most bank staff don't really know about this procedure, so you may need to explain it to them. There is no upper limit to the payouts (though Mastercard has a minimum of £10).

If you're told to put your request in writing here's a template letter to help:

If you're unsuccessful then contact the Financial Ombudsman to make a complaint. This is completely free and well worth doing, there's a simple claim form on its website and details on how it can help in the Financial Fight Back guide.

Chargeback is nowhere near as strong as Section 75 for credit card purchases. The key difference is that when you complain under Section 75, the credit card company itself is legally liable, with chargeback it's just about the Visa/Mastercard process and that is nowhere near as weighty. It's also the case that you can't take the issue to court if your bank won't pay up.

Use credit card for GUARANTEED protection

While chargeback is a useful tool, Section 75 is much stronger as the credit card company is legally liable. So, to ensure you have the most protection, if you're spending over £100 it's worthwhile using a credit card. Read the full Section 75 guide for more details and exceptions to the rules.

Yet credit card companies do, of course, make their money by charging you interest. And frankly the interest cost is so large it often overrides the protection, so follow…

Always set up a direct debit to pay the card off in full each month, so you'll never pay interest.

If you don't have a credit card or have debts on a card, and need another especially for these purchases so you can pay it off in full each month, then it's time to apply for a new card. In which case the two best choices are:

• A cashback credit card. These pay you each and every time you spend on them. Set up a direct debit so there's no interest. This can add £100s a year to your income, without any hassle, so you get a double boon. Full info and best buys in the Cashback Credit Cards guide.

• A 0% for spending card. Borrowing in the current climate isn't a good idea. Though if you are going to spend on a card you can't repay in full, at least ensure it's as cheap as possible. A number of cards offer 0% interest for a year on all your spending, full info and best buys in the 0% Interest Cards guide.

If your credit score isn't good enough to get one of these, read Section 75 without a credit card.