Chargebacks

Yesterday, I discussed the use of debit cards and how they compare to credit cards. I noted a key difference, the chargeback. With a debit card, you have to prove outright fraud in order to successfully charge back a purchase. Your card would have to be stolen or a merchant would have to make a completely unauthorized charge. With a credit card, you merely have to contend that the product or service was not delivered, and the presumption of guilt is on the merchant.

Today, I have two examples of how the chargeback is a huge advantage.

Inauguration Chaos

Last January, millions of people showed up in Washington for the inauguration of President Obama. Most received tickets for free, but some made a donation to the Presidential Inauguration Committee or PIC and received VIP tickets. While most attendees of the inaugural festivities had an incredibly good time, some were prevented from attending by the huge crowds and some epic security screw ups. In one case, a couple had paid $10,ooo to the inaugural committee, according to this article in the Washington Post, yet they were prevented from attending due to the security snafus.

In this case, their donation was charged to the couple’s American Express account, and they tried to get the money refunded after the event. For a while, it seemed like the committee was cooperating, but now they are giving them the cold shoulder. Their response is to request a chargeback from American Express. While $10,000 is a very large chargback, I think that they have a strong case. First, they are dealing with American Express, which has a better reputation for defending their customers in chargeback disputes than Visa or Mastercard. Next, they clearly did not receive the services that were promised. The worst case scenario is that the committee will claim that they did not get to attend due to circumstances outside the committee’s control, such as crowds or security. I think that is rather week, since the committee did have some control over security and crowds , and to a large extent, they just botched it. From the committee’s standpoint, I don’t think they have much of a case unless there was a clearly spelled out contract that was presented to the couple when they made their donation as to what their liability would be in this circumstance. The analogy would be when someone purchases tickets to a sporting event that is canceled due to weather. Usually the ticket has terms that clearly dictate what the holder is entitled to in that circumstance, such as tickets to the make up game, a refund, or a credit towards a future game.

I am sorry they missed out on this once in a lifetime event, but I hope they are able to take advantage of the protections inherent in all credit card purchases to recoop their money.

My Recent Chargeback Experience

Two weeks ago, I was skiing at Breckenridge Colorado with my parents. They generously offered to pay for my lift ticket. I presented my discount pass to the ticket window and explained that I would prefer not to use their “resort charge” option. This is a system where they link your pass to your credit card and charge it automatically. After some difficulty, they salesperson at the ticket office decided that she would have to print out a new pass for me, and then charge my lift ticket to my parents credit card. I was assured that my card would not be charged.

Of course, when I received my credit card statement yesterday, I was in fact charged the $59 for the lift ticket. I contacted my father, who happened to have the register receipt for the purchase, and I was able to submit a copy of that to American Express as part of the dispute process.

Unknown is how American Express will figure out that the receipt includes a lift ticket for me, and not three other people. Ultimately, the Breckenridge people should be able to look into their computer system’s records and verify that three of us skied that day and we were charged four times, since each skier has a unique pass with a picture on it. I have confidence that American Express will sort this out. At the very least, they immediately issued me a temporary credit for the $59, pending their investigation.