Credit card transaction disputes have increased significantly during COVID-19, and may of these cases are unusually complicated. Merchants, card-issuing banks, and cardholders all want to know what their legal rights and options are, but the answers are often elusive. To help provide clarity, VISA is providing additional information regarding best practices and FAQs when responding to COVID-19 related disputes.
Unique COVID-19 Era Disputes
Most of these disputes have arisen from transactions related to travel, transportation, lodging, and entertainment. Consumers made purchases before the pandemic, with no idea that their plans would be disrupted. Similarly, businesses expected to deliver goods and services without knowing the historic challenges they were about to confront. There are situations where payment was made to a business that subsequently closed down operations, either temporarily or permanently, due to COVID-19. Perhaps a consumer purchased a gift card, but before they redeemed it the merchant who issued it went out of business.
Cancellations Due to COVID-19
The recently published guidance from VISA is a rather detailed document, and merchants can read it to understand its clarifications in greater depth. But some of the key points outlined include cases where a business cancels products or services, such as airline flights, due to a lack of demand. In that case, the cardholder has a right to dispute the transaction. If the cancellations are because of government prohibitions, however, those mandates supersede VISA’s rules regarding dispute rights. Nevertheless, the consumer can still work directly with the merchant in an attempt to resolve the situation.
When a cardholder buys tickets to attend an event that is rescheduled, the event organizer may offer to hold the event at a later date. But the cardholder is not required to accept that offer of an alternate date, and can dispute the transaction. A consumer may buy a ticket or book a hotel room, but later decide not to use it due to their own personal health and safety concerns. But as long as the business fulfilled it’s obligation to deliver the services, the cardholder is not entitled to dispute the charges.
Denial of Service Due to Closure
When services or products are denied due to business closure or bankruptcy, the cardholder does have recourse to request a refund. The same holds true if a customer wants to return a purchase, but is unable to do so because the business is no longer open to accept returns. If the cardholder bought a gift card from a merchant but it becomes worthless because the company has gone out of business, they also have the right to initiate a dispute through their credit card company.
The Bottom Line
VISA emphasizes that its dispute rules haven’t changed , but acknowledges that COVID-19 has forced an unprecedented volume of product and service cancellations, delivery slowdowns, and refund requests. VISA has asked that card issuers give merchants adequate time to resolve problems with customers, during this difficult period. Many businesses are working hard to avoid disputes, by offering refunds or credits when they are unable to provide services or products due to COVID-19. Meanwhile, VISA strongly urges cardholders to try to resolve their disputes directly with merchants, before asking credit card companies to intervene.