Basic Information about Credit Card Chargeback Mechanism

Basic Information about Credit Card Chargeback Mechanism
What is Chargeback?

Cardholder using credit card to make payment for product or services is eligible to apply for a refund of the payment for a transaction dispute with merchant (“Chargeback”). Chargeback is a mechanism set out by Card Associations (e.g Visa and MasterCard) which allows transaction to be reversed and makes refund of the disputed amount to the cardholder under certain circumstances. For instance, unauthorized transactions or failed delivery of goods or services by the merchant after a one-off pre-payment, cardholder can contact the card issuing bank and request a Chargeback.

However, the chargeback request is subject to certain rules and conditions set by the respective Card Associations, for example, the request may fail if it is not raised within the relevant timeframe.

General (simplified) process flow of the chargeback mechanism

(Note):

Subject to the reason of the dispute, the chargeback process will normally take 6-12 weeks to complete. The processing time may be longer depending on the complexity of the case. In accordance with the rules of the respective Card Association, a merchant acquiring bank or a merchant may accept or reject a chargeback request. If the merchant acquiring bank or the merchant rejects the chargeback request but the card issuing bank does not agree with the decision, the card issuing bank may in accordance with the rules of the respective Card Association submit the disputed transaction to the Card Association for arbitration.

What is the role of the card issuing bank?

Fubon Bank (Hong Kong) Limited being the member of Visa and MasterCard as a card issuing bank, after obtaining the details of the disputed transaction from cardholder, will evaluate the case and raise a chargeback request on behalf of the cardholder against the merchant acquiring bank when it satisfies the rules and conditions of respective Card Associations. If the chargeback request is accepted by the merchant acquiring bank, the dispute amount will be reimbursed to Cardholder’s credit card account via the card issuing bank.

What type of transactions can the Cardholder dispute?

A Cardholder may request a chargeback for a number of reasons with valid supporting documents, including:

• Transaction amount which the Cardholder believes are incorrect
• Internet transactions which the Cardholder believes he or she did not authorize; (excluding OTP transaction)
• Transactions that the Cardholder suspects that they are fraudulent;
• Duplicated transaction;
• Goods or services that the Cardholder did not receive at all or within the agreed timeframe (in such cases you should contact the merchant in the first insurance);
• Recurring direct debits and regular repayment authorities that the Cardholder has previously cancelled.

However, please note that not all credit card transactions are protected by chargeback mechanism. The dispute request for the following transaction types would not be accepted. Cardholder should contact the merchant and resolve the dispute with the merchant directly.

• Requests submitted after the deadline
  Chargeback requests must be raised within 60 calendar days from the statement issuance date. For the instance of merchant closed down business resulting in failure to deliver goods and or services after one-off pre-payment, the eligible claim period shall not exceed 540 calendar days from the transaction posting day.
  
  After this 60 calendar days / 540 calendar days’ period, the Bank reserves the right to reject any request. Cardholder shall be responsible for any loss or damage (if any) arising out of or in connection with the relevant card transaction.
  
  
• Credit Card Instalments
  Credit Card Instalment is a loan agreement between Cardholder(s) and Fubon Bank. Cardholder(s) is/are bound to repay on time to Fubon Bank until the installment loan is paid off.
  
  
• Online Transaction with One-time Password (OTP) Authentication^*
  The Cardholder‘s identity is verified by the one-time password (OTP) sent to the Cardholder’s registered mobile phone with the issuing bank via SMS. Authentication must be completed before the purchase can be executed. Since the transaction is authenticated, “Unauthorized Transaction” cannot be used as a reason for chargeback request.
  
  
• Face-to-Face Card Present Transactions where chip read or contactless payment is used
  Since the transaction is authenticated, “Unauthorized Transaction” cannot be used as a reason for chargeback request.
  
  
• Mobile Wallet-Based Payment Method (including but not limited to Apple Pay, AlipayHK, WeChat Pay, Google Pay and FPS using Credit Card)^*
  Since the transaction is authenticated, “Unauthorized Transaction” cannot be used as a reason for chargeback request.
  
  
• E-Bill Payment
  Since the transaction is authenticated, “Unauthorized Transaction” cannot be used as a reason for chargeback request.
  
  
• Octopus Automatic Add Value Service (AAVS) Auto-Reload Transaction
  Since the transaction is authenticated, “Unauthorized Transaction” cannot be used as a reason for chargeback request.
  
  
• Other Reason
  For instance, quality of goods and/or service provided by a merchant or contract-related disputes are not covered service offered by Card Associations.
  
  

*Note:

Please report to the Police immediately for further investigation once the Cardholder suspects that he/she might be cheated in the said transactions.

Before you submit a dispute request, some possible explanations that might help you to recognize the transaction:

• The purchase was made by a supplementary cardholder
• The merchant may be registered under a different name from the shop / website
• Additional charges to the basic payment package (such as Hotel, Airlines or Hired Car Services)
• A free trial that you previously subscribed to has ended and has been extended automatically
• Exchange rates are applied, and extra fees are charged for purchases made in foreign currency
• A recurring payment that you have signed up / previously subscribed for some time ago is billed to you again

How to initiate a Chargeback request for disputable transaction?

In most of the cases, Cardholder may need to try and solve the problem by first contacting the merchant. If that proves unsuccessful, Cardholder may contact our Bank to raise a dispute request according to the following procedures:

1. Call to Fubon Bank Integrated Customer Services Hotline (Tel number (852) 2566 8181) for dispute transaction inquiry or download the “Cardholder Transaction Dispute Form” from our website of www.fubonbank.com.hk.
   
   
2. Complete and submit the “Cardholder Transaction Dispute Form” together with requested documents / information to Fubon Bank via one of the following channels:
   a) Fax number: (852) 2503-4162
   b) Postal address: 23/F Fortress Tower, 250 King’s Road, North Point, Hong Kong
   c) Any Fubon Bank branches
   
   

   Note:

   Supporting documents may include but not limited to the relevant transaction receipt(s) or the contract or the proof of the merchant failure to deliver goods/services (if applicable). Upon receipt of the documents, the case will be evaluated to ascertain if the rules and conditions of Chargeback are satisfied. The documents provided by Cardholder will be sent to the merchant acquiring bank to sustain the Chargeback when it is required. For details of the information/documents to be provided to Fubon Bank under different scenarios, please refer to the “Timeframe for Processing Chargeback Request” table. As the evaluation process takes time to complete, Cardholder is advised to submit supporting documents to Fubon Bank at earliest convenience, so we have sufficient time to process the dispute request.

    

3. Cardholder should raise the dispute request within 60 calendar days from the statement issuance date.
   
   
4. After Fubon Bank has received the “Cardholder Transaction Dispute Form” from the Cardholder, the dispute amount will be withheld until the processing of the chargeback case is completed. Cardholder can choose to settle the amount at its own discretion. However, the cardholder may be subject to the retrieval fee of HK$50 and all subsequent financial charges when the dispute is found invalid.
   
   
5. For the instance of merchant close down business or failed delivery of goods / services by the merchant, the Chargeback timeframe may be varied by the different Card Associations. Fubon Bank should submit the Chargeback request to the merchant acquiring bank within the timeframes (Please refer to the Timeframe for Processing Chargeback Request Table).
   
   

   Note:

   Cardholder should initiate the dispute request and provide adequate and valid supporting documents to Fubon Bank at least 10 working days prior to the deadline to ensure timely submission of the relevant chargeback request to the Card Association.

    

6. Normally, the turnaround time of processing a dispute case will take around 6-12 weeks upon receipt of all required documents from the cardholder by the Bank. It may take longer time to process depending on the complexity of the case.
   
   
7. If the Chargeback is accepted by the merchant acquiring bank, the dispute amount will be reimbursed to cardholder’s credit card account via card issuing bank. In any event, notification will be sent to the Cardholder regarding the result of the Chargeback request.

Timeframe for Processing Chargeback Request
Cardholder may submit their dispute requests within 60 calendar days from the statement issuance date so that the Bank can have sufficient time to review and follow up the case. Besides, each dispute reason has respective processing time and deadline. The dates stated in the following table is for reference purpose only and the guidelines issued by the respective Card Associations (which may be changed from time to time and without prior notice) shall be followed.

Dispute Reason	Visa Card	MasterCard	Supporting Document
Duplicate Processing	Within 120 calendar days from the transaction posting date	Within 90 calendar days from the transaction posting date	Sales invoice and / or Transaction receipt
Paid by Other Means	Within 120 calendar days from the transaction posting date	Not applicable	Sales invoice and / or Transaction receipt Supporting document for the payment by other means
Incorrect Transaction Currency / Amount	Within 120 calendar days from the transaction posting date	Within 90 calendar days from the transaction posting date	Sales invoice and / or Transaction receipt to show incorrect currency / amount billed Supporting document to prove the original / agreed transaction currency / amount
Merchandise / Services Received is Not as Described (such as counterfeit goods)	Within 120 calendar days from the transaction posting date OR Within 120 calendar days from the agreed delivery date of the service / merchandise but not exceeding 540 calendar days from the transaction posting date		Sales invoice and / or Transaction receipt Proof of dispute raised with merchant and attempt to resolve the matter (e.g. correspondence email) Proof of returned merchandise / attempt to returned merchandise Details of what was not as described
Defective Merchandise Received	Within 120 calendar days from the transaction posting date OR Within 120 calendar days from the agreed delivery date of the merchandise but not exceeding 540 calendar days from the transaction posting date		Sales invoice and / or Transaction receipt / or confirmation email from merchant Proof of dispute raised with merchant and attempt to resolve the matter (e.g. correspondence email) Proof of the merchandise received by the cardholder was damaged or defective Proof of returned merchandise / attempt to returned merchandise
Non-Receipt of Merchandise / Service	Within 120 calendar days from the transaction posting date OR Within 120 calendar days from the agreed delivery date of the service / merchandise but not exceeding 540 calendar days from the transaction posting date		Sales invoice and / or Transaction receipt Detailed description of ordered merchandise / or services Proof of delivery date Proof of dispute raised with merchant and attempt to resolve the matter (e.g. correspondence email)
Credit Not Received	Within 120 calendar days from the date on the credit documentation		Proof of refund acknowledgement (e.g. Confirmed refund email or refund note) Proof of dispute raised with merchant and attempt to resolve the matter (e.g. correspondence email)
Recurring direct debits and regular payment after cancellation / termination of service	Within 120 calendar days from the transaction posting date		Service contract to prove that the service period has ended Proof of cancellation request made to the merchant Proof of the merchant’s acknowledgement of the cancellation Proof of dispute raised with merchant and attempt to resolve the matter (e.g. correspondence email)
Merchant Close-Down	Within 120 calendar days from the transaction posting date OR Within 120 calendar days from the merchant closed down business date. Eligible claim period shall not exceed 540 calendar days from the transaction posting date.		Sales invoice and / or Transaction receipt of pre-payment indicating that the purchased merchandise / services are only partially received Detailed description of ordered merchandise / or services purchased Proof of the purchase order or services contract containing a written description of the purchased merchandise or services and expected delivery date Proof of dispute raised with merchant and attempt to resolve the matter (e.g. correspondence email)
Unauthorized Transaction	Within 120 calendar days from the transaction posting date		Documents required are subject to a case-by-case basis. (e.g. Police Statement would be required for lost card)