Chargeback requests for air tickets purchased with credit cards -CHOICE # 379

Consumers may be able to obtain refund for air tickets of the defunct Hong Kong-based budget carrier if the purchase is made with credit cards.

The Consumer Council has surveyed 20 credit card-issuing banks and companies to ascertain their policy and practice with regard to chargeback provision.

All indicated to the Council their commitment to process chargeback request from credit card holders affected by the air carrier concerned.

Generally, credit card providers vary in their practice regarding application deadline for chargeback requests, for example, within 60 days after the issue of monthly statement or 120 days after the transaction date or expected flight date.

But a number of them have expressed that they would handle chargeback requests from consumers affected in the airline's liquidation with flexibility. Card issuers are called on to handle consumers' chargeback requests even if the application deadline may be over.

Consumers are advised to approach their respective credit card issuers for refund, with the relevant documents of the purchase made with their credit cards, as early as possible.

So far, the Consumer Council has received 1,414 complaints involving a total of $17.2 million in relation to the Hong Kong-based budget carrier.

While all card issuers undertook unanimously to process chargeback requests, they do vary in their practices of handling the transaction amount in dispute. On the condition that card-issuing banks entertain the chargeback request:

• If the transactions concerned have not yet been settled by the credit card holders, the practice in general is that the card-issuing banks or companies will "freeze" the disputed amount. But some (4 card issuers) would "freeze" the sum only if the consumers request specifically for it.
• In the event the disputed amount has already been settled by consumers, 12 of the card issuers would credit back the amount to the card holders. 5 issuers, however, indicated that they would not do so.

But, ultimately, whether or not the consumers' chargeback request will result in an actual refund generally depends on the negotiation outcome among the banks involved or credit card associations.

Consumers are rightly concerned over the issue of cost in the chargeback process, especially if their application turns out to be unsuccessful.

While the survey shows that most card issuers do not impose any charges, a few do levy finance charges, interest or service fees.

One card issuer would charge interest and finance charges in accordance with its terms and conditions of service. 2 would levy a service fee on the unsuccessful cases in the sum of $50 and $150 respectively.

The Council, however, is of the view that if affected consumers can provide sufficient document to substantiate their claims, credit card providers should waive such fees and charges as is the current practice of the majority of card issuers.