How to get your money back from Booktopia
By Tom Watson
Last week, customers of online bookstore Booktopia - which is in voluntary administration - were handed some unwelcome, though unsurprising, news by the company's administrators.
Any outstanding orders placed with Booktopia would not be fulfilled, nor would those who have been left out of pocket be eligible for a refund.
There are reportedly around 150,000 unfulfilled orders worth about $12 million according to reporting by the ABC, as well as around $3 million worth of unused Booktopia gift cards.
Instead, administrators from McGrathNicol Restructuring have stated that those affected will need to make a claim as unsecured creditors - an outcome that means that customers are likely to be towards the bottom of the list when it comes to handing out any funds that are recovered.
Booktopia is just one of a number of businesses that have left customers in the lurch in recent years, which begs the question: is there any recourse for people to get their money back in these situations, beyond registering as creditors?
While there are plenty of variables involved that will come down to an individual's circumstances, one option for customers could be requesting a chargeback from their bank.
What is a chargeback?
"A chargeback occurs when a cardholder disputes a transaction that was processed via a merchant facility," says Michael Bjazevic, the head of payments risk at Tyro.
"This usually happens when a cardholder believes the transaction was processed incorrectly, was not authorised by them, or when the goods or services were not received, or as described."
So in essence, a chargeback acts like a refund. If a debit card or credit card payment is successfully disputed then the transaction will be reserved and the funds returned.
Bjazevic explains that Australian banks and businesses with a banking licence like Tyro are obligated to pursue chargeback requests made by their customers, but they try to look into them quickly as part of their customer service.
The schemes themselves are actually run by the major payment card networks though, which is why chargebacks can be sought for card payments but not for the likes of bank transfers or direct debits.
"The chargeback rules and process is governed by the schemes from Visa, Mastercard and others, not the banks," Bjazevic says.
"If a customer asks their bank for a chargeback, a decision is made on whether it's valid, based on the rules of the card scheme. Banks that are members of card schemes are legally obliged to pursue chargebacks under the law of contract."
When can you seek a chargeback?
Given that most Australians make hundreds, if not thousands, of purchases with a multitude of businesses each year, it's inevitable that things go wrong from time to time.
Alexandra Kelly, director of casework at the Financial Rights Legal Centre, says that chargebacks can be an option in a variety of situations where people have made their purchases using a card attached to a payment scheme like American Express, Mastercard or Visa.
"Examples of this include when you don't get what you've paid for, or the purchase is not as described, or counterfeit, or defective," Kelly says.
"You can also seek a chargeback if you were charged multiple times, or the wrong amount. Each scheme has their own rules, including when you must apply for one through your card provider and the grounds.
"Chargebacks can also be sought if the transaction was fraudulent, you cancelled a recurring transaction, or if a merchant became insolvent."
In the case of companies that have become insolvent, Kelly recommends that those thinking about pursuing a chargeback should do so as soon as possible.
That's because the card schemes have limits on how long a chargeback can be requested after a transaction has been processed. They differ from scheme to scheme, but that timeframe typically ranges from 45 days to 120 days.
How can you request a chargeback?
Taking a step back though, Kelly recommends that the first action to make before requesting a chargeback is reaching out to the merchant or retailer.
"Like all consumer problems, always try and solve a problem with the merchant first - this is the quickest and easiest way to get your money back.
"If you have no luck with the merchant, contact your card issuer - generally a bank. They can claim a chargeback from the merchant's bank, but there are time constraints that depend on the card scheme involved."
Most banks require their customers to message them or fill out a form if they're looking to request a chargeback, and customers may also need to include evidence that they've tried to obtain a refund themselves with the merchant in question.
The bank will then go about investigating the request, which may take some time as the merchant and merchant's bank have the opportunity to respond. And as Bjazevic explains, it won't always end in success for the customer.
"The chargeback process does not guarantee that a transaction will be refunded. The cardholder may not have a chargeback right under the scheme rules or the merchant's bank may have a valid reason for rejecting the chargeback."
What if you're unhappy with the chargeback outcome?
While rejections can be totally valid, if you believe that your bank hasn't lived up to its obligations while looking into a chargeback request you can complain to the bank itself, or failing that, lodge a complaint with the Australian Financial Complaints Authority (AFCA).
"If your card issuer or bank will not accept the chargeback request or it is rejected, get written reasons from them and consider lodging a complaint with AFCA - but remember that AFCA can only look at whether your bank met its obligations in seeking the chargeback," Kelly says.
"It's important to know that if a chargeback is rejected by the merchant's bank, the card scheme makes the final decision - and AFCA can't review the card scheme's decision, only the actions of your card issuer or bank."
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