Learn expert tips to handle #creditcard disputes and chargebacks effectively. Navigate credit card transactions and resolve issues with confidence. This video covers everything you need to know about credit card disputes and #litigation.
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00:00Credit card litigation as a merchant in the UAE
00:03With an increase in the availability of credit facilities provided by the banks,
00:09consumers have replaced currency with credit cards with pre-approved credit limits,
00:13which in turn has given rise to online transactions.
00:16Though credit card transactions are convenient,
00:19it does come with certain inherent risks such as credit card fraud and transactional glitches.
00:25This video aims to understand the disputes arising out of such credit card transactions
00:29from the position of a merchant.
00:31Credit card litigation can be a complex and a challenging process for merchants in the UAE.
00:36Broadly, a credit card litigation arises when a cardholder customer notices a transaction
00:42that they suppose is not a valid transaction
00:45and disputes it by notifying their respective bank i.e. a card-issuing bank.
00:52Oh, credit card disputes may arise for various reasons,
00:56including but not limited to fraudulent transactions.
00:59Billing errors, and customer dissatisfaction with a product or service.
01:03When a customer disputes a charge on their credit card,
01:06the issuer bank then initiates an investigation to determine whether the charge was genuine.
01:11The merchant is duly notified and is asked to furnish evidence such as transaction records
01:15or proof of purchase, etc.
01:18If the bank determines that the charge was not genuine,
01:21the merchant may have to refund the amount to the customer
01:23and the issuer bank will then initiate a chargeback proceeding.
01:26A chargeback is simply the reversal of a credit card transaction amount,
01:31meaning that the amount of the original sale amount,
01:34including a commission, discount, applied to the transaction.
01:38Chargebacks are a common issue in the UAE,
01:40and to address this issue, the Central Bank of the UAE,
01:44CBUAE, has issued guidelines on chargebacks,
01:47which aim to protect the interests of both customers and merchants in the UAE.
01:51A chargeback generally arises under the following circumstances.
01:55When a particular transaction is not recognized by the cardholder.
01:58When a transaction was not authorized by the cardholder.
02:02Where the transaction was duplicated.
02:04When the transaction was canceled, but is a recurring direct debit transaction.
02:08When the goods or services are not received.
02:10When the goods services received are faulty.
02:13When the goods services received are not as described or promised.
02:16When the authorization is declined.
02:19When it is a fraudulent multiple transaction.
02:22When there are point-of-sale errors.
02:23When the charges are delayed.
02:25When an invalid, incorrect card account number is being used.
02:29When the credit card has expired.
02:31According to the CBUAE guidelines,
02:33a chargeback can only be initiated by a customer in the event of fraud,
02:37non-delivery, or dispute over the quality of goods and services.
02:41The customer must first attempt to resolve their issue with the merchant.
02:45And only when this is unresolved can they initiate a chargeback.
02:49Circumstances where the customer claims shall be considered as invalid.
02:52Where the customer wants to return the shipment,
02:54but wants to avoid, evade the shipping or handling fees.
02:57Where the customer feels like the merchant's return process is inconvenient.
03:02Where the customer has misunderstood the delivery date but time.
03:05Where the customer wants a refund on the purchase,
03:08but the timeline to make the return has already expired.
03:12Guidelines for Banks in UAE
03:13The CBUAE has issued regulations and guidelines for banks in the UAE
03:18on the issue of chargebacks.
03:20The regulations define chargeback as a request by a cardholder
03:23to a bank or financial institution to reverse a payment transaction.
03:28The regulation places an obligation on banks
03:30to provide customers with a clear understanding of the chargeback process
03:33and the circumstances under which a chargeback can be initiated.
03:37The guidelines clearly specify that the banks are required to ensure that chargebacks
03:42are only initiated following the rules and regulations
03:45set out by international payment schemes i.e. Visa and MasterCard.
03:50Banks are also required to notify merchants of any chargebacks
03:53and provide them with an opportunity to respond.
03:56The guidelines further also specify that merchants have the right to dispute the chargeback
04:00by providing sufficient evidence to support their case.
04:03Banks are required to give due consideration to the merchants' requests and evidence
04:07before deciding on the chargeback claim.
04:10Furthermore, the regulations require banks to establish clear policies and procedures
04:14for handling chargebacks, including the time frame for resolving disputes
04:18in the documentation required for a chargeback claim.
04:22Failure to comply with CBUAE regulations can result in penalties and fines,
04:27as well as damage to a bank's reputation.
04:29Therefore, it is essential for banks to ensure that their chargeback processes
04:33are in line with CBUAE guidelines to avoid legal and financial consequences.
04:38By implementing these guidelines, the CBUAE aims to provide a fair and transparent process
04:44for handling chargebacks in the UAE and protect the rights of consumers and merchants.
04:49What can you do as a merchant if the bank has initiated a chargeback?
04:52If the bank decides to issue a chargeback, you can either accept the chargeback if there
04:57is any default on your end.
04:58The CBUAE guidelines specifically state that merchants in the UAE have the right to dispute
05:04the chargeback.
05:05If you decide to contest the chargeback, a process called representment is made available
05:10through which you must submit solid evidence, such as proof of purchase, i.e., transaction receipt,
05:16any email or telephonic conversations, tracking information of the shipment or any photographs
05:21or screenshots proving that the customer's claim is invalid and the chargeback is illegitimate.
05:27In some cases, you are required to enclose a rebuttal letter along with the relevant evidentiary
05:31documents in compliance with the guidelines of the respective bank or card.
05:36You are required to submit the evidence within seven working days.
05:40Once your evidence has been submitted, the bank will verify the same and shall decline the
05:44chargeback if the relevant evidence is satisfactory and genuine.
05:47In case the bank finds that the chargeback-slash-customer claim is valid, the chargeback amount is debited
05:53from your account, and the bank shall issue you a written notification.
05:57However, it must be noted that in some cases, credit card disputes may be escalated to litigation.
06:03If you are sued by the customer or the issuing bank, it is recommended that you retain
06:07legal counsel to protect your rights.
06:10To avoid such credit card disputes and potential litigation, as a merchant, it is suggested to
06:14ensure credit card transactions are conducted in compliance with the applicable regulations
06:18and ensure a clear cancellation, return and refund policy, which is stated communicated to the
06:24customer at the time of the transaction.
06:26Furthermore, keeping your customers well-informed about the status of their shipment,
06:31even in cases where a delay is anticipated, and implementing fraud prevention measures,
06:36promptly addressing customer complaints and suggestions, are the simple measures
06:39which will help prevent any such potential disputes.
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