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A family member was recently duped into topping up a foreign pre-paid Visa card, and our domestic bank said they can't help due to them having verified the transaction with a One Time Password (OTP).

The story goes like this:

  1. Family member received an email which appeared to be a company they work with, requesting a small sum for their service.
  2. They went to pay the apparently small sum using their credit card
  3. They received and entered the OTP the bank sent them
  4. The credit card was debited x10 as much as what they initially thought they were going to pay.

The transaction seems to be a top-up to a prepaid Visa card company based in Spain - BITSA / PECUNPAY.

Our bank has said that the family member was in possession of both their card details and the SMS to authorize the transaction, they can't consider the transaction as fraudulent.

Is possible to issue a chargeback against the merchant in this case?

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  • Which country is the family member/issuing bank in?
    – yoozer8
    Nov 9, 2020 at 14:43
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    As I (probably imperfectly) understand things... "requesting a small sum for their service", when they (presumably) didn't supply the service suggests you may have a claim. If you buy something from a company who turns out to be dodgy / fails to deliver, you can dispute the payment even if you authorised the transaction, so having supplied the OTP in itself needn't be a problem. Perhaps hinges on whether topping up another CC counts as a cash-advance, and perhaps isn't covered by the normal CC guarantees?
    – TripeHound
    Nov 9, 2020 at 14:53
  • @yoozer8 This is in Ireland. +TripeHound - that's what I was thinking and wondering why the bank hadn't suggested it.
    – TomSelleck
    Nov 9, 2020 at 14:55
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    I'm a bit confused about the part where they charged 10x the amount they originally asked for, and the bank won't even hear of this as fraud. Show the bank the initial bill, then show them the amount that was actually charged; there's clearly an error here, scam or no scam.
    – Steve-O
    Nov 9, 2020 at 15:36
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    The problem the bank has is that in their OTP - they said the correct amount e.g. x10 - presumably the x10 was to subtly shift the decimal point so they wouldn't notice
    – TomSelleck
    Nov 9, 2020 at 16:07

1 Answer 1

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+100

For your particular case, you probably have a valid chargeback claim.

Condition 12.5 Incorrect Amount can apply if:

• The transaction amount is incorrect.
• An addition or transposition error was made when calculating the transaction amount.
• You altered the transaction amount after the transaction was completed without the consent of the cardholder.

[This is written with merchants as the audience, so "you" refers to the merchant.]

Page 37 of Visa's Dispute Management Guidelines for Visa Merchants..

It would be rather silly if merchants could defeat a chargeback by simply noting that the transaction in general, but not the transaction amount specifically, was authorized. That would make all credit card transactions a "blank check" to the merchant.

Where it could get sticky is if the full price was disclosed, but in a discreet manner (e.g. in the fine print). If your authorization was made on the belief that the amount was lower, and that belief had a reasonable basis, I would expect the chargeback to be upheld, but it might be an uphill battle. It helps your claim if you can show that the merchant deliberately caused that false belief.

Addressing the general case of your question title, there are times when a chargeback of a transaction that is part of a scam is denied. For instance, if you use a credit card to buy pre-paid cards, and then let the scammers have access to the cards, the fraud is against the pre-paid card, not the credit card. If you try to charge back the credit card transaction, that will likely be denied, since you did in fact get what you were promised (you got pre-paid cards), and the merchant who sold you the cards was not a participant in the scam.

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