If you've used your credit card to pay for goods you haven't received, is it possible to get a refund from your bank rather than the merchant? Kleenmaid certainly think so.
Andrew Young, co-director of failed whitegoods company Kleenmaid, this week told customers who paid for goods they never received to demand a refund from their credit card provider.
The company has gone into insolvency owing $27 million to customers who paid for (or placed deposits on) goods they have not received.
But are credit card providers liable in these instances? Are consumers within their rights to demand a refund from their bank? And if so, who pays the bank if the merchant has gone out of business?
According to the Australian Government's credit code website, customers are entitled to a credit chargeback for goods they have not received. The scenario falls into the category of a 'disputed transaction' (the same procedure applies for fraudulent or duplicate transactions).
Customers have a limited timeframe to dispute the transaction and the rules and conditions are set by the payment system (e.g. Visa, MasterCard etc) and the regulatory authority (in this case the credit code).
But who pays the bank? The credit code stipulates credit providers are 'entitled to seek reimbursement from the supplier', so in this case, the banks will have to chase Kleenmaid for the money. They are likely to simply join the pool of creditors (who are owed a total of about $73 million) and will receive a portion of their debt from the company administrators.
The credit code doesn't assist customers who paid by debit card or cash.
This obviously raises some ethical questions. Is it right for the bank to be liable for these charges? After all, they have no way to mitigate their risk - they cannot investigate the financial solvency of every company prior to a transaction occurring.
Tell us what you think below: is it right for Kleenmaid customers to claim this money from their bank?
