Disputed transactions
Most bank transactions are completed successfully, but sometimes things go wrong, and your customer may dispute having made or authorised a transaction. If you can’t settle the matter directly with your customer, we’ll take an independent look.
Generally, disputed transactions complaint fall into two categories:
- those involving fraud and scams, such as where a consumer is persuaded by a third party pretending to be their bank
- those where the customer disputes the payment for some other reason
You can read more about our approach in our page on fraud and scams. The guidance below deals with other types of disputed transactions where there is a complaint for another reason.
Types of complaints we see
We see a range of complaints about disputed transactions. For example, customers might tell us:
- they tried to withdraw money from a cash machine but none was dispensed – then the amount was debited to their account
- they deposited money into a paying-in machine but the deposit didn’t appear on their account, or the wrong amount was credited
- they provided their credit or debit card details to a supplier of goods and services (usually over the phone or online), which the supplier used in a way the customer didn’t expect or authorise
- they asked their card issuer to refund them (through the ‘chargeback’ process) for an incorrect card transaction, but the card issuer hasn’t sorted it out
We also see complaints from joint account holders, where one of them claims the bank or building society should have declined a transaction made by the other account holder.
What we look at
As with every case, in reaching a decision about what’s fair and reasonable, we consider:
- the relevant law and regulations
- any regulator’s rules and guidance that applied at the time
- any industry codes of conduct in force at the time
- what we consider was good industry practice at the time
Information we’ll ask for
We may ask the consumer for information such as:
- where they were at the time of the transaction
We may ask you for information such as:
- how the transaction was made, whether in person, by phone or over the internet
- the nature of the transaction, including when and where it was made, and what it was used to pay for
- the outlet where the transaction was made
- how the transaction was verified by the system, for example, by personal identification number (PIN) or password
- the electronic audit trail for the transaction
- their previous use of the plastic card
- information about your plastic card or security procedures
Depending on the kind of transaction being disputed, you may also need to provide:
- the terms and conditions of the account that the disputed transaction was made from
- examples of the customer’s signature
- website screenshots or emails associated with the disputed transaction
- copies of any paperwork relating to the disputed transaction
- any CCTV footage you’ve kept or obtained
If we decide that the customer didn’t make or authorise the disputed transaction, we then assess if they have any liability for it – and if so, how much.
Generally we’ll share the information that we’ve used to reach our decision with both sides. If you consider any information you give us is commercially sensitive, or should otherwise remain confidential, let us know and we’ll take that into account. We’ll make sure that information from businesses, third parties or customers remains confidential.
Below, you can find out more about what we’ll ask for when looking at different types of complaints – and our approach to resolving them.
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Disputed cash machine transactions
Typical complaints about cash machine transactions include:
- the customer says they didn’t make a cash machine withdrawal that has appeared on their account
- the customer’s account has been debited with a cash machine withdrawal, but the customer says the full amount wasn’t dispensed
We ask for information from you and the customer to assess whether or not the customer made the transaction.
When the cash machine withdrawal is disputed, we usually ask the customer:
- where they were when the transaction took place
- the location of the cash machine used to make the withdrawal
- their previous use of the same cash machine
Examples of things we might ask you:
- how the card used to make the withdrawal was recognised by the cash machine, for example, by reading a microchip or magnetic stripe
- how the transaction was verified by the system, for example, by inputting a personal identification number
- if there’s more than one disputed transaction or a pattern of transactions at the same cashpoint
- the electronic audit trail for the withdrawal and any related transactions (for example, balance enquiries) that preceded or followed it
If we decide that the customer didn’t make the transaction, we’ll assess whether they have any liability for it – and, if so, how much. We take account of:
- the account terms and conditions
- the law, such as the Payment Services Regulations
- industry codes of practice
- sections 83 and 84 of the Customer Credit Act 1974, when the withdrawal was made using a credit facility
Where there’s a series of disputed transactions, we’ll assess whether and how that affects any liability the customer might have.
When a customer says they made a cash machine withdrawal, but didn’t receive the full amount of cash, we ask the customer:
- what they remember of the cash machine transaction, including any information or messages they remember seeing on the screen of the cash machine
- whether they have any interaction that they had with anyone at the time of the transaction, such as a conversation with someone else at the cash machine
We’ll ask you:
- for the cash machine records, to see when the cash machine was next balanced following the disputed transaction and whether there was surplus or missing cash
- whether the machine took back cash dispensed but not removed from the slot, and other transactions before and after the disputed transaction
- whether other complaints have been received about malfunctions at the same cash machine around the same time
- information about your cash machine procedures
Once we have the necessary information, we’ll consider whether or not the cash machine dispensed the correct cash for the disputed transaction. If we decide that it did, we’ll then consider other factors that might affect the customer’s liability for the transaction.
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Disputed plastic card transactions
Disputed transactions made with plastic cards happen in locations such as shops, bars and restaurants, and also with goods or services bought over the internet. Usually, the customer notices the transaction on their account and complains that they didn’t make or authorise it.
The transaction may have been made with a debit or credit card and by presenting the card in person or remotely. Remote transactions by phone or over the internet are also called ‘cardholder not present’ transactions.
To weigh up the facts and reach a fair decision, we’ll ask for information from you and the customer:
We may ask the customer for information such as:
- where they were at the time of the disputed transaction
- how the transaction was made, whether in person, by phone or over the internet
- the nature of the transaction, including when and where it was made, and what it was used to pay for
- the outlet where the transaction was made
- how the transaction was verified by the system, for example, by personal identification number (PIN) or password
- the electronic audit trail for the transaction
- their previous use of the plastic card
We may ask you for information about your plastic card or security procedures.
If we decide that the customer didn’t make or authorise the disputed transaction, we then assess if they have any liability for it – and, if so, how much.
In making that assessment, we take into account:
- the account terms and conditions
- the law, such as the Payment Services Regulations
- industry codes of practice
- sections 83 and 84 of the Customer Credit Act 1974 , when the withdrawal was made using a credit facility
Card details not used in the way the customer expected
Sometimes customers tell us that while they agree they provided their card details to a supplier of goods or services (usually by phone or online), the supplier has used those details to make a transaction they did not authorise.
An example might be a customer who used their debit card to pay for an item over the phone – but later found that the supplier had included extra amounts in the transaction, for charges that the customer wasn’t told about and hadn’t agreed to.
When we deal with complaints like this, we get as much information as we can about the circumstances in which the payment was made. We then weigh up all the facts and decide what the customer most likely agreed the supplier could take from their card account.
Complaints about the quality of goods or services
When the complaint is about the quality of goods or services paid for with a credit card, section 75 of the Customer Credit Act 1974 may apply . This is because, in certain circumstances, consumer protection laws make the provider of credit liable for some problems with goods or services.
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Disputed chargebacks
“Chargeback” is the name given to the process that enables consumers – in certain circumstances – to challenge and claw back payments made using their plastic card.
That could be a transaction appearing on a credit card account, or it could be one that appears on a current account as a debit card payment. The cases we see usually concern disputes about VISA credit and debit card, and MasterCard credit card transactions.
The main parties to plastic card transactions are:
- the card holder – the consumer whose plastic card account has been debited;
- the card issuer – the financial business that operates the plastic card account for the consumer;
- the card scheme – the business that operates the payment network (for example, VISA and MasterCard are card schemes);
- the merchant acquirer – the financial business that provides the merchant with a facility to accept payments by plastic card (usually, their bank);
- the merchant – the business that the consumer pays using his plastic card. complaints about chargebacks
Typically consumers who complain to us about chargebacks have asked their card issuer to try to obtain a chargeback of a transaction because:
- they did not make or agree the plastic card transaction; or
- the transaction was carried out by the merchant for the wrong amount, or was duplicated; or
- the goods or services paid for were not provided.
We can normally consider complaints about chargebacks:
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- from card holders complaining about card issuers
These are usually complaints that a chargeback was not attempted – or was attempted but was not successful.
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- from merchants who are “micro-enterprises” complaining about merchant acquirers
These are usually complaints that the merchant acquirer accepted a chargeback request and debited the merchant's bank account with the amount of the chargeback.
Chargebacks are possible because of the contract between the card issuer (or merchant acquirer) and the card scheme. They are not a right or protection given directly to the card holder.
The exact grounds on which a chargeback may be attempted will vary, depending on the card scheme. Each card scheme operates its own rules for the plastic cards that fall within its scheme. While there are lots of similarities between these various sets of rules, there are also some important differences.
There is also normally a time limit for raising the chargeback request – usually 120 days from the transaction appearing on the account. But there are some variations between card schemes.
We consider that, as a matter of good practice, the card issuer should attempt a chargeback if the card holder has challenged a transaction and – taking account of the relevant card scheme rules - there appears on the face of it to be a chance that a chargeback request may succeed.
So we normally expect the card issuer to identify whether the potential exists for a chargeback request. And if so, to ensure that a request is processed in the right format and within any time limits that apply.
If it does not do that, we will decide whether in our opinion the chargeback would have succeeded, if it had been properly made.
Where a chargeback request is made but then refused, the card issuer can take the matter to the appeal process operated by the relevant card scheme. We cannot consider complaints about decisions made by card schemes about chargeback requests, because card schemes are not covered by the ombudsman service. But if the card issuer did not attempt an appeal, we will consider whether it should reasonably have tried and whether, in our opinion, it would likely have succeeded.
Complaints brought by merchants
Chargeback complaints brought by merchants against their merchant acquirers are usually about chargeback requests that were made and accepted. The merchant may complain:
- that the chargeback was made for unfair reasons
- that the merchant acquirer didn’t properly defend the request
The right of the merchant acquirer to debit the merchant’s account comes from the contract between them. Often referred to as the ‘merchant services agreement’, the agreement is made when the card-processing facilities are provided to the merchant by the merchant acquirer.
We’ll consider the terms of the merchant services agreement when we assess whether or not the merchant acquirer was allowed to debit the merchant’s account.
“Cardholder not present” transactions
Complaints from merchants often involve chargebacks made on card payments accepted over the phone or internet, also called ‘cardholder not present’ transactions. Merchant services agreements often have strict rules about when and how merchants may accept these transactions, and when they can be clawed back.
If the merchant acquirer has acted according to the terms of the merchant services agreement, we’re unlikely to uphold the complaint. This is even the case when the merchant has been the innocent victim of a fraudster who has obtained goods using a stolen card.
In some cases, the merchant says they were misled by the merchant acquirer about the risk of accepting a payment. Here, we consider the evidence and decide whether they were misled – and if so, whether that affects the merchant acquirer’s rights under the merchant services agreement.
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Disputed transactions made over the counter
Some of the disputed transactions that customers complain about are made over the counter of their bank or building society.
The customer thinks that someone else must have impersonated them at the bank or building society branch and made the transaction (usually a cash withdrawal).
Sometimes the customer suspects that a member of staff from the bank or building society was dishonestly involved in the matter.
The type of information that we need to see in complaints like this includes:
- any paperwork relating to the disputed transaction, such as withdrawal slips
- any recollection the bank or building society has of the transaction, such as a statement from the counter clerk who dealt with the transaction
- information about any previous disputed transactions involving the branch or employee in question
- any CCTV coverage available for the time the disputed transaction took place (although even where CCTV is available it is rarely conclusive)
- information from the customer about where they were when the transaction was made
- information about the previous pattern of transactions on the account
- information about the consumer’s circumstances and whether anyone else could have had access to the consumer’s card and details
We use this information to decide whether or not the customer made the transaction, or has or authorised someone else to make it.
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Disputed transactions made using paying-in machines
We see complaints about disputed deposits made through paying-in machines (including night safes). Customers complain that they made a deposit through the machine that has not appeared on their account, or that they’ve been credited with less than they paid in.
Sometimes the customer suspects that a member of staff from the bank or building society was dishonestly involved in the matter.
The type of information that we need to see includes:
- any paperwork relating to the disputed transaction, such as deposit slips
- the records for the paying-in machine for the period during which the customer says the deposit was made
- information about the bank or building society’s procedure for processing payments from paying-in machines
- any CCTV coverage available for the time the disputed transaction took place (although in the complaints we see, this type of evidence – even where available – is rarely conclusive)
- information from the customer about exactly what was deposited and their recollections of making the transaction
- information about the previous pattern of transactions on the account
- information about the consumer’s circumstances and whether anyone else could have had access to the consumer’s card and details
If a member of staff is accused of dishonesty, we’ll need additional information from the bank or building society. This includes any previous similar disputed transactions involving the branch and employee in question.
We may need to keep some of this information confidential where it concerns third parties or the employment files of individual employees.
We’ll use this information to decide whether or not the customer made the deposit, and, if so, how much money was deposited.
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Disputed transactions involving joint account holders
Sometimes we see complaints involving disputed transactions on joint accounts, where the joint account holders don’t agree.
A joint account holder may feel it’s the financial business that’s in the wrong. For example, one or other of the joint account holders may have:
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- told you that there has been an acrimonious split between them
- asked you to freeze the account
- asked you to authorise payments for only specified items (for example, insurance premiums or mortgage payments on a joint house)
If this is the case, the account holder who’s lost money because of disputed withdrawals made by the other account holder may complain that you are fully or partly to blame for their loss.
We can usually look at complaints like this, if we think we can fairly decide the case without needing evidence from third parties.
We’ll take into account:
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- the terms and conditions of the joint account (although we’d expect you to follow good practice and not simply rely on the strict terms of the account)
- discussions between you and the customer (or between you and the other account holder) prior to the transactions
- other proceedings, such as legal proceedings for a financial settlement in the joint account holders’ divorce
- whether you took reasonable steps to prevent misuse of the account, once it had been made aware of the disagreement
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Handling a complaint like this
We only look at complaints that you’ve had a chance to look at first, unless both sides agree. If a customer complains and you don't respond within the time limits or they disagree with your response, then they can come to us.
When you respond to a complaint, we’ll expect you to provide us with the relevant information and to have considered that as part of your investigation.
We’ll also expect you to have considered whether the customer is a vulnerable person.
Get support on how to resolve a complaint.
Putting things right
If we find you’ve treated a customer unfairly, and they’ve lost out as a result, you’ll need to put things right. This usually involves putting your customer back in the position they’d be in if things hadn’t gone wrong.
How we’ll ask you to put things right depends on the nature of the complaint. This may include refunding the payment or payments in the dispute, interest and an award for the trouble and upset caused.
Resources
Search our decisions database to find past decisions on disputed transactions.