Chargeback of credit entries on a credit card account without the consent of the cardholder

A client complained that a credit card provider had reversed two payments that had already been credited without her consent, after the sender had reclaimed them via the bank commissioned with the payment as mistakenly made. The credit card provider considered the chargeback to be lawful under the given circumstances and described this procedure as being in line with the existing industry-standard processes. The Ombudsman considered the actions of the credit card provider to be incorrect and asked them to correct the error. The credit card provider followed the Ombudsman’s recommendation and re-credited the amounts to the client’s account. The client, in return, assigned her claims against the remitter to the credit card provider.

The client was the holder of a credit card issued by the card provider. In the past, she had agreed with her then cohabiting partner that she would cover the rent and ancillary costs of the joint household, while he would pay her credit card bills. Accordingly, the client’s credit card bills were each paid by transfers from the partner’s bank account and credited to the client’s card account.

After the separation of the couple, which was accompanied by intense disputes, the cohabiting partner requested the return of two payments amounting to several thousand francs through his bank, claiming that the transfers had been made by mistake. As a result of this request, the credit card provider recharged the previously credited amounts to the client’s credit card account without obtaining her prior consent. The client objected to this procedure and argued that the payments had been made correctly and, after the final posting to her account, could not be reversed without her consent.

The credit card provider took the position that it had acted on the basis of incorrect instructions from the client and that the reversal corresponded to industry-standard processes. He repeatedly refused to correct the chargebacks and continued to demand the corresponding amounts from the client.

The client, represented by a lawyer, then approached the Ombudsman. He examined the documents and concluded that a payment already credited could, in principle, not be debited again without the account holder’s consent if the originator of the payment or the instructing bank claims an error. A reversal would only be possible if the crediting financial institution itself had acted erroneously. In his assessment, the client’s legal argumentation was correct.

According to the Ombudsman’s experience, the usual procedure would have been for the crediting credit card provider to inform the client about the request for reimbursement and to ask for her consent to the reversal. If she had refused, the credit card provider would have had to inform the instructing bank accordingly. The remitter could then have dealt directly with the client as the payee.

Subsequently, the Ombudsman intervened with the credit card provider and asked them to credit the amount back to the client’s account. The credit card provider finally agreed, without acknowledging any legal obligation, to credit back the charged amounts including fees, while the client in return assigned her claims against her cohabiting partner. The case could thus be closed amicably. The credit card provider assured the Ombudsman that it would adjust the relevant processes.