The do’s and don’ts of credit card refunds

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When Jeff Campbell checked into the Austin airport for spring break, the last thing on his mind was a credit card chargeback. Instead, he was thinking about the fun he was going to have with his three daughters at Universal Orlando Resort that week.

“Literally at the gate, my airline canceled the flight,” he says. “An agent said they would refund that specific flight, but then gave me a business card to call and talk to someone about it.”

His only option was a rental car and about a 17-hour drive to Orlando. He didn’t even bother to ask his airline for a refund when he decided to drive home.

“I disputed the entire charge on my credit card,” he says.

Campbell, a personal finance expert who blogs at Middle Class Dad Money, joined many other travelers who turn to credit card reimbursements when something goes wrong on a trip.

Under the Fair Credit Billing Act, consumers can dispute a credit card charge for goods and services they did not receive or accept. Your bank will investigate and, if they side with you, you’ll get a refund.

Monica Eaton-Cardone, chief operating officer of Chargebacks911, a company that protects businesses from fraudulent chargebacks, says it has become more common for consumers to actively dispute credit card payments and seek refunds from their banks. According to the company’s research, the number of such disputes has increased by 25 percent since the beginning of the pandemic.

Experts thought things would return to normal after the pandemic sparked an initial round of disputes over canceled holidays. Then came another wave of travelers unwilling to accept airline vouchers or cruise credits. Now, industry watchers say fare refunds are increasingly seen as a preferred means of getting refunds from travel companies.

Take the case of Campbell, for example. As a personal finance expert, he knows how Fair Credit Billing Act refunds and limits work. (I’ll get to those in a moment.) But he didn’t want to bother asking his airline for a refund. He just wanted his $2,300 back. Two months later, his bank returned the money.

The dispute process was no more difficult than in the past, he says. “But it took a lot longer to get a solution.”

How bad has it gotten? Stephen Fofanoff, general manager of Domaine Madeleine, a small inn in Port Angeles, Wash., says he’s noticed a significant increase in credit card disputes since the pandemic began. They follow a similar pattern: guests book the cheapest nonrefundable rooms, bypass travel insurance, and then request a refund when their plans change.

“If we don’t give them a refund, they threaten us with bad reviews and then file a refund with their credit card,” he says.

But a refund is not a magic bullet for travelers who want a refund. For starters, it only applies to credit cards. If you pay by cash, debit or bank transfer, you cannot receive a refund.

Fair Credit Billing Act protects purchases where the date is incorrect. (For example, you booked an airline ticket for the 23rd of the month, but received a ticket for the 25th.) This also applies to receiving the wrong number of goods or services (you booked a rental car, but paid for two) and mathematical errors, such as a decimal point concoction that turns your $4 latte into a $4,000 cup of joe.

You have 60 days after receiving the first statement containing the disputed transaction to file a refund.

If you have a complaint about the quality of a travel product, as opposed to a failure to provide a service, the threshold is even higher for credit card disputes. The law requires that the business must be in your home state or within 100 miles of your current billing address and that the purchase must be for more than $50. You must also make a “good faith effort” to resolve the issue with the seller first.

A credit card chargeback is almost never the fastest or easiest way to get a refund. Even if you’re successful, getting a refund is a long process, and the dealer may send you back to a collection agency or add you to their “Do Not Rent” list. It is much better to work with the airline, rental car company or hotel to get your money back.

So when should you immediately make a refund? Only when a travel company charges you fraudulently. Please be patient with any other disputes. If, for example, a company promises a refund and doesn’t deliver, you should talk to your bank. (Remember the 60-day limit.)

“Don’t use chargebacks as a weapon,” advises Y. Murat Ozguc, managing partner of Turkish tour operator Travel Atelier. He often deals with chargebacks from customers who don’t recognize his company’s name on their credit card bills. Instead of calling to ask about their bill, they submit a refund. They don’t win the argument, but it makes life complicated for everyone.

Read the fine print before calling your bank or credit card. Brandon Barron thought he could use a credit card dispute to get a refund from Aeroflot after the airline canceled his flight from Washington, D.C., to Kemerovo, Russia, this summer. But the airline could not return the money because it was affected by US sanctions. He then realized that he had booked the tickets with a debit card.

“Beginner’s mistake,” says Barron, who works for a rental company in Charlotte. “I don’t have much hope of ever seeing a penny of that amounting to nearly $5,000.”

The takeaway: Credit card chargebacks can be a powerful tool for recovering your money from a travel company. But use them sparingly and only after exhausting all other measures.

Prospective travelers should consider local and national public health guidelines regarding the pandemic before planning any travel. Travel health advisory information can be found on the Centers for Disease Control and Prevention’s interactive map showing travel recommendations by destination and the CDC’s travel health advisory website.

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