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A reversed refund

Rachel and Rick booked a cruise to America through a travel agency. The travel agency had contracted with a cruise company to operate the cruise. Rachel and Rick used their credit card to pay the travel agency the $50,000 cost of the cruise.

When Rachel learned the cruise company was in serious financial strife, she asked the travel agency for a full refund of the trip. It looked like the cruise would be going ahead on different dates and Rachel and Rick couldn’t travel on those dates due to other commitments. The travel agency didn’t provide a refund, and Rachel requested a chargeback from the credit card provider. A chargeback is where a credit card provider reverses a payment back to the credit card because a transaction is disputed in some way.

The credit card provider assured Rachel multiple times it would accept her chargeback request, before crediting back the full $50,000 days later. With the matter resolved (or so they thought), Rachel and Rick rebooked their flights for a replacement trip to Asia. Weeks later, the credit card provider recharged the cost of the cruise to Rachel and Rick’s credit card without warning.

Rachel contacted FSCL after she was unable to resolve the problem with the credit card provider.



The credit card provider said it initially refunded the transaction because Rachel had said the travel agency (not the cruise company) had gone out of business. When it transpired the travel agency in fact remained in business, the provider reversed the chargeback saying the basis for the chargeback request was invalid.

The credit card provider also said it couldn’t chargeback the transaction because the cruise dates changed, because the travel agency’s terms and conditions stated the service was “subject to change”.

In Rachel and Rick’s view, they had paid $50,000 for a service they hadn’t received, so the credit card provider should refund the money back to them according to its chargeback policy (which stated the provider would chargeback a transaction if the cardholder did not receive the goods or services it paid for). Rachel was also unhappy with the way the credit card provider handled her complaint – it promised her the refund multiple times, issued it, and then recharged the cost back to her credit card without warning.



We couldn’t see any reference to Rachel claiming the travel agency had gone out of business in her communications with the credit card provider. When she first requested the chargeback, she outlined the cruise company’s financial difficulties. In any event, the credit card provider had written to the travel agency (before the chargeback was applied) requesting the chargeback on the basis that the new cruise dates were not appropriate for Rachel and Rick. The reasons the provider gave for reversing the chargeback when Rachel made the complaint were inconsistent with its own records.

We next considered the travel agency’s terms and conditions which said its services were “subject to change”. We outlined that the terms and conditions could not override the Consumer Guarantees Act (the CGA) under which the travel agency guaranteed Rick and Rachel would receive the cruise services they signed up for. We accepted there may be some changes in a service that wouldn’t trigger the CGA (such as a different ship of the same standard as the original ship). However, overall, we considered the dates of a trip to be essential to travellers, like Rachel and Rick, who are likely to have date constraints due to other commitments.

We ultimately found that the change in the service (being the date change) was fundamental, and Rick and Rachel were entitled to their refund under the credit card provider’s chargeback policy.

We also found that, even if the travel agency’s terms and conditions had allowed it to change the dates of the trip, or allowed the credit card provider to refuse the chargeback, the provider could not go back on the representations it made to Rachel when it promised to refund her in full and subsequently issued the refund. Rachel and Rick relied on these representations, and the refund once issued, and rebooked the replacement trip to Asia.



We upheld Rachel’s complaint and recommended the credit card provider reapply the full chargeback. We also said the provider should pay Rachel and Rick $1,000 as compensation for stress and inconvenience. This was because Rachel and Rick received no warning of the chargeback being reversed, and then it was stressful to have to quickly pay off $50,000 so they could use the credit card during their replacement trip.


Key insights for the participant/ the complainant

It is important for participants to communicate clearly and consistently with complainants and not make any false promises or go back on a resolution that complainants may rely on.

Both participants and complainants should be aware that service providers have general consumer law obligations which may override their general terms and conditions.