The Law Handbook 2024

460 Section 5: Managing your money Chargebacks A ‘chargeback’ is where a cardholder reverses an unauthorised transaction under the Visa card and Mastercard Rules. Chargebacks apply to disputes where the unauthorised transaction relates to the use of a Visa card or Mastercard and the transaction was not authorised by a signature, PIN or password. Chargebacks often apply to transactions made over the telephone and to mail orders. You can ‘chargeback’ an unauthorised transaction and obtain a refund on the basis that you did not authorise the transaction. This regularly occurs where a person’s Visa card or Mastercard details have been used for internet or telephone purchases by someone other than the cardholder. You may also be able to chargeback a transaction you did authorise if you were the victim of a scam. This may be possible where you made an internet or telephone purchase of goods or services using a Visa card or Mastercard and the goods or services were: • not received by you; or • not as they were described to you; or • defective. Most banks are required to consider ‘chargeback’ disputes under the Banking Code of Practice (see below). However, strict timeframes apply, so contact your financial institution as soon as possible. If a financial institution fails to properly process a chargeback dispute, you can make a complaint to the Australian Financial Complaints Authority (see ‘Contacts’ at the end of this chapter). Credit and finance industry codes of conduct Industry codes of conduct can provide additional and stronger protections for consumers. Industry codes are not laws of parliament, but are agreements entered into by members of an industry about the standards and practices they will uphold. Industry codes range from unenforceable voluntary codes to compulsory codes that bind industrymembers. However, external dispute resolution schemes may see industry codes as good industry practice relevant to decision-making. Banking Code of Practice The Banking Code of Practice (‘ Banking Code ’) is a voluntary code that sets out standards of good banking practice when banks deal with consumers who are, or may become, their individual and small business customers or guarantors. Nearly all retail banks subscribe to the Banking Code. The Banking Code is on the Australian Banking Association’s website (www.ausbanking.org. au ). There is now legal authority that the Banking Code forms part of the bank’s contract with the customer. Therefore, a breach of the Banking Code amounts to a breach of contract. Under the Banking Code, subscribing banks will: • supply the terms and conditions of any banking services it offers to any person on request (cl 146); • promptly process instructions to cancel a direct debit authority and complaints about an unauthorised direct debit (without directing or suggesting that the matter should be raised first with the debit user) (cls 135, 136); • where a customer disputes a credit card transaction, claim a chargeback and not accept a refusal from the relevant bank unless it is made in accordance with the Chargeback Rules (cl 130); • before offering, giving or increasing an existing credit facility, exercise the care and skill of a diligent and prudent banker in selecting and applying its credit assessment methods and in forming its opinion about the customer’s ability to repay (cl 49); • try to help a customer overcome their financial difficulties with any credit facility held with the bank, including by developing a repayment plan, communicating with the customer’s financial counsellor, informing the customer about the hardship variation provisions in the National Credit Code (NCC) (if applicable) and confirming the main details of any hardship assistance it provides in writing (cls 167–178); • not accept a person as a co-debtor under a credit facility unless the bank takes reasonable steps to ensure the borrower understands the risk of being a co-debtor, considers why the borrower wants to be a co-debtor and is satisfied there is no financial abuse (cl 54); • give certain information to a prospective guarantor about the financial situation of the debtor whose loan is being guaranteed (cl 97);