Not upheld: chargeback handling and fairness of reversing temporary refund complaint against Bank of Scotland plc

Decision detail

Summary

Mr K purchased a £14,200 watch using his BOS debit card, which he claimed arrived empty. BOS raised a chargeback claim and provided a temporary refund of £14,200, warning Mr K not to spend the funds pending the outcome. Mr K spent the funds on a replacement watch before the merchant successfully defended the chargeback claim. BOS reversed the temporary refund, leaving Mr K with an unauthorised overdraft of approximately £14,000. Mr K complained that BOS should not have given him the refund if he was not meant to use it and should not hold him responsible for the resulting debt. The ombudsman found BOS acted fairly throughout, as they correctly handled the chargeback claim, clearly communicated that the refund was temporary, and warned Mr K of the risks of spending the funds.

The Ombudsman's reasoning

The ombudsman found that BOS correctly applied the appropriate Visa chargeback reason code ('Merchandise/Services not received') and reasonably concluded the claim had little prospect of success based on the merchant's defence, which included proof of delivery and photographic evidence of the watch being packaged. The ombudsman determined that BOS was not obligated to conduct a deeper investigation into the courier's handling of the package. Regarding the temporary refund, the ombudsman found that BOS clearly communicated to Mr K that the refund was temporary and warned him not to spend the funds pending the chargeback outcome. Since Mr K spent the funds despite this warning, the ombudsman concluded BOS acted fairly in reversing the refund and pursuing the resulting overdraft debt. The ombudsman noted that while a delay occurred in processing the chargeback, this delay did not cause the unsuccessful outcome, as the merchant would likely have provided the same defence regardless.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website