Partially upheld: disputed transactions, chargeback handling, customer service failures complaint against NewDay Ltd

Decision detail

Summary

Mr L complained that NewDay unfairly processed two gambling payments totalling £2,026.32 on his credit cards and refused to refund them or raise chargebacks. Mr L argued the payments should have been blocked as they were gambling transactions processed with incorrect non-gambling merchant codes, contrary to UK credit card gambling restrictions. NewDay declined chargebacks and s.75 CCA claims, but acknowledged customer service failures. The ombudsman found NewDay was not responsible for merchant-set categorisation codes and that chargebacks were reasonably declined under Mastercard rules excluding gambling payments. However, the ombudsman upheld the complaint in part, increasing compensation from £65 to £200 for NewDay's provision of conflicting information during dispute handling, particularly given Mr L's vulnerability.

The Ombudsman's reasoning

The ombudsman found that while Mr L authorised the payments and they were not fraudulent, NewDay was not responsible for the incorrect MCCs used by the merchant. Chargebacks for gambling payments are excluded under Mastercard rules, and Mastercard confirmed no chargeback codes exist for masked gambling transactions, making chargebacks unreasonable to pursue. Section 75 CCA claims faced multiple barriers including financial limits (BIP payment under £100), unclear debtor-creditor-supplier relationship, and no demonstrated misrepresentation or breach. However, NewDay's customer service failures in providing conflicting information during dispute handling, particularly given Mr L's vulnerability, warranted compensation. The ombudsman rejected the argument that NewDay should attempt chargebacks without reasonable prospect of success in hope merchants fail to defend.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website