At the end of a business day, the merchant delivers all of his sales draft information to his own bank, which is how the merchant obtains his funds from the various credit-card purchases made at the store. The merchant's bank creates an electronic version of the drafts, which are forwarded to the credit card's data centre.
The data centre then files these drafts to the banks that issued each consumer their credit card (making sure to include all fees, currency conversions, etc). The issuing bank receives the file and posts the transactions to the card holder's account. That same bank then dispatches the owing funds to a settlement bank, which is responsible for delivering the funds to the bank that supports the merchant.
There are no regulations in Canada that oversee this transaction flow. Card companies and participating banks referee themselves. "Visa has operating regulations that govern how a transaction flows," says Terrie Tweddle, a spokeswomanfor Visa Canada.
"The purpose behind these rules is to ensure that the card holder has a similar experience regardless of where they are, anywhere in the world."
Make refunds within 30 days
But if you return it within the 30-day period, you have a case. If the store clerk refuses to do a refund, you should resort to seven words of fail-safe intimidation: "I'd like to speak to the manager."
If the store still won't budge, your next avenue of recourse is to tell the financial institution that issued your credit card. (With a CIBC Aerogold Visa, for example, you would need to contact CIBC rather than Visa.) In most cases, the two sides will settle the dispute, and you should receive your refund.
The more troubling scenario is if you look at your credit-card statement and find a transaction you're certain you didn't make. In that case, you need to contact your credit-card issuer and ask them to investigate potential fraud.
The bank will go back to the store and demand proof of the purchase in question -- typically a sales slip with your signature on it. In most cases, the matter will end there.
Zero-liability cards protect consumers from fraud
"We tell people, reconcile your statements at the end of the month to make sure there's nothing unauthorized," says Isabelle Rodrigue, consumer education officer at the Financial Consumer Agency of Canada in Ottawa. "If you do find something that you think you didn't authorize, call your credit-card issuer right away."
The mere suggestion of fraud is enough to give consumers chills, but most credit cards have a zero-liability policy in place. What does that mean? In most cases, the credit-card issuer reimburses the customer as soon as fraud is suspected.
If the transaction is later proved to be fraudulent, the card holder has already been compensated; if the transaction is not fraudulent, she is recharged for the amount on her credit card. Either way, the customer does not pay interest for the duration of the investigation.
"We tell customers that they're more protected with a credit card than they are with a debit card, just because they have this zero-liability policy," says Rodrigue.
Awaiting your refund
If you're dealing with a large department store like Sears, it's connected to an electronic system. A refund at Sears will be administered a lot more quickly than if you're dealing with a small-town merchant who's jotting everything on old MasterCard and Visa stubs and processing transactions manually or by phone.
One thing about using a credit card: You can't control when a purchase -- or a subsequent refund -- hits your account. It's very possible, for example, that you made a purchase in one month, but were credited the refund the next month.
Many consumers assume that because they've returned the item, they don't need to resolve their balance. It's quite possible, however, that the credit-card company doesn't know that you've returned the item, because the refund transaction hasn't registered in your account yet.
In the world of credit, as soon as you make a purchase, you're loaned money. So while it may seem a nuisance, you're still liable for the whole amount of the credit-card statement.
If you pay off the disputed amount in the first month, you should see a credit on your next statement. This, too, comes with a stipulation: In most cases, credit cannot be redeemed for cash. That means you'll have to work off your refund by using your card for other purchases.
"The best thing to do is pay off the statement in full even though you're paying off more money than you should," says Rodrigue. "The following month, when you get the credit, use it up on essential purchases, like buying gas or groceries."
Andre Mayer is a freelance writer based in Toronto.
|-- Posted: April 16, 2004