- What is a chargeback or claim?
- Why are customers able to reclaim payments?
- How can a customer reclaim a payment?
- When can a customer reclaim a payment?
- How common are chargebacks/claims?
- Can I dispute a chargeback/claim?
Chargebacks and claims are two terms commonly used to describe the same situation – when a customer reclaims funds that were collected through the Direct Debit scheme, via their bank. As with the term used for this situation, the process and ability for payers to action this varies between Direct Debit schemes.
Direct Debit is a ‘pull’ based payment system that enables you to draw funds out of your customers’ bank accounts, following their authorisation of a Direct Debit mandate.
As Direct Debits are simple to set up, and payments can be created and charged without the explicit approval of the payer, they are offered protection under each Direct Debit scheme to cover them in instances when payments are collected from their account in error.
The process for reclaiming funds collected through Direct Debit varies between schemes, however in all cases it is actioned by the customer directly with their bank. If accepted, their bank will then return the funds to them before informing GoCardless of the action. For further information please view the relevant Direct Debit scheme article via our Schemes section here.
The timeframe in which a customer can chargeback/reclaim a payment following its collection varies between schemes. For further information please view the relevant Direct Debit scheme article via our Schemes section here.
Direct Debit protection falls heavily in the customer’s favour making it is difficult to dispute wrongful claims once they have occurred.
Many banks will not accept an online mandate as proof that a customer has authorised a Direct Debit. As a result, GoCardless is unable to assist with disputing chargebacks/claims.
If you do receive a chargeback/claim that you do not believe to be legitimate, we recommend the following:
- First, get in touch with your customer to find out why they have charged back the payment. In most cases the customer has not recognised the payment on their bank statement. If necessary, you can also advise your customer that it is a crime to wrongfully charge back a payment. (This is stated in the UK’s 2006 Fraud Act, for example).
- If you are not able to resolve the issue with your customer directly, you would need to seek specialist advice on if and how you can formally dispute the claim. (If in the UK, for example, disputes should be raised through the Small Claims Court, and the Citizens’ Advice Bureau is the best source of further information on this process).
We recommend that you have a written agreement or contract signed with the customer outside of GoCardless, when they sign up to your services. In the event of a chargeback/claim, this agreement can be used as evidence that a customer has agreed to pay you.