If your customer who paid via PayTo wishes to challenge the withdrawal of funds from their bank account, it is known as a mandate claim (not a chargeback, the terminology that is used in some of our other schemes).
Within PayTo, there are certain scenarios under which a customer may raise a mandate claim. As with BECS AU, funds reversal is not automatic, again unlike in some of our other schemes.
For reference, the rules around PayTo mandate claims are covered in section 17.10 of the NPP regulations.
There are 4 steps involved in the claims process
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If a customer believes they have cause to raise a claim, they do so via their bank
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The customer’s bank will then pass on the details of the claim to us via Cuscal, our PayTo banking partner
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We then investigate the claim and decide whether to accept or reject it, and we send a message back to the customer’s bank with the results of our investigation
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If we decide to accept the claim, only then do we initiate a manual funds reversal to your customer from our GoCardless bank account
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Any successful claims will then appear as a negative amount against the respective merchant's GoCardless account, and they’ll be balanced out against subsequent collected payments.
Mandate claims can be raised under the following circumstances
A mandate claim is defined as a claim that a customer’s bank makes on behalf of a customer, in the case of a debited payment that was not authorised by the terms of the PayTo agreement and/or by the customer.
‘Not authorised’ is mostly limited to the following four cases. Claims cannot be raised for other reasons e.g., failure to provide a billing notice is not within the claims scope.
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Where there is no record (in the central PayTo Mandate Management System, the MMS) of the customer’s mandate authorisation
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If the relevant mandate is suspended or cancelled at the time that the payment request is sent to the customer
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Where fraud has occurred which is not already subject to an indemnity claim, regardless of any record held in the MMS
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In relation to a mandate that has been migrated from BECS AU to PayTo:
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If a PayTo payment has been initiated that goes against the authorisation of the original Direct Debit that the migrated PayTo mandate is based on i.e., the terms of the migrated PayTo mandate must match the terms of the original Direct Debit
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Points 1-3 also apply for migrated mandates
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Since all PayTo payments made are off the back of an authorisation, it is unlikely that the outcome would be favourable for the customer who raised the claim, unless it was an exceptional circumstance.
Claims relating to migrated BECS AU Direct Debit Requests (DDRs = mandate)
Where a claim relates to a migrated BECS AU DDR, the claim will be deemed to be substantiated unless there is written evidence of the following:
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The customer’s authorisation of the DDR upon which the migrated PayTo mandate is based; or
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The PayTo payment which the claim is based upon was in fact authorised by the terms of the migrated mandate i.e., there is no valid basis for the claim
Claims relating to new PayTo agreements
Claims where the customer disputes that a payment was permitted.
Where a claim relates to a PayTo payment made against an authorised mandate, where the customer disputes that the payment was permitted, the claim will be deemed to be substantiated by reference to the mandate record in the MMS.
I.e., if a customer claims that a payment is not permitted in terms of the amount, frequency, or beneficiary, this can be checked against the details of the mandate held in the MMS.
Claims where the customer disputes that a payment was authorised
Where a claim relates to an unauthorised PayTo payment, where the customer disputes either having authorised the mandate, or that the payment was authorised at the time it was taken e.g., because the mandate was suspended or cancelled, the claim will be deemed to be substantiated unless there is evidence that the customer did authorise the payment.
If a resolution cannot be agreed, e.g. the customer’s bank does not agree with the evidence supplied, then the PayTo disputes resolution process may be followed, whereby the claim is referred to the NPP for formal investigation.
Time limit for PayTo claims
PayTo payments can be claimed back up to 7 years after the payment charge date.