If you issue debit cards branded under MasterCard or Visa, know your Association's Rules and Regulations regarding disputes as the customer would still be protected by these rules even if the claim falls outside of Reg E. You would not need to issue PC and credit can be giving at the time of chargeback or hold on to the credit until the chargeback timeframes expire if you are afraid the customer will run off with the money.
Chargebacks can be performed under both MasterCard and Visa for ceased operations. Save the bank money and make your customer happy and keep their business.
Below is a bulletin released by Visa regarding chargebacks available to the issuer in these cases.
When a merchant, such as an airline, ceases operations, the Visa U.S.A. Inc. Operating Regulations and Visa International Operating Regulations provide issuers with the following chargeback rights.
Services Not Rendered
The "Services Not Rendered or Merchandise Not Received” (Reason Code 30) chargeback right covers several situations—including flight cancellations and non-receipt of airline tickets. This chargeback must be processed within 120 days of the Central Processing Date of the transaction or the expected date of the services and must be supported by a letter from the cardholder or a completed Visa Resolve Online (VROL) Dispute Resolution Form. Chargebacks representing future travel dates are valid when the airline files for bankruptcy and ceases operations. In such instances, the expected travel date is used when completing the "expected date of receipt for the merchandise/services” field on the applicable VROL Dispute Resolution Form. If the expected travel date is prior to the date the merchant ceased operations, this chargeback reason code should not be used.
Issuers are reminded that they may charge back only the portion of the services not received. If a cardholder uses half of a round-trip ticket prior to the airline ceasing its operations, only the unused portion of the ticket may be charged back.
Credit Not Processed
The "Credit Not Processed” (Reason Code 85) chargeback may be used when a credit voucher has not yet posted to the cardholder’s account. Issuers must wait 30 days from the date on the credit voucher prior to exercising this chargeback. A copy of the credit transaction receipt or acknowledgement, or a completed VROL Dispute Resolution Form must support all U.S. chargebacks. For international chargebacks, a copy of the credit transaction receipt must be provided. Issuers are reminded that neither the Visa U.S.A. Inc. Operating Regulations nor the Visa International Operating Regulations consider "lost ticket applications” or "applications for refund” as credit vouchers.
Tickets Honored by Another Airline
A cardholder is not required to accept a flight offered by another carrier willing to honor the unused ticket. If, however, the cardholder accepts this option and the ticket is used, a chargeback right is available only if an additional fee was assessed by the alternate carrier. If so, the issuer may charge back the initial transaction for the amount of the additional fee using the "Services Not Rendered or Merchandise Not Received” (Reason Code 30) chargeback right (if the fee is over the Travel and Entertainment transaction minimum amount of $25). Although not required, including documentation to support the chargeback, such as a copy of the receipt for the additional fee, will expedite the dispute process.
Agent Fees
Fees billed by travel agencies for booking flights prior to an airline’s bankruptcy are considered valid and should not be charged back, as the cardholder has received the service of booking the flight.
Fees for Date Changes
If a cardholder purchases a ticket prior to an airline’s bankruptcy and is charged a fee for changing the date of the original ticket, the issuer may not dispute this charge. The service of changing the dates was provided.
Unused Tickets
Although most tickets are issued electronically, issuers are reminded that unused paper tickets are negotiable documents. Whenever these tickets are returned by mail, the sender should use a mailing method that provides proof of delivery. While proof of return of unused paper tickets is not a condition of any chargeback, issuers should verify the disposition of the paper tickets with the cardholder. This will minimize the chances for the cardholder to receive credit twice (through the chargeback process and directly from the merchant or its agent).
Representments
For disputes involving tickets honored by another airline, acquirers can represent a transaction with the following information:
Flight date
Flight number
Carrier used
Point of origin
Destination
When presented with this type of information, issuers are encouraged to work with their cardholders to determine if the tickets were used.
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