Managing Chargebacks During Natural Disasters

Unexpected natural disasters, such as hurricanes and earthquakes, can have serious consequences for consumers, businesses, and financial institutions. Some firms and organisations may continue operating normally, while others may have significant challenges.

Businesses impacted by disasters may be unable to provide the goods or services promised, perhaps leading to a dispute, or customers may be unaware of these concerns and may file chargebacks based on misunderstandings. Furthermore, damage to infrastructure, power outages, and resource limits can all impede communication, resulting in delays and chargebacks.

When this happens, payment networks and banks advise their consumers to be flexible while they resolve any issues that arise. Standard dispute resolution methods remain in place, but businesses and financial institutions are being advised to be more detailed when dealing with transactions impacted by these difficulties. Here are some crucial things to remember and the best approaches to resolve disputes during these times.

The Most Effective Strategies to Handle Chargebacks

When dealing with chargebacks caused by unanticipated events, it is critical to be caring and practical. Here are some situations that may happen:

Transactions and Refunds are Processed Slowly

• Extraordinary Delays: If a merchant completes a transaction or refund later than expected due to an unusual circumstance, issuers should consider allowing these transactions to proceed rather than challenging them.

Disputes about Travel and Hospitality

• Travel issues: If a cardholder is unable to travel due to an unexpected emergency, merchants should make revisions or cancellations as soon as possible, even if they committed to a non-refundable policy.
• Hotel Reservations: If communication issues prevent timely cancellation, hotel operators should waive fees and consider refunding deposits.
• Airlines that cannot fly into or out of affected areas should provide credits or refunds. If an airline says no, card issuers should advise cardholders to contact the merchant about the matter, emphasising that the acquiring bank may be held liable for services not provided.
• If you are unable to return a rental automobile due to airport closures or transportation issues, the rental business must attempt to resolve the issue peacefully and cannot levy damage fees without the cardholder’s consent.
• If cruise companies are unable to accommodate guests due to flight cancellations or travel restrictions, they may offer vouchers for future cruises. If a cruise company claims it is not responsible for these types of delays, the issuer may be held liable in the dispute.

Ticketing Disputes for Events

• If an event (such as a show, sports game, or play) is rescheduled and the cardholder is unable to attend, the acquirer must reimburse the cost.
• Voluntary Cancellations: If a cardholder cancels their presence at a planned event, sellers should be willing to make changes or provide a refund, even if the policy states non-refundable payments. Any additional travel or lodging should be arranged directly through the appropriate businesses.
• If you purchase tickets through a third-party resale site, you may be subject to the resale provider’s refund and cancellation rules, rather than the original merchant’s.

Failure to Deliver or Late Delivery

• Order Fulfilment: If a seller fails to fulfil an order within the agreed-upon timescale, such as for food, flowers, clothes, or furniture, the acquirer must ensure the service is given correctly or refund the money.
• If both parties agree on an alternative delivery date, issuers will still honour the agreement.

How does the Payment Network Handle Chargebacks during Disasters?

Visa and Mastercard both place a high importance on the ability to resolve disputes swiftly and effectively in times of tragedy. Visa wants disputes resolved in good faith so that both businesses and cardholders lose as little money as possible. It also encourages tolerance in the worst-case scenarios while adhering to key dispute resolution rules.

Similarly, Mastercard offers the Hardship Variance, which provides more alternatives for handling chargebacks. This includes extending the chargeback and arbitration deadlines in the event of a disaster, as well as encouraging issuers, acquirers, and merchants to collaborate to mitigate the financial impact.

Advice on How Merchants can Handle Chargebacks Successfully

To handle chargebacks appropriately in a crisis, consider these steps:

 • Proactively communicate with customers to address service issues and provide alternative solutions.
 • Record all transactions: Keeping track of communication and work interruptions might help resolve issues swiftly.
 • Remember to be kind during a crisis, as everyone is going through a difficult time. Empathy promotes trust and kindness.

The Bigger Picture

Visa and Mastercard understand the importance of being adaptable and assisting people in difficult situations. The industry attempts to protect businesses and customers from financial losses by implementing guidelines such as Visa’s good-faith resolution process and Mastercard’s Hardship Variance.

Not everything can be prepared for, but recognising what’s going to happen, collaborating with everyone involved, and using good judgement can help save expenses and maintain positive relationships.