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Chargeback rights for customers (due to COVID-19)

Chargeback rights due to COVID-19

Credit card companies have advised there is a chargeback right where goods or services have not been provided, including when this is due to government prohibition, insolvency or other exceptional circumstances. 

Merchants should process a refund promptly if the cardholder declines to accept credit notes or vouchers for future use.

In some cases, credit card companies do make exceptions where merchants have failed to provide a service due to a government-imposed prohibition despite this contradicting credit card company’s dispute rights. 

Chargebacks and Section 75 of the Consumer Credit Act 1974? 

Section 75 of the Consumer Credit Act 1974 states the credit card company is jointly and severally liable for any breach of contract or misrepresentation by the merchant.

This means, credit card companies are just as responsible as the merchant for the goods or services supplied, allowing the cardholder’s to claim from the credit card companies.

Cardholder’s can make a claim to both the merchant and credit card provider simultaneously, although they can only receive the money back once.

When can a chargeback be opened?

  • If the alternative arrangements are not covered in the terms and conditions
  • The offer of vouchers or free rebooking is deemed insufficient by the cardholder.
  • A flight cancellation due to the closure of borders because of the EU rules around refunds override government prohibition.
  • Ticketed events offering a new date or vouchers don’t have to be accepted, including if the event was cancelled due to the government restrictions on public events.

The most common chargebacks we receive are due to “Service not provided” which are directly related to Covid-19. This can be caused by government prohibition.

What is Government Prohibition and their Restrictions:

Government prohibition is defined as a law, regulation, government order or decree that the merchant would have violated by proceeding to provide its services to the cardholder during the COVID-19 crisis. It is a law or regulation that restricts the merchant’s cardholders as opposed to the merchant itself does not negate the credit card companies dispute rights.

Here are some examples to help understand what would be considered a valid government prohibition.

  • Border is closed and the government expressly prohibits an airline from flying into the country.
  • Example: Effective 22 March 2020 at 11:59 p.m., international flights to St. Maarten are prohibited for two weeks and airlines are not allowed to bring any passengers into the country, including residents / nationals. The only flights allowed are cargo flights or ferry flights to pick up passengers to return them to their homes. No restriction applicable for crew (cargo and ferry flights).
  • Non-essential business closure by order of the government (e.g., gym, golf membership, camps, indoor and outdoor recreational and cultural facilities).
  • Example: Effective 24 March 2020 the country enacts declaration of emergency to protect the public by requiring the closure of non-essential businesses. Gyms are not on the list of essential services and are therefore mandated to remain closed under this regulation.

Here are some examples of what would not be considered a valid government prohibition.

Business is still able to operate without violating the law, but makes a business decision to close.


  • Advisory regarding risks of traveling to a specific destination.
  • Recommendations against gatherings of a certain size.
  • Guidance or best practices by government agencies or industry groups.
  • Non-essential public event advisory for voluntary closure (e.g. concerts).
  • Mandated maximum number of people allowed to gather (e.g., impacting large events like concerts, theatres, weddings, galas).
  • Restrictions impacting the merchant’s passengers or other cardholders from showing up to receive services
Updated on February 17, 2021

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