The Truth About Chargebacks & Section 75: How Banks Really Decide Disputes — And Why So Many Claims Are Failing

24th Nov 2025
The Truth About Chargebacks & Section 75: How Banks Really Decide Disputes — And Why So Many Claims Are Failing Chargeback (Definition): A voluntary Mastercard/Visa dispute process allowing cardholders to request refunds when goods or services are not delivered as advertised. Section 75 (UK): A statutory protection making credit card companies jointly liable for purchases between £100 and £30,000. Common Dispute Types: Misrepresented services, undelivered goods, cancelled travel, faulty products, card-not-present fraud. Average Resolution Time: 45–120 days depending on the card network. Chargebacks and Section 75 offer powerful tools for consumers when goods or services are misrepresented, defective or not provided. But banks increasingly reject claims, citing insufficient evidence or “expectation issues,” while businesses suffer from an epidemic of chargeback abuse. This guide explains how the system really works — including what banks look for, how Mastercard and Visa assess cases, and what to do when a dispute ends in stalemate. Why Chargebacks & Section 75 Matter More Than Ever Consumer disputes are rising, and both banks and merchants are under pressure. Chargebacks were created to give customers protection when purchases go wrong. Section 75 goes further, imposing legal liability directly on credit card providers. But as the claims system becomes more complex, more consumers find their disputes rejected — even when they feel clearly justified. At the same time, businesses are being overwhelmed by fraudulent chargebacks, with some restaurant owners calling the problem “crippling.” Understanding how banks think, and how Mastercard and Visa review cases behind the scenes, is now essential. When a “Dream Holiday” Turns Into a Dispute Sometimes a case becomes clear only when you’ve lived it. Consider a stay at a five-star hotel in Greece, booked for two adults and three children, costing over £5,000.It was marketed as a luxury Thalasso Spa experience — heated indoor pool, working sauna, tranquil surroundings, premium family facilities. The real experience was very different: The pool was ice-cold The sauna was never switched on A club opposite blasted loud music until 5:30am Guests wore profane slogans, despite a stated dress code The atmosphere bore no resemblance to “family-friendly tranquillity” This is where disputes land:the hotel insists the facilities exist, the guest argues that they were unusable and misrepresented. Resolving these disagreements is precisely what chargebacks and Section 75 are designed for — but the process rarely plays out smoothly. How Chargebacks Actually Work Behind the Scenes Many consumers think a chargeback is a simple refund request. In reality, it triggers an internal investigation between: You (the cardholder) Your issuing bank The merchant The merchant’s acquiring bank The card network (Mastercard or Visa) The process looks simple from your app — but is complex behind the scenes. 1. You file a dispute You choose a reason code: Not as described Service not provided Defective product Cancelled booking Fraud/unrecognised transaction 2. Your bank refunds you immediately This is temporary. 3. Your bank asks the merchant for evidence They have limited time — often just 7–14 days — to produce: Proof you used the service Terms and conditions Photos, logs or receipts Evidence of attempts to resolve the issue 4. Mastercard/Visa decides based on their rulebook This is the part most consumers never realise.Banks don’t simply “decide” — they follow: Visa Claims Resolution (VCR) Mastercard Chargeback Rules These are enormous, highly specific frameworks.If the merchant’s evidence meets the network’s criteria, the bank must reverse the refund. 5. The bank informs you of the outcome If you lose, you can still escalate — but only through Section 75 or the Ombudsman. Section 75: The Legal Route the Banks Don’t Advertise Section 75 is a completely separate mechanism. ✔ It’s not a chargeback✔ It’s not Mastercard/Visa✔ It’s an actual legal liability under the Consumer Credit Act 1974 It applies only when: You paid via credit card The cost was £100–£30,000 There is misrepresentation or breach of contract You have a “direct debtor–creditor–supplier” link Crucially: Your bank is legally liable if the retailer breached the contract or misrepresented the service.The Consumer Rights Act 2015 also requires services to be delivered with reasonable care and skill, and to match their description — a standard often central to hotel, travel and service-quality disputes. Banks examine these claims far more aggressively than chargebacks, because if they uphold a Section 75 claim, they must pay you from their own pocket. ⭐ The Hidden Crisis: Chargeback Fraud Is Crippling Small Businesses While many genuine customers struggle to win claims, thousands of small businesses are being destroyed by fraudulent disputes. The Soho example — losing £600 a week Nima Safaei, who runs Forty Dean Street in Soho, says he has lost £5,000 in just three months, calling it “daylight robbery.” “We are on our knees. This is crippling us.” The Chingford example — even no-show fees are disputed Restaurateur and pastry chef Ravneet Gill experienced her first-ever chargeback for a no-show fee. She has never won a single dispute, despite providing evidence each time. “As a business, if you get one of these, you are powerless.” Industry-wide problem Aite-Novarica: up to 80% of chargebacks may be fraudulent Cifas: surge in “friendly fraud” UK Hospitality: one-third of venues affected This is why hotels often resist refund requests — even legitimate ones. How Banks Push Back: Tactics Used in Real Disputes The email language sent by banks to consumers follows a predictable pattern. The specifics vary — but the tactics are the same across the industry. Here are the common tactics used by UK banks when rejecting or reducing Section 75 claims: 1. “Expectation vs. reality” defence Banks frequently argue: “This does not indicate a breach of contract, only that the service did not meet expectations.” This shifts the burden back to the customer to prove factual misrepresentation — not disappointment. 2. “Benefiting from the Act” Banks often argue: “You cannot receive a full refund while retaining the benefit of the service.” Even when the service was materially defective. 3. “No factual evidence provided” Banks routinely dismiss claims that rely on narrative rather than: Time-stamped photos Videos Decibel recordings Screenshots of adverts Email correspondence 4. Low “goodwill offers” Banks sometimes make a small offer (e.g., 10–20% of the claim) framed as final and non-negotiable.This is not a Section 75 outcome — it is a commercial gesture, not an admission of liability. 5. Directing customers toward the Ombudsman When banks want closure, they say: “If you remain dissatisfied, you may approach the Financial Ombudsman.” This is often used to end the dialogue rather than genuinely facilitate resolution. These tactics aren't unique to any single bank — they are widespread across the industry. Chargeback or Section 75? Which Route to Use Use Chargeback When: ✔ You used debit card✔ Merchant won’t communicate✔ Goods/services not as described✔ Booking cancelled Use Section 75 When: ✔ You used credit card✔ Cost was £100–£30,000✔ Misrepresentation or breach of contract occurred Use Both When: ✔ The case is serious✔ You want maximum protection✔ You’re prepared to escalate What If Mastercard or Visa Reject the Claim? Consumers frequently believe that Mastercard/Visa will “override” a bank’s decision.They won’t. You cannot contact Mastercard or Visa directly.All communication flows through your issuing bank. If your bank rejects the chargeback, and you believe it is incorrect, the only escalation routes are: ✔ Section 75✔ Financial Ombudsman Service (FOS) There is no independent appeal to Mastercard or Visa. What To Do When Your Bank Refuses to Increase an Offer If your bank says: “This is the bank’s final decision and the offer will not be increased” …then you are at the final stage of the internal complaints process. At that point: ⭐ You are entitled to escalate to the Financial Ombudsman Service. The Ombudsman will: Review the evidence from scratch Consider industry standards Interpret consumer law Determine whether the bank acted fairly Banks must legally comply with FOS decisions. Final Step: Escalating to the Financial Ombudsman Service If a bank refuses to uphold your Section 75 claim, or offers a goodwill gesture that does not reflect the severity of the issue, you can — and should — escalate. You can submit a complaint to: Financial Ombudsman Service www.financial-ombudsman.org.uk The Ombudsman can order the bank to: Refund in full Partially refund Compensate for distress or inconvenience Re-review evidence they ignored This is the final and most powerful escalation route available. Final Thoughts Chargebacks and Section 75 remain essential protections. But the modern landscape is messy: consumers often face denials, businesses face fraud, and banks often sit somewhere in the middle, balancing legal obligations with commercial reality. The key is knowing: Which mechanism to use What evidence banks accept How Mastercard/Visa rulebooks influence decisions How to escalate when a bank refuses to act For many consumers, the final remedy lies not with the bank — but with the Ombudsman. Frequently Asked Questions 1. What is the difference between a chargeback and Section 75? A chargeback is a voluntary scheme run by Mastercard and Visa where your bank can attempt to reclaim money from a merchant. Section 75, on the other hand, is a legal protection under the Consumer Credit Act 1974 that makes your credit card provider jointly liable for misrepresentation or breach of contract. Chargebacks rely on network rules; Section 75 relies on UK law. 2. Can I make a chargeback and a Section 75 claim at the same time? Yes. Many banks allow both processes to run in parallel. A chargeback may be processed faster, while Section 75 provides a deeper legal review. If the chargeback fails, Section 75 can still succeed. 3. Can I contact Mastercard or Visa directly about my dispute? No. Consumers cannot appeal directly to Mastercard or Visa. All contact must go through your bank, which submits evidence into the card network’s dispute system on your behalf. Your only independent appeal route is the Financial Ombudsman Service. 4. Do banks automatically side with customers in chargeback cases? Not anymore. While banks often refund customers initially, the final outcome depends on evidence, merchant records, and card network rules. Recently, banks have become stricter to prevent chargeback fraud and misuse. 5. What evidence do I need to win a chargeback or Section 75 claim? The strongest evidence includes time-stamped photos, videos, screenshots of misleading advertisements, emails to the merchant, proof of attempts to resolve the issue, and any contemporaneous notes about the problems you experienced. Clear, factual documentation carries more weight than narrative statements. 6. Can I still claim if I used part of the service? Yes. Using part of the service does not cancel your rights. You can still claim for the portion of the service that was misrepresented or unacceptable. The bank may, however, reduce the refund to reflect the benefit received. 7. Why did my bank offer a “goodwill payment” instead of upholding my claim? Goodwill offers are commercial gestures, not admissions of liability. Banks use them when they believe the evidence is incomplete, the legal threshold for Section 75 has not been met, or they are unwilling to refund the full amount. You can still reject the offer and escalate to the Ombudsman. 8. Is noise, cold facilities, or poor service enough to claim under Section 75? It can be—if it amounts to misrepresentation or a failure to provide the contracted standard. For example, a hotel advertised as a luxury spa retreat must deliver working spa facilities and a reasonable level of tranquillity. The key question is whether the service differed materially from what was advertised. 9. How long do chargebacks and Section 75 claims take? Chargebacks typically take 45–120 days depending on the card network’s review periods. Section 75 claims can take several weeks or months, particularly when the bank requests more information or escalates internally. 10. What if my bank says their decision is final? You can escalate the matter to the Financial Ombudsman Service. Once a bank issues its “final response letter,” the Ombudsman is the independent authority that can overturn the bank’s decision and order them to refund you. 11. Does the Financial Ombudsman often side with consumers? The Ombudsman rules based on fairness, evidence and consumer law. Many consumers win when banks’ investigations were incomplete or relied too heavily on merchant statements. Strong documentation significantly improves the outcome. 12. Is there a time limit to complain to the Ombudsman? Yes. You must bring your complaint to the Financial Ombudsman Service within six months of receiving the bank’s final response letter. Missing this deadline usually closes the case permanently. 👉 Best Legal Document Services in 2025: What They Offer and Who They're For