Bank failed to consider all available grounds before rejecting chargeback request

Categories:

Cards, Chargebacks,

Summary:

In June 2026, Jerry made 13 debit card payments totalling NZ$4,000 to two merchants on an online gambling account. Jerry had previously activated a gambling block, but the merchants used category codes unrelated to gambling and the bank’s block did not pick up the fact the payments were gambling transactions. Jerry complained that the bank did not adequately investigate the category codes or consider all available chargeback options.

Published:

October 2026

Our investigation

Jerry authorised the payments, so the bank could not seek a chargeback on the basis of fraud. It told Jerry there were no other grounds for seeking a chargeback. However, the bank’s fraud team, which did not handle chargeback requests, was unaware that invalid transaction data might be another ground for a request.

When Jerry gave the bank information indicating that the merchant category codes were wrong, the bank requested a chargeback on the basis of invalid transaction data. The merchants accepted liability, and the bank credited $4,000 to Jerry’s account. The bank also blocked both merchants from being able to process transactions with Jerry’s debit card. We told the bank it should have considered other chargeback grounds at the start and encouraged it to remind staff about the chargeback rules.