We have had multiple customers complain that our refunds, which we have done as "Refund by Reference" where possible, have gone to cards that they say have been cancelled. Windcave says that the refund by reference should be clever enough to be transferred to a new card (new number or expiration date) connected to the same account (i.e. bank), but these customers claim that they have cancelled the cards in question and closed their accounts with the bank in question. It's entirely possible that the customers believe that they have cancelled the cards but haven't, either in error or because the bank in question is being sleazy, but I don't know what tools we have to research this, and we can't ask our customers to do so (indeed, many of them likely lack the wherewithal). Has anyone else come across this issue or have any tips?
I'm bumping this with very important news: we now have a customer who was able to confirm to us that their money was refunded to a closed account. They had previously both cancelled the card in question and closed their account altogether with the bank (BofA), but after a "long conversation" the bank admitted that they had received the money and offered to write them a check for the amount. I fear many of our other customers will not be able to get this resolved, and of course we have no idea how many times this has actually happened without the customer doing a significant amount of research for us, but we're looking at 4 reported cases, I believe.
I don't see how we can use Refund by Reference in the future if it allows something like this to happen.
I wanted to chime in here to let you know that we are in communication with the payment providers about this issue. We will keep you updated as we learn more. It is important to note that Refund by Reference protects a merchant from fraud liability by ensuring refunds are issued to the card used for the original transaction and limiting the refund to the original transaction amount.
Tami Fox said:by ensuring refunds are issued to the card used for the original transaction and limiting the refund to the original transaction amount.
Except, of course, when they aren't. And it doesn't protect against a bad actor in the box office because there are too many scenarios that require a refund to an account to remove this functionality from box office personnel. It basically only protects against accidentally double-refunding a full order amount.
It's definitely a convenience for the box office, but it's now a nightmare for the customers who have lost their money to closed accounts. I think it's a great idea in theory, but the theory falls apart because it requires banks to choose to behave properly, with no (negative) consequences if they don't.
Is there any update on this?