I was recently charged a $5 fee in error by a California based tech company. I disputed the charge via app and they issued me a “refund” in credits for future use of their service. I have not been able to contact the company in regards to getting my payment method refunded. I’m upset at this shady business practice, because I am out of the $5 for their error no matter what and the only way I can experience the refund is if I use their service again. Personal feelings aside, I’m genuinely interested if this is a legal way to conduct business.

Can a company erroneously charge customers and issue credits as refunds instead of refunding the payment method directly?

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    If you used a credit card, you can leverage the contractual relationship a credit card company has with merchants, and discuss with your card issuer filing a chargeback. If you used a debit card or some online service that does not have the same protections as a credit card, let this be part of the lesson learned. – user662852 Jun 28 '18 at 16:11
  • You really should say in your question what happened, and how you paid. – Acccumulation Jun 28 '18 at 19:46

No, this isn't legal. Had you authorized the purchase, then it would have been legal; this is similar to a store credit for returns without a receipt. But since you claim they charged you in error and you did not authorize the transaction, then they must refund the money directly to you (unless you agree to another method of compensation). In fact, a direct refund should have been the default unless they gained your permission to receive it in a different form.

Why are you unable to contact the company? That seems like the simplest resolution so this.

  • I agree it should be a simple fix! The company does not have a phone number publicly listed or at least I have not been able to find one that does not direct me to use their app. The fee was because someone who works for them cancelled on me. They have a 5 minute grace period and I was late by 2 minutes. – drg Jun 28 '18 at 14:50
  • Just to make sure I understand: it sounds like you did authorize the original $5 purchase. Then you decided to cancel within 5 minutes but did not succeed in cancelling until 7 minutes? And the reason you couldn't cancel within 5 minutes was because of an error on their end? Is that correct? – TTT Jun 28 '18 at 15:12
  • I did not decide to cancel. I was scheduled for 5:30am and at 5:32am the their person cancelled on me. They (as in the company) offer a 5 minute grace period before I should be penalized. I did not want to cancel. – drg Jun 28 '18 at 15:26
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    I think this is going to depend on the service agreement and the details of the transaction. If you can use the credits to reschedule a different time then perhaps that is fair. But if after that time the service is no longer relevant to you, then a refund would be fair. Is there an email or form for support you can use? – TTT Jun 28 '18 at 16:06
  • I have not found any way to communicate with the company. Their TOS state that all charges are non-refundable, except as determined by them. They made no mention about how their refunds work. I did use their service immediately after their person canceled on me, but I was unaware that I was charged the cancellation fee at that time. I don’t use their service often. It could be over a year before I have a use for it again. – drg Jun 28 '18 at 18:27

So much of this depends on the TOS (Terms of Service) with the company and/or the App. Read it. The TOS may very well state there are cancellation fees for their services, and their method of refunding such fees is in App credits and not cash. You agreed to the TOS when you clicked through the TOS to use the App. See Click wrap Contract (Wikipedia). You can also contact the California | Better Business Bureau.

  • Their TOS just states that there may be fees that apply and that charges are non-refundable, except as determined by them. They make no mention of how a refund would work, if it would be as a credit or cash. Thank you for suggesting that I contact the CA BBB. – drg Jun 28 '18 at 18:30

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