Is it legal for a store to accept payment by debit card but not be able to refund to it, even in event of staff's mistake?

Question

A store accepts payment by payment cards, including debit and credit cards. Refunds are allowed, however due to a technical problem refunds cannot be made to debit cards.

Sometimes a refund is necessary if a mistake was made, for example if the clerk scans the same item multiple times or the scanning gun malfunctions. This happened and the customer paid by debit and didn't have a credit card. (The mistake was caught after the customer read the receipt). Also the store does not carry cash. The store can give him the products that he paid for, but may the customer insist on getting a refund? Could the store give the customer credit, or must they actually return the money?

Answer 1

Could the store give the customer credit or must they actual return the money?

The store has the legal obligation to return the money if the customer demands to be reimbursed. Section 155(4)(a) of the BC Business Practices and Consumer Protection Act explicitly provides reimbursement "to a consumer or class of consumers".

The store's unilateral, inflexible decision to give the customer credit in lieu of a reimbursement is in violation of sections 8(3)(a) and 9(1) of the Act. That approach constitutes undue pressure to enter into an additional consumer transaction, more so where management is aware of the issue and refuses to fix it.

Answer 2

Based on how the debit clearinghouses work, it's fantastically unlikely that the retailer is unable to reverse/refund a transaction. That is how the banks want you to do it!!!!

The reason is simple: Suppose you charge $123.45 to my card, we have a dispute. Two things happen in parallel: a) you decide I am right and refund my $123.45, and b) I do a "chargeback" on my debit card.

• *As long as you have reversed/refund the same transaction, the credit card company will go "OK, these are just the same thing" and they will drop investigation of the chargeback since you already agreed to the refund.
• However, if you do a standalone reverse charge, then I get $123.45 back, and then the chargeback is investigated, and then another $123.45 is refunded! Now we have another big mess.

Occam's Razor says that either the individual clerk does not have the skills (or authority, though that seems like a blunder in a retail setting) to do the refund on their point-of-sale system...

... Or... the clerk does not want to give your refund, and is hoping to scam you with lies.

In this case, there's a simple (but perilous) answer: the vendor can do a cash refund. That is what they need to do if they can't work the machine properly. Cash is "Legal tender for all debts, public and private". The problem, then, is if a chargeback also occurs, again double refund.

Answer 3

Yes. They owe you a debt, they can’t just shrug their shoulders and say no can do, but neither are they obligated to repay it in a specific manner.

But they also can’t just hand over a company cash card or a plushy and say the debt is paid in full. You have to agree to accept it. Which would mainly be either cash or putting the money back (given the way the banking system works, I don’t think you could legally refuse to accept a reversal of a debit charge).

Since this is Canada, you might be able to get away with refusing cash in some circumstances, although I would think it unlikely — it isn’t mandatory to accept cash for all debts, but by the time it gets to court, I don’t see what else you could reasonably be asking for. On the other hand, the option to refuse cash and take it to small claims court could give you some leverage. If you won, you’d end up with cash, but they would have had to pay to file a defense at the very least and possibly pay your fees as well, plus any related expenses (their lawyer or representative’s time).