What’s the deal with credit card chargebacks and risky online investments?

Have you ever invested in binary options trading over the internet? What if a deal doesn’t go your way?

The New Zealand Bankers’ Association (NZBA) has sent out a Media Release today supporting the Banking Ombudsman’s warning that you shouldn’t expect to be reimbursed for authorised credit card payments to risky binary options trading websites.

NZBA Chief Executive Karen Scott-Howman stated that “Once you’ve authorised an online payment with your credit card to a binary options trading website, you can’t expect to get a chargeback if the trade doesn’t go your way. The same applies to any credit card payments you make online that you have authorised.”

Binary options are a high-risk form of investment where you can gain or lose money by trying to determine whether the value of a share, commodity or currency will go up or down within a certain time.

In order to sign up to a binary options trading website you are required to enter your credit card details as payment.

NZBA stated that credit card payment reimbursements, or chargebacks, may be available in the case of disputed payments. Chargebacks may occur in cases where the payment was not authorised by the cardholder, or the goods were either not received or defective, or if the payment was incorrect or duplicated.

This serves as an important reminder to make sure you know what you’re signing up for before you start entering your credit card details into these types of websites. Remember that once you’ve confirmed the payment, and you receive the service that you’ve paid for, you can’t get your money back.

More information about credit and debit card chargebacks is available on the Banking Ombudsman’s website.

I’ve paid a few bucks in the past to NZ Dating and Findsomeone, both of which are pretty much crap and I never thought of asking for a chargeback.

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People don’t understand that if they give details out and they don’t read the terms and conditions then they are liable The bank has no reason to reverse funds because you don’t read the terms and conditions

Another thing to keep in mind is purported “investments” which accept credit cards are almost certainly a scam for the following reasons:

  1. Merchant fees - Typically 2.5-3% for internet transactions - a level which would not typically be absorbed in investment margins.
  2. Merchant service contracts (the agreement between the merchant and their bank) typically stipulate credit card payments can only be accepted for the sale of goods and services. While this is not a universal rule - notable exceptions include TravelEx (who charge a “convenience fee” for foreign currency purchases via credit card) - exceptions would be on a case by case basis. I have never heard of any legitimate investment company obtaining a dispensation by the card schemes.
  3. In any instance - investing borrowed money is risky and even half-legitimate options like CFD’s (Contract for differences aka. Margin investing) companies would seek to limit their exposure to client defaults by requiring payment to be made through a non-recourse channel, which credit cards are not.

Credit cards can be used for online gambling though these sites are classed as “high risk” by the card schemes and their member banks who impose extra conditions, if they will even accept these businesses at all. These extra conditions would typically include sizeable security deposits, rolling-holds on card revenue and increased oversight.

Is this welcome back for the 3rd or 4th time now @Fordette?

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So in another feat of breathtaking “taking the ■■■■”, you are telling the BNZ you have money to gamble on high risk “investments” while claiming poverty?