Credit card chargeback in Israel: an item not supplied, a double charge and charges abroad

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Were you charged for a transaction you did not make? The dedicated guide: An unauthorized charge on a credit card: getting your money back.

Which charges can be disputed?

Israeli law gives you an express right to dispute a charge, and places the burden of proof on the credit card company, not on you: it must show that the charge was lawful.

Credit card disputes fall into two types: (a) disputes on the cardholder’s side, for example a transaction that was not authorized or a transaction with a wrong amount; (b) disputes about receiving the product or service purchased. For a charge you did not make, sections 27–29 of the Payment Services Law apply; for a product or service that was not supplied even though the delivery date has passed, the credit card company must stop the charge from the time of your notice, if you also notified the business of the cancellation of the transaction (section 17).

I was charged twice on my credit card for the same transaction

A double charge is a payment transaction that you did not make. When there is no signed document or strong authentication for the second charge, tell the credit card company, within 30 days of the day it gave you the notice of the charge, that you did not make the transaction, and it must return the amount within 8 business days of the notice (section 29(b) of the Payment Services Law, 5779-2019). In any case, a request about a defect in carrying out a payment transaction requires the credit card company to look into the matter and tell you the result within a reasonable time, and if it is responsible for the defect, to correct it (section 19(d)–(e)).

I ordered and did not receive: what must the credit card company do?

In a credit card transaction, if the agreed delivery date has passed and the product or service was not supplied, or (even before the delivery date) the business has permanently stopped supplying products or services of that kind, and you notified the business of the cancellation of the transaction, as far as it was possible to notify it, the credit card company must stop carrying out the payment order and the charge under it, from the time of the notice you gave it (section 17(a) of the Payment Services Law). This stops, for example, installments that have not yet been charged. If only part of the order was supplied and the charge can be separated, the provision applies to the part not supplied (section 17(c)). If the credit card company is satisfied that the conditions were not met, it may charge again, with a reasoned written notice at least 15 days before the charge (section 17(b)).

Who has to prove what, and what must the credit card company do?

Under the Payment Services Law, 5779-2019 (which replaced the Debit Cards Law, 5746-1986), when a credit card holder tells the credit card company that they deny a charge (in a distance transaction made without a signed document (section 29 of the Law) or in misuse of the card (sections 24–27)), the credit card company must return the money, and in practice the burden of proving that the transaction was authorized shifts to it. This is very significant: the credit card company cannot make do with a negative statement (“we do not know that the transaction was not authorized”); it must actually prove that the transaction was made lawfully. Under the Law, it may charge again only if it is satisfied of this, with a reasoned written notice at least 15 days before the charge, attaching copies of the documents it holds if you asked for them (sections 27(b) and 29(b)).

Under section 29 of the Payment Services Law, a cardholder who was charged for a “payment transaction with a missing document” (a transaction, for example by phone or online, for which there is no document signed by the cardholder and no record documenting strong authentication of their identity, section 29(a)) and who tells the credit card company within 30 days of the day they received the notice of the charge that they did not make the transaction, is entitled to have the amount of the charge returned within 8 business days of giving notice. The credit card company may charge them again only if it is satisfied that the transaction was in fact made by them, and in that case it must give them a reasoned written notice in advance and send them, at their request, copies of the documents it holds.

How to get a credit (chargeback), step by step

When a credit card holder succeeds in a dispute, the first remedy is canceling the charge (chargeback): crediting the cardholder’s account with the amount charged. The process is carried out with the body that acquired (cleared) the transaction for the business, and in the end it is the business or the credit card company that bears the return of the money. A cardholder may also claim compensation for the damage caused as a result of the unauthorized transaction (such as unauthorized use of data, or interest charged as a result of the charge).

A cardholder who did not get their money back may sue the credit card company in court, or file a complaint with the Consumer Enquiries and Inspections Unit of the Banking Supervision Department at the Bank of Israel (בנק ישראל), the regulator with the power to look into complaints against banks and credit card companies. The refund under the Payment Services Law is of the amount of the charge at its value on the day of the charge (sections 27 and 29 of the Law).

Your card was stolen or you were defrauded: what is your protection?

A credit card holder is protected against misuse of the card under sections 24–27 of the Payment Services Law, 5779-2019, and against being charged for a product or service that was not supplied, under section 17 of the Law. Until the notice of the loss or theft of the card is given, the customer bears at most NIS 75 plus NIS 30 for each day that has passed since they found out, and if they gave notice within 30 days of the first misuse, no more than NIS 450 (section 24(c)); after the notice, a full exemption. Any transaction made after this notice (and not approved by the cardholder) is the responsibility of the credit card company, which must return the amount of the charge within 8 business days of the customer’s notice (section 27).

When there is a systematic breach that harmed many customers, the cardholder may file a motion to certify a class action against the credit card company. In such proceedings, one cardholder can represent hundreds or thousands of cardholders harmed by the same credit card company. A representative plaintiff whose claim succeeded may receive a personal award, and the court awards attorneys’ fees to their lawyer.

Transactions abroad: what happens when there is a problem?

Disputes about transactions made abroad (for example, buying on a foreign website with an Israeli card) are handled in a similar way. The cardholder may dispute a charge abroad exactly as they would a charge in Israel. However, because of the difficulties of coordinating with businesses abroad, looking into the matter with the business may take longer, but the duty to return the money within 8 business days of your notice applies here too (sections 27 and 29). It is the Israeli credit card company that contacts the acquirer abroad or the business to look into the dispute.

A cardholder who suspects fraud may file a police complaint at the same time as notifying the credit card company.

What can you demand beyond a refund of the money?

A cardholder who successfully disputed a charge is entitled to the return of the amount of the charge at its value on the day of the charge (sections 27 and 29 of the Payment Services Law). If they had to go to court, they may also ask for legal costs and attorneys’ fees (at the court’s discretion) and, in suitable cases, compensation for damage that was proved.

In addition, a cardholder harmed by a credit card company that did not keep their data confidential and secure as required (that is, the data was exposed to fraud because of negligence) may sue in tort for the damage caused to them, including emotional distress, on the ground of negligence under sections 35–36 of the Torts Ordinance [New Version].

What to do now, and in what order?

If a cardholder suspects an unauthorized charge, they should: (1) notify the credit card company immediately, and in a transaction with a missing document, at the latest within 30 days of the day the notice of the charge was received (section 29 of the Payment Services Law); until you give notice about a card that was stolen or lost, you bear part of the charges (section 24), (2) file a police complaint if fraud is suspected, (3) keep all the records (confirmations, emails, screenshots), (4) demand that the money be returned immediately, (5) contact the Public Inquiries Unit at the Bank of Israel, or go to court, if the credit card company did not return the money within 8 business days, (6) seek legal advice if this did not succeed. The cardholder can also prevent similar transactions in the future by: freezing the card when needed, setting alerts for high-value transactions, and using the bank’s app with instant alerts on every transaction.