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I was doing some research for an issue I am facing with Virgin Money on my Virgin Atlantic paid card to see if someone has taken VM to FOS for a similar issue. It was then that I came across this decision of FOS which I thought is worth sharing here since I know many of us were stung by cash advance charges from Virgin Money when they suddenly introduced those charges on Curve fronted transactions in 2022. If I recall correctly I got stung by £250 or so, but I decided not to raise a complaint to avoid attracting attention to my card account.
Well, as it turns out, FOS is of the view that Virgin Money is within its rights to not refund the cash advance charges even if the original transaction is refunded by the merchant. Virgin Money has confirmed to the FOS and the complainant that these charges are non-refundable
I know FOS decisions don’t set a precedent but I am sure FOS will take a dim view of the MS transactions some of us here were doing on our Virgin credit cards. Therefore, I am glad that I did not take the matter to FOS. Poor guy who raised the complaint made a transaction at a builders and was charged £492.50 in cash advance fee. Not sure how that attracted a cash advance charge, but it is what it is. Here’s the decision from FOS.
https://www.financial-ombudsman.org.uk/decision/DRN-4291267.pdf
Another example of this:
https://www.financial-ombudsman.org.uk/decision/DRN-4283984.pdf
I’m not sure why anyone should reasonably expect the fee to be refunded, let alone take it to the Ombudsman. If you have taken the cash advance (ie effectively a cash loan) you have taken it and been charged a facility fee and whether you pay it back the next day, in 30 days or 300 days is irrelevant. The interest accrues on a daily basis but the one off advance fee is for granting any facility at all so clearly not refundable.
PS the cash advance fees weren’t introduced “suddenly”. Due notice was given to all cardholders.
I’m not sure why anyone should reasonably expect the fee to be refunded, let alone take it to the Ombudsman. If you have taken the cash advance (ie effectively a cash loan) you have taken it and been charged a facility fee and whether you pay it back the next day, in 30 days or 300 days is irrelevant. The interest accrues on a daily basis but the one off advance fee is for granting any facility at all so clearly not refundable.
PS the cash advance fees weren’t introduced “suddenly”. Due notice was given to all cardholders.
One of the two cases the transaction was reversed, not repaid. I’d be pretty aggrieved if that happened to me, and I think it’s at least arguably unfair in Consumer Rights Act terms too. But whether technically legal or not, for a major corporation to be clinging on two a few pounds of fees for a reversed transaction in a widely competitive market is madness. Absolutely not worth the bad feeling, bad press, and FOS fees/complaint handling time.
the key is why a cash advance was applied
How a cash advance fee of £492.50 was due on a transaction at a builders escapes meThe usual “withdrawals from a cash machine, over the counter at a bank, foreign currency purchases and gambling transactions” don’t seem to apply here
Interesting cases. I recently bought some insurance online and I was going to use Chase debit for 1% cashback, but I remembered that insurance is one of the excluded categories. So I used a different card, which told me that they would count it as a cash advance and apply interest from the day of posting (no cash advance fees on that card) meaning I had to pay it off immediately.
I also can’t understand why the FOS thought it was reasonable to apply a fee to a payment made to a builder, unless it involved some sort of money transfer rather than just making a conventional payment with the credit card?
I also can’t understand why the FOS thought it was reasonable to apply a fee to a payment made to a builder, unless it involved some sort of money transfer rather than just making a conventional payment with the credit card?
Mr M, the complainant, didn’t dispute this point in escalating his complaint to an Ombudsman who was also satisfied that the fee was correctly charged. The dispute was merely about the non-refundable nature of the cash advance fee.
Yes, but I’m wondering what the nature of the transaction was that made Virgin regard it as “cash-like”.
They have been known to refund these types of fees if you ask nicely, I suppose it may depend who you speak to!
Yes, but I’m wondering what the nature of the transaction was that made Virgin regard it as “cash-like”.
They have been known to refund these types of fees if you ask nicely, I suppose it may depend who you speak to!
I haven’t looked at the terms, but if the customer, investigator and Ombudsman, who each have all the requisite information, all accept that it a cash-like transaction then that seems quite clear.
There is a degree of common sense involved, as there are essentially two main types of transaction – standard purchases and everything else. Is paying a builder a ‘standard purchase’? Another transaction recently reported here as attracting a cash advance fee was a vet’s bill.
These two cases are different: one involved a cash advance fee, and prompt repayment; the other a cash advance fee and a reversed transaction.
On the latter case, to cling on to a handful of pounds for a reversed transaction, dismiss a complaint, fight it at FOS (and win) seems downright bad business for a large lender in a competitive market. Surely much better to issue a warning and refund “just this once”. They have a seriously annoyed a (probably ex-) customer. It was a non-refundable charge, but on a reversed transaction the non-refunability is at least arguably unfair (in the legal sense) and I’m surprised the complainant didn’t raise it (or the ombudsman ignored it).
Yes, but I’m wondering what the nature of the transaction was that made Virgin regard it as “cash-like”.
They have been known to refund these types of fees if you ask nicely, I suppose it may depend who you speak to!
Does it matter? Mr M accepted the fee was correctly applied.
What Mr M was complaining about was that V Money didn’t refund the fee even though the original transaction was refunded by the builder.
As @JDB says V Money charged Mr M for providing the service requested.
It’s similar to you paying an airline to make changes to your booking and then not refunding the fee -because it was levied for providing the change to the ticket – even though the flight was cancelled and that was refunded.
These two cases are different: one involved a cash advance fee, and prompt repayment; the other a cash advance fee and a reversed transaction.
On the latter case, to cling on to a handful of pounds for a reversed transaction, dismiss a complaint, fight it at FOS (and win) seems downright bad business for a large lender in a competitive market. Surely much better to issue a warning and refund “just this once”. They have a seriously annoyed a (probably ex-) customer. It was a non-refundable charge, but on a reversed transaction the non-refunability is at least arguably unfair (in the legal sense) and I’m surprised the complainant didn’t raise it (or the ombudsman ignored it).
It isn’t about VM clinging on to a few £ as the sum of money is inconsequential for them. However, if they have a term, they need to apply it equally to all customers. This is also why firms don’t just settle all complaints below the cost of going to the Ombudsman; they have other considerations and need to draw a line. In terms of any unfairness, Mr M did plead this and the Ombudsman didn’t agree there was any, and their terms of reference require them to follow the law, even though they aren’t judges.
It was a non-refundable charge, but on a reversed transaction the non-refunability is at least arguably unfair
why is it unfair? Does the TnCs state the charge will be reversed if the payment is reversed? If not, it comes down purely to goodwill and asking nicely.
Is this the equivalent of liberals getting triggered for small things?
Looks like people are pampered by Amex generosity and get a rude awakening when dealing with other financial providers.@Flyer/Stayer, yes it does matter because one of the reasons people come here is to learn how not to fall into these kind of traps. Of course everyone should check the Ts and Cs for themselves but it’s always useful to be able to pick up a bit of information without wading through loads of small print.
If an airline cancelled my flight I would certainly expect any booking fee to be refunded. If such a term was displayed at check out, as required by law, then I’d think twice about using them on principle!
I said change fee not booking fee. They aren’t the same.
Mr M did accept the fee was correctly charged. He made an assumption it would be reversed.
Nobody is disputing this, what is unclear is why Virgin regarded the transaction as eligible for levying the fee in the first place.
Nobody is disputing this, what is unclear is why Virgin regarded the transaction as eligible for levying the fee in the first place.
As above, none of us has all the facts, but when three different people, including the victim, all accept the fee was correctly levied per the terms, I’m not sure why you keep asking the same question; perhaps look at the terms that the three parties have analysed to reach their unanimous conclusion.
If there were any doubt about whether the cash advance fee had been correctly applied that would most likely have been Mr M’s key (and most probably winning) argument rather than pursuing the refund of an explicitly non-refundable fee akin to an overdraft/loan facility or arrangement fee, chargeable whether you use it or not.
Nobody is disputing this, what is unclear is why Virgin regarded the transaction as eligible for levying the fee in the first place.
That will all depend on how exactly the transaction was processed and the coding used.
To give an example, MBNA wrote to me and advised me that in future I would be charged cash advance fees for “cash like” transactions such as the recent fines on my Visa Card. I knew I hadn’t paid any fines, so went on the hunt.
Turned out that a local authority car park I used regularly had been set up with the wrong transaction coding with payments taken as “parking fines” rather than “parking services”. A quick email to the relevant department at the Council, and within 48 hours I had a “thank you” reply and confirmation that they’d updated their systems.
So if the builder or the curve submit transactions that are coded as “cash like” then that’s exactly how VM should process them.
As for the reversal. It’s no different than taking cash out of your Credit Card by mistake and going immediately back into the bank to pay it back in again. The original transaction happened.
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