Dance instructor Cosmas Hoo paid $2,500 to renew his California Fitness membership just before the gym closed abruptly last year. Despite his efforts, the 24-year-old has not been able to get his money back.
Yesterday, the Consumers Association of Singapore (Case) launched a guide to help credit card users like Mr Hoo cancel a charge if a purchase has gone wrong.
The consumer watchdog based its chargeback guide - which is available on its website - on advisories issued by major credit card providers and local banks.
A chargeback is a type of consumer protection that allows credit card users to dispute a charge and reverse the transaction if a purchase goes wrong.
This covers cases where customers do not receive the goods or services they paid for, such as when a company goes bust or when faulty goods are delivered.
Case said that its guide was in response to "a lack of clear and specific directions for consumers on how to file a chargeback application on card issuers' (banks') websites". Case said it expects its guide to be useful to those who use credit cards to buy things such as beauty or travel packages, fitness club memberships, home renovation services, cars and furniture.
Rise in pre-payment losses, says Case
Said Case executive director Loy York Jiun: "Case has witnessed a number of high-profile businesses ceasing operations abruptly, such as Five Star Tours and California Fitness, leaving many consumers high and dry, with some having made full payment or close to full payment."
Case said these were examples of pre-payments, where money is paid in advance to a business.
In July, Case reported a rise in the amount of pre-payments lost by consumers when firms shut down, from $1.05 million in 2014 to $3.59 million last year.
Most times, customers can ask for a chargeback within 120 days of the transaction if they encounter non-delivery, faulty goods and services, errors in credit card transactions or unauthorised transactions.
Each of these situations, however, requires consumers to do different things. Those who do not receive ordered goods, for instance, must first try to solve the issue with the business and show written proof of this. Those who are charged the wrong amount or currency, on the other hand, do not need to contact the seller and need to just show proof of the authorised amount or currency.
Case said: "As Singapore continues to push for a Smart Nation and the adoption of cashless payment systems, we can expect credit cards to continue to be one of the preferred payment methods. (Thus) we would like to highlight the chargeback mechanism for credit cards."
Financial services consultant Chua Hui Ting said Case's guide is a step in the right direction, especially as many people do not know about chargebacks.
Case wants to urge all card issuers to prominently provide on their websites a step-by-step guide on how to lodge a chargeback claim.
A spokesman for DBS Bank saidit has detailed information on chargebacks easily found online. Affected consumers can also call the bank directly.
Said Mr Hoo: "If I had got a guide earlier, it would have been of great help to me." However, he said Case's guide is definitely good for other consumers in Singapore.
For details on the chargeback process, go to http://str.sg/oknh