I recently needed to work from home for a week as our offices needed to close for some maintenance work.
Aside from being pleased about avoiding my two-hour commute, I was also going to save money by getting a refund for some of my un-used monthly Travelcard.
However, my mood soured when I found out I would have to pay £5 to get my money refunded.
What's more, I'd need to fork out an extra £5 for a new Oyster card as it wouldn't be possible to get the money repaid on my current card because all the data is stored on the physical card.
Money for nothing
When I asked Transport for London (TfL) about the charge, they said it was an admin fee that cover the cost of working out a refund.
It’s questionable how it can cost quite so much to do a calculation that must pop up regularly – surely this should be an automated, cost-effective process?
When asked for a response to this article, a spokeperson for TfL said: “The £5 Oyster refund fee has been in place for many years and is an admin fee, which contributes towards the cost of calculating and processing the refund.
Explaining the additional £5 charge, they added: "Due to the way the Oyster system works (with all data stored on the physical card), the card itself has to be cancelled so that customers can't carry on using it, having also got a refund.
"Customers may find it more convenient to use pay-as-you-go with contactless, which offers the same benefits as pay as you go with Oyster, as well as Monday to Sunday weekly capping.”
From bad to worse
When I decided to get a partial refund, I assumed I'd only lose up to £10, but I was wrong.
I ended up with a refund of just under £80 for my remaining Travelcard. While this sounds like a handsome sum, I paid nearly £250 for my Travelcard (Zone 1-6) and only used it 17 days out of 30 days.
So, I have only received 30% of my money back despite barely using half my allocated days.
I disputed the refund and was informed it was not calculated in direct proportion to the cost of the season ticket.
Instead, it was calculated by determining the period the Travelcard was used for, and then working out the amount of weekly and daily tickets that would have been bought.
While this experience has not been a happy one, it has been eye-opening.
Why are some industries able to provide a refund while others feel the need to charge whopping fees?
I decided to look a little deeper into the matter. Can these fees ever be justified?
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Are these charges justifiable?
Martyn James, head of media at complaints resolution firm Resolver, gets straight to the point.
“There’s no reason whatsoever for these charges,” said James, who claimed the processing and paperwork excuses were "rubbish".
“It’s just a way to charge you money.”
James told me it costs "literally pennies" to process a refund – much less than the £5 charge I'd been hit with. As a refund is processed digitally, there’s also usually no paperwork to deal with.
He believes there shouldn't even be an administrative charge as customers tend to enter their own details for the refund.
When I contacted the likes of Mastercard and Visa, they couldn't share any information on how much processing a refund actually costs.
However, they did say that, while it is seen as another transaction and it incurs a ‘nominal’ fee, it should not be as high as £5.
So, it appears businesses could be charging more than they should for refunds.
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‘Not fair or acceptable’
James claims that some companies will always try and justify a charge for a refund for the effort involved, but this is simply not the case.
“It’s not fair or acceptable, and they’ve been getting away with it for years.”
He added that customers are able to get chargeback – a transaction reversal following a disputed card transaction – without getting charged, yet this does not apply to some refunds.
It seems refund charges are essentially penalising people for trying to get their money back – with some companies potentially profiting from it.
My experience is by no means unique: airlines, hotels and many other industries charge varying administration fees to change a booking or may even refuse a refund.
They're common, but that doesn't make them fair.
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What should be done?
There needs to be more transparency upfront about any fees that customers are charged, whether it’s for changing a booking or getting their money back.
Businesses have their own costs and I am happy to pay for any incurred, but only if it actually costs them money.
Sadly, it seems to be another opportunity for companies to profit at our expense.
As for me, I have learned to be careful and consider any potential extra fees before spending money in the future.
Do you think refund fees are fair? Are certain industries particularly bad (or good) when it comes to levying them on customers? Let us know your thoughts in the comments section below.
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