Can I refund by a different payment method?

[Moose1978]

As per the title.

The company I work for has always processed refunds using the original method of payment (eg, the customer paid with a credit card and the refund goes back onto a credit card)

Although refunding the payment via a different method is frowned upon (due to money laundering), is it actually illegal??

[grumbas]

Don't think it's illegal, but opening yourself up for fraud.

Customer buys on card and insists on refund by bacs/cheque/cash - just wait for the chargeback to come through...

[jammy_basturd]

I have to say I always thought it was illegal under anti-laundering law.

Quick Google brings up this thread on MSE: http://forums.moneysavingexpert.com/showthread.php...

And the relevant bit of legislation: http://www.legislation.gov.uk/ukpga/2002/29/sectio...

[R1 Indy]

Doubt it's illegal.
When I worked at Tesco, always refunded in cash as was much quicker/easier.

[grumbas]

jammy_basturd said:

I have to say I always thought it was illegal under anti-laundering law.

Quick Google brings up this thread on MSE: http://forums.moneysavingexpert.com/showthread.php...

And the relevant bit of legislation: http://www.legislation.gov.uk/ukpga/2002/29/sectio...

Doesn't really say it's illegal, just you shouldn't knowingly facilitate.

So for example someone buys an expensive item with cash, returns it requesting a refund to their card/bank account - if the cash was from proceeds of crime (drugs or similar) the transaction would 'legitimise' the money in the bank to a certain extent. But the person processing the transaction has to reasonably suspect it's dodgy for it to become illegal.

I remember seeing something recently about fixed odds machines in bookies being a current favourite as apparently you can gamble cash and get winnings paid into your bank, so whilst fixed odds you're going to loose a bit it's an acceptable 'business expense' for wherever the cash originated from.

A shop keeper refunding a £10 purchase in cash that was paid for by card because it's less hassle isn't illegal as odds of someone mucking around doing loads of £10 purchases to launder money is exceptionally unlikely. As I mentioned before though it leaves the shop keeper open for a chargeback as no evidence of the refund. I suspect this is the reason the big retailers enforce refunds by the same method.

[LooneyTunes]

jammy_basturd said:

I have to say I always thought it was illegal under anti-laundering law.

<snip>

And the relevant bit of legislation: http://www.legislation.gov.uk/ukpga/2002/29/sectio...

POCA isn't the most relevant consideration: the Money Laundering Regulations 2007 is really what you want http://www.legislation.gov.uk/uksi/2007/2157/pdfs/... (along with JMLSG guiadance).

Not illegal but, given the downside of falling foul of AML could include jail time, people tend to err on the side of caution.