BEAT STORE REFUND LOOPHOLES
THE nation’s last-minute festive shoppers are being warned that one of the key safeguards against a purchasing disaster is not as watertight as they may think.
Section 75 of the Consumer Credit Act provides credit card users with the right to a refund should a retailer go bust, goods fail to turn up or are not as represented.
But gripes about failings in this legislation are rising. Some shoppers feel it does not always live up to its promise.
The Financial Ombudsman Service, which acts as a go-between when customers are unhappy with product providers, says Section 75 related complaints are rising by 14 per cent a year. Meanwhile, online complaints service Resolver has seen complaints balloon in the past six months.
The Act states that any purchase made on a credit card between £100 and £30,000 is protected.
This still applies even when only a deposit for an item has been paid by card.
But Martyn James, of Resolver, believes changes in modern shopping methods mean customers are not always protected when they pay by card.
He says: ‘Paying by credit card does not always mean you get back your money. The way the Act is worded does not always fit with the way we live and shop today.’
CRACKS IN THE ACT
SHOPPERS are increasingly losing out because only transactions made directly with a supplier are routinely covered. If a payment is made via a third party, such as Amazon, the direct link is broken, along with the protection.
To have Section 75 protection you must buy direct from the supplier of the goods.
For example, if you buy a concert ticket direct from the venue and spend more than £100 then you are covered.
Buy the same ticket through a third-party ticket agency and you are not covered.
The exception is where the ticket agency is an ‘official’ seller – though this is not guaranteed.
Shoppers paying by credit card through services such as PayPal can also lose out as using them to pay a supplier breaks the link. But PayPal has its own voluntary buyer protection scheme.
People booking flights online need to be wary. If you book direct with an airline using a credit card you are covered if it goes bust, but not if you buy the flight through a comparison website.
The same goes for holidays bought through an online booking company.
So it is best to use a comparison website to compare holiday deals, but then book direct to ensure you are covered by Section 75.
The Financial Ombudsman Service has pressed the Law Commission to make Section 75 more watertight.
In a statement to the Commission’s consultation on law reforms earlier this year, the Ombudsman said: ‘ We frequently see cases involving a break in the ‘debtor-creditor-supplier’ relationship.
In these situations, consumers who are making a payment using their credit card may not realise the usual protections do not apply.’ Currently, two thirds of complaints about Section 75 are rebuffed by the Ombudsman. Martyn James says: ‘ Always appeal a decision not to refund as the law is so grey even the credit card companies often do not fully understand it.’ The Commission has decided not to reform the law on third party payments. It will leave any changes to the Financial Conduct Authority as part of its overhaul of the Consumer Credit Act. This is due to become law in 2019.
The Act does not fit with the way we shop today