. . . and what you can do about it
MANY popular payment methods have little protection, but there are steps you can take to minimise the risk of losing out.
CASH: If something goes wrong when paying for goods there is no audit trail – and no Section 75 cover.
TIP: Keep receipts, even photograph them for your records. This is also useful if an insurance claim is later necessary to make good any loss or report a theft.
CHEQUES: Millions of cheques are still written every year. Although fraud is declining, about £14 million is stolen this way by fraudsters using counterfeit, forged or fraudulently altered cheques. If a cheque is tampered with the bank will reject it.
TIP: If accepting a cheque as a refund, do not return the items until six working days have passed since it was banked. Only then is the money yours.
If a refund is for a large sum consider asking for a different form of payment such as bank transfer. If writing a cheque, use a pen and put a line through any empty spaces. Alarm bells should ring if you are offered a cheque for a greater amount than agreed – and then asked to pay back the difference.
STORECARD: Pushed at the till, these cards charge high rates of interest. On the plus side they are covered by Section 75 in the same way as a credit card.
TIP: A storecard can be useful for getting a big discount on your first purchase, but make sure any balance is paid off in full – and consider cutting it up afterwards. It is an expensive option. DEBIT CARD: Though excluded from Section 75, card providers offer a voluntary scheme called ‘chargeback’. It means you can ask your bank to get money back in a disputed transaction. Unlike Section 75 there is no upper or lower limit so it can work for claims – even on credit cards – below or above the £100 and £30,000 limits. TIP: Act swiftly to claim as there is usually a time limit (maximum 120 days).
BANK TRANSFER: Paying someone by bank transfer, usually online or by phone, means the payment goes straight from your account to the recipient’s.
But it is similar to paying by cash as there is no safety net if things go wrong. More than 19,000 people lost out to fraudulent bank transfer scams in the first six months of this year, losing some £100 million.
TIP: Always check you are sending the money to the correct person and account. Test it first with a £1 transfer – then call to check it has arrived. If a payment goes to the wrong destination or a fraudster, contact your bank as soon as you realise, as it needs to act quickly to get the money back.
Following a campaign by consumer group Which?, banks are planning to do more to help retrieve funds lost as a result of a bank transfer. The Payments System Regulator is also contemplating setting up a compensation scheme. SECOND CARD HOLDERS: Many couples share a credit card, but second named cardholders are not protected by Section 75 if they purchase something just for their own use. If the item is shared, say a sofa for the home, they should be covered. TIP: The main cardholder should make any claim under Section 75, even if they did not make the purchase.
To avoid potential problems, the main cardholder should make any large purchases on the card.