Shoppers attempting to claim money back from their credit card company, after receiving faulty goods, are increasingly being denied a refund by their card provider.
The Financial Ombudsman Service, the independent watchdog for the finance industry, has said it handles as many as 100 complaints per week from customers who’ve been effectively ignored by their credit card company.
Credit card customers should be protected by Section 75 of the Consumer Credit Act, which is designed to protect card users financially.
Section 75 was once a little-known regulation. But as people’s credit card usage has increased over the years, so has knowledge of its benefits.
“It’s more important than ever that people know their rights if you use credit and something goes wrong,” said Chief Ombudsman Natalie Ceeney.
In the last five years in particular, the use of Section 75 has shot up. But where credit card companies would once payout without question, evidence shows that more and more are taking a stricter line when it comes to refunds.
Many customers have complained of receiving a standard letter from bank staff rejecting their claim outright, while the Financial Ombudsman Service has seen a spike in complaints in the last few years.
Section 75 states that if a consumer pays for something using their credit card, the credit card company is liable if something goes wrong with the purchase.
This can be anything from faulty goods, to the company selling you the goods going out of business. To claim on Section 75, the consumer must have spent a minimum of £100 and a maximum of £30,000.
“Credit cards offer a greater level of protection to consumers than payment by cash or cheques – meaning that purchases can be made with much greater confidence,” said Craig Jones, spokesperson for the UK Cards Association.
The law can be very useful to shoppers and card users, as it prevents them for paying off a debt on something that they either did not receive or was faulty.
Customers are now being urged to know when Section 75 applies, as it does not protect you should you change your mind about a purchase.
“Section 75 gives you great and unique protection,” said Doriena Koldenhof, of the UK Cards Association, the trade body for banks, says:
“But the law in this area can be complex and each claim has to be assessed on a case-by-case basis,” she added.
An alternative to credit cards is a prepaid card. These offer many of the benefits as a credit card, but with added fraud security as they are not tied to a bank account.