Credit Cards Protection For Purchases

It is often quoted that using a credit card to pay for goods or services offers much higher levels of protection over paying using other methods such as cash, bank transfer, cheque or debit card.

The other methods of payment in fact provide very little protection for the purchaser other than any specific contract that is in place or recognised laws such as the Sale of Goods act, Consumer Protection act and Trade Description act. These acts may well provide protection in different situations but very few people understand them enough to pursue a case using them.

So the specific protection offered by credit card providers is an attractive option. This protection is not a free service that card companies have decided to offer, it is in fact a requirement of the Consumer Credit Act which requires retailers and credit providers to be jointly responsible for faulty purchases. This applied only in the UK until the House of Lords ruled in 2007 that protection should also apply to purchases made overseas. The credit card companies fought quite hard over a 10 year period against the extension, but when it finally came it was welcomed by APACS, the Association for Payment Clearing Services.

So what does this protection actually cover? Well it means that should goods fail to arrive, get damaged in transit, arrive faulty or not function properly, then the purchaser can claim a refund from the credit card company. The cover extends to goods costing between ?100 pounds and ?30,000 pounds and even covers goods that have been paid for but not delivered after the supplier has gone bust. The extension of protection to cover overseas was seen as an important move to support the growth of internet transactions from overseas suppliers.

For a consumer to be able to lodge a claim against their card company they must be in a situation where a breach of contract has occurred and that is usually a clear occurrence if a payment for an item or service has been made and that item or service has not been delivered as described at the point of sale. The card companies are in a unique position to be able to fund this insurance because they charge suppliers for using their services, which would not be the case if payment was made using cash or by cheque for example.

The first port of call for a consumer with a problem should be the supplier themselves. In most cases complaints are resolved quickly but if a dispute arises such that the consumer is still not satisfied then they should gather evidence to prove the value of the loss incurred and present this to their credit card company for consideration.

As with any claim, companies often respond initially with a downbeat or negative reply. Sometimes that is enough to put some people off from following up their claim and card companies can escape many payouts by taking this approach. But consumers are advised not to take this kind of response personally and just to see it as a standard letter that card companies must issue to avoid accepting any responsibility before they have had chance to investigate claims thoroughly. It has been reported that sometimes consumers are told that they must initially get a court order against the supplier but that is not the case. The consumer can choose to claim either against the credit card company, the supplier or both.

Buyers should also be aware that the protection under section 75 of the Consumer Credit Act only applies to credit cards and not debit cards or charge cards such as American Express and Diners Club.

One area of complication that consumers should be wary of is the case where the company accepting the card payment is not the company providing the goods or service. In this situation claims can often become complicated and can fail.

Michael Lennan writes about credit cards for a number of websites that cover the subject. Read more about standard credit cards and different charity credit cards here.