When paying on plastic it's always nice to know you've got a bit of financial protection. Using credit cards can offer this peace of mind – under Section 75 of the Consumer Credit Act, you and your credit card provider are "jointly and severally liable" for any purchase, meaning that if something goes wrong your provider will refund you if the retailer won't.
But, what about when you use your debit card? You may not realise that you could still be protected – although you're not covered by the Consumer Credit Act as there's no credit agreement in place, you might find that the Chargeback scheme comes into play instead.
What is the chargeback scheme?
The main debit card issuers have all signed up to the scheme (Visa, MasterCard and American Express) and in some cases even pre-paid and charge cards are included. It'll cover you in the event that a retailer goes out of business, if the goods were defective or delivered but not received, if you were a victim of fraud or even if you were charged multiple times for the same product. If a retailer can't (or won't) refund you in these situations, your card issuer could do instead.
In essence, it's similar to the protection offered when making credit card purchases, but the key difference is that it's a voluntary agreement and therefore isn't legally binding – in other words, your card issuer is technically under no obligation to uphold any claims made, but if they've signed up to the scheme then hopefully they'll be willing to consider any claim brought forward.
How does it work?
If you're not happy with the goods provided your first step should always be going back to the retailer for a refund or exchange. If this isn't possible for some reason, such as they're gong into administration or flat-out refuse to resolve the dispute, you can contact your bank that issued the card to make a claim.
Generally, any claim needs to be made within 120 days of you noticing the problem – time limits vary depending on the card issuer – but happily there's no upper limit on the amount you can claim (although some card issuers, such as MasterCard, have a minimum transaction amount of £10). You'll usually need to fill in a series of forms to open the dispute proceedings and if your claim is upheld the bank will reverse the transaction and will refund the money back into your account, with the intention being that they'll then request the money from the seller's bank.
What if my claim isn't upheld?
There are no guarantees that your claim will be upheld. If yours isn't and you're not happy with the response or the reasoning you can conduct the Financial Ombudsman Service within six months of being notified of your claim being refused.
What about if I pay through PayPal?
Unfortunately, if you've paid for goods using PayPal you usually won't be covered under the chargeback scheme. In this case the act of loading money into your PayPal account is itself classed as the transaction, so unless that fails you won't be covered. However, PayPal does offer its own voluntary purchase protection scheme – Buyer Protection – so if you're experiencing issues make sure to check their terms and conditions.
For more information on writing a letter for chargeback which? have a good example
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.