Firms ‘fail on credit card rights’


Published: Saturday 25th October 2014 by The News Editor

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Financial firms are failing to explain properly the protections that people are entitled to when they pay by credit card, consumer group Which? has found.

Which? said that many members of staff working for card providers showed a “poor” knowledge of section 75 of the Consumer Credit Act, which entitles consumers to get their money back when something goes wrong with a credit card purchase.

Section 75 can make credit card providers jointly liable for breaches of contract with a trader when consumers make a card purchase. This means that consumers should not be left out of pocket if an item is faulty, the retailer goes bust or it does not deliver what it has promised.

Under section 75, consumers are potentially protected for the total value of the item, even if they only used their credit card for part of the payment, provided the total cost of the item is between £100 and £30,000.

Which? called major current account and card providers six times each with the same scenario to put their knowledge to the test.

Researchers said they were asking for general advice on behalf of a relative who had bought a £600 sofa, putting a £60 deposit down on their credit card and paying the rest by cheque. The fictitious sofa supplier had gone out of business before the sofa was delivered.

Santander only got half of one reply correct out of the six times that researchers made the enquiry, while Tesco Bank came out top, getting five out of six enquiries correct, according to the findings.

Which? awarded half points in cases where advisers had given a vague answer but indicated that a refund might be possible, or where they said they could not give any information without speaking to the cardholder.

No points were awarded for calls where the adviser said it would not be possible to make a claim, or that the cardholder would only be able to get the deposit that they had put on their card back.

Across the board, only one third of advisers correctly explained that if just part of an item has been paid for by credit card, it is still possible to claim for the full amount.

Some staff even suggested that researchers should try going elsewhere to get their money back, such as to Citizens Advice or Trading Standards.

Which? said that several advisers, including three at Santander, said it would not be possible to get any money back if more than 120 days had elapsed after the purchase.

But this timeframe applies to a separate protection on debit cards called “chargeback”, not section 75. Chargeback is an industry-backed agreement which is not enshrined in law in the same way as section 75.

Richard Lloyd, executive director of Which?, said: “Section 75 is an important piece of consumer protection so it’s unacceptable that credit card providers have such poor understanding of it.

“Banks must improve staff training and help consumers get their money back when they are entitled to it.”

Which? said that people looking to make a claim under section 75 should go to the retailer in the first instance to try to get a refund.

If they have no success, they should then explain to their card provider that they want to make a claim under section 75 of the Consumer Credit Act.

Consumers can still make a claim if their account has been closed and section 75 can also be applied to transactions made abroad.

If your provider does not accept you have a claim or you disagree with their decision, you can turn to the Financial Ombudsman Service (FOS), which resolves disputes between consumers and financial firms.

Around a quarter of the credit card disputes taken to the ombudsman in 2011/12 involved section 75.

A spokeswoman for the FOS said the body “consistently” sees complaints from consumers which revolve around section 75, many of which stem from claims for money back from card providers having been turned down.

Richard Koch, head of policy at the UK Cards Association, said the “patchy” findings in relation to section 75 show “a need to do more to ensure that customers get more consistent advice about their rights”.

He said: ” The unique legal protections that come with paying by card rather than other means is an important factor in why consumers choose to use cards.”

A spokesman for Santander said: “Although there is undoubtedly an industry-wide difficulty in correctly identifying section 75 claims, we are disappointed to learn of the findings by Which? and are working hard to put robust processes and training in place for our customer advisers.

“We would like to emphasise, however, that where section 75 claims are correctly identified, the vast majority are resolved to our customers’ satisfaction.”

Here are the scores out of a maximum of six points which firms received from Which? as a result of its research into staff knowledge about section 75 of the Consumer Credit Act:

:: Tesco Bank, 5

:: Capital One, 4.5

:: Lloyds Bank, 4.5

:: MBNA, 3.5

:: American Express, 3

:: Barclaycard, 3

:: Halifax, 2.5

:: NatWest, 2

:: Nationwide, 1.5

:: Santander, 0.5

Published: Saturday 25th October 2014 by The News Editor

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