Why You Should At Least Pay A Deposit On A Credit Card
Section 75 Of The Consumer Credit Act 1974
Every year we all make a variety of purchases for our homes and ourselves, and some of those purchases can be expensive. What happens if something goes wrong with what we have just bought? Is there someone we can hold accountable? And what is the process for claiming?
Let’s look at some examples of things that we may buy, and the implications of paying by different methods:-
1. You buy a timeshare and pay a deposit on a Visa debit card, and the balance by bank transfer.
In this example under the Visa chargeback regulations, any claim submitted for breach of contract and misrepresentation must be within 120 days of the purchase to the card provider. The only monies that will be refundable are those charged to the card and not the subsequent bank transfer.
2. You buy a timeshare and pay a deposit on a Visa credit card, and the balance by bank transfer.
In this example, you have 3 years from the date that you first became aware there was an issue with the product or 6 years from the time that the credit facility was last available to you. The other very important difference here is that the card provider is also responsible for refunding the monies paid by bank transfer, in addition to the funds paid via credit card, plus interest on the total sum paid. Using this method of payment is the preferred option as claims can more easily be brought under Section 75 of The Consumer Credit Act 1974.
3. You buy solar panels, and pay a deposit by cheque, and a bank transfer for the balance.
Where you pay a third party by cheque/ credit card cheque, and then the balance by bank transfer, you have no protection from either the Visa chargeback regulations or under Section 75 of the Consumer Credit Act 1974. Your only option is then to try and negotiate a refund or discount from the supplier; take legal action or, if the company is now insolvent, to file a claim with the liquidator.
4. You pay for some gifts on eBay via Paypal.
For Section 75 to apply, there must be a debtor-creditor-supplier relationship in place. However, where you use payment providers such as Paypal, you are introducing a 4th party to the agreement. In this instance, any claim would need to be brought via Paypal’s refund policy and therefore more difficult to enforce.
We would always recommend when making a purchase particularly something of significant value, to do so by using a credit card, even if you only make a deposit payment using this method. This may be relevant when you are asked to make your purchase at a presentation, especially when you are told it can only be purchased “on the day”; or indeed when you are abroad.
Never use a charge card or a debit card, unless you are 100% confident that you will never have a problem with the goods or services that you are buying. Alternatively, if the supplier can arrange the finance for you via a third party whom they have a relationship with, for example, Barclays Partner Finance, Black Horse or some of the smaller finance houses, then you will be protected under Section 75.
Always ensure that you ask how the supplier is going to process your card payment. i.e. which merchant they are using, as this should always be either Mastercard or Visa. If the supplier is using any other payment processor such as Paypal, Worldpay, or others, then you won’t have the ability to claim a refund under Section 75 if something goes wrong with your purchase. The fees that a business is charged by Mastercard and Visa is usually substantially less than other payment processors, in particular where large sums of money are involved. If a supplier is not using one of these two companies, it may indicate that something is wrong.
Where you enter into any contract for goods or services in excess of £1,000 and where the supplier will not allow you to pay a deposit via a credit card, this should raise some alarm bells as there may be other underlying issues here that the supplier does not want you to know about and which you should be concerned about.