Online shopping has been a big boost for people living in rural areas. We buy with confidence, believing that if the transaction goes wrong we have the protection of having used a credit card. Under Section 75 of the Consumer Credit Act this makes the card issuer liable for resolving a dispute if this can’t be achieved with the retailer. This is catch-all protection for any payment over £100 made using a credit card, but there is some devil in the detail. This comes down to exactly how the payment is made – if there is any indirect element this consumer protection could be lost.
The first issue is the difference between a debit and a credit card. Some online sellers charge a transaction fee for using a credit card, to cover charges imposed on them by card companies. If you use a debit card to avoid the fee you will not have the full Section 75 protection. If things then go wrong you will be dependent on the reduced protection of Chargeback, where your bank can agree to try to recover the funds, but it won’t have the same responsibility to do so as is the case under Section 75, which was initially about preventing people getting into debt for faulty goods. This protection is a boost if the retailer is being unhelpful, is overseas or is proving hard and costly to contact. You tell the card issuer the goods are faulty and you want your money back. This also applies where companies with which an order is placed go out of business.
A new problem with online retailing is when you think you’re paying with a credit card, but are in fact doing so via an agency. A prime example is the use of PayPal, once owned by Ebay, but now spun off as an independent company. It offers the protection of both parties having to be satisfied for the sale to happen, but even though PayPal uses your credit card details, you do not have Section 75 protection as there is no direct relationship with the seller. This is a crucial difference. By using PayPal you’re giving up some substantial legal protection and rights to depend on those being offered by a company. This doesn’t mean PayPal is unsafe, it’s simply the difference between commercial and statutory protection.
Even if not using PayPal there are situations where you may not be aware you’ve lost your Section 75 rights. An example is buying from Amazon, where you buy not directly from Amazon, although you buy on its site, but from a company supplying its goods via Amazon. It will be made clear that the goods aren’t being supplied and despatched by Amazon, and you’ll still have your rights to return them under Amazon’s trading arrangements. But, even though you’re paying Amazon, which is dealing as an agent, you’ll not have Section 75 protection. This depends on a direct relationship between your card issuer and the business supplying the goods. The same applies with buying airline tickets via a third party, although if you’re dealing with a registered travel agent the protection will be greater than under Section 75.
The simple message is that for maximum protection when shopping online, always use a credit card, and be aware of the risks of dealing indirectly via an agent.
It’s also worth remembering when buying online that under the 2014 Consumer Contracts legislation, which replaced the distance selling rules, you can cancel a contract seven days from when you place the order. For goods this seven days applies from placing the order to seven days after delivery. There are restrictions about you paying postage and some goods, including DVDs and some clothing, are excluded.