In the run up to Christmas it is a fair bet that most of us will be doing at least some of our shopping on the internet. It’s quick and convenient, and items are often cheaper than in a physical store.
However, when buying things online you need to be sure that you are protected. Here are three ways that mean you won’t lose your money if your purchase falls through.
Credit cards
The best way to pay for goods online is via credit card. Some people say you should really only use this type of payment for larger items, but I think it is important to use your credit card whenever you can, as it means you are instantly protected under Section 75 of the Consumer Credit Act.
This great bit of legislation means you can claim a refund from the credit card company if your supplier goes bust, if your goods do not arrive or even if your goods are faulty. The most important point of Section 75 is that the payment must be made directly through the credit card: it does not apply if you pay through a third party, such as PayPal (some third parties have their own protection: always check what they provide before you buy).
If you do not have a credit card, consider applying for one. Look out for deals where the credit card company offers you cashback or another sort of reward.
Chargeback
If you use your debit or credit card to pay for a service or goods (up to £100) and you do not receive them (including if the company goes bust), you can also use the Chargeback scheme, which allows the bank that issued your card to reclaim the money from the retailer’s bank. This is not written in law but it is an industry-recognised scheme which incorporates American Express, Mastercard and Visa. You need to start the process within 120 days of making the payment.
Whether you use Section 75 or the Chargeback scheme, it is always advisable to contact the supplier first before going to the credit card company for assistance.
PayPal
When purchasing from online sites with multiple sellers (eg eBay), you may prefer to use PayPal. PayPal has built-in buyers’ protection, meaning you can claim a refund up to 180 days from when a payment is made if you do not receive what you paid for.
With these three options available, I would highly recommend that you do not use bank transfers when making payments. Even though paying by bank transfer guarantees the money arriving at its destination, it is very difficult to get your money back in the event of a dispute.
Please always seek professional advice before taking any action. We are happy to answer questions in future issues. Please send your questions through the Contact Us page on our website.
Chantal Baker is the director and founder of Champ Consultants Ltd, an accountancy and tax consultancy practice in Caterham. Please follow us on our various social media channels.
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