Highland consumers warned of credit card online purchasing

A Skye consumer and The Highland Council’s Trading Standards Officers are warning people during National Consumer Week 14th - 18th September to be wary of online purchasing with credit cards through payment service providers.

Consumers who use their credit card wisely can take advantage of added protection.  Under Section 75 of the Consumer Credit Act 1974 (as amended), consumers can pursue their credit card issuer as well as or instead of the supplier of goods if things go wrong.  So for example where a supplier goes out of business and fails to deliver goods that have been ordered using a credit card, a consumer can claim back this purchase from their credit card provider (provided the single transaction is between £100 and no more than £30000). 

However, one such savvy online shopper recently discovered not all transactions are covered and was left a little bewildered by the experience.  

Highland consumer, Barry Ranicar, who lives in Skye, was shocked to find that his payment was not protected under a recent purchase he made from an online business. 

Mr Ranicar ordered a generator from a trader’s website ‘Omega Wolf TV’ and paid for this item online using his credit card.  The ‘generator’ cost £244 and payment was made through ‘Sage Pay’, a payment service provider, through ‘Omega Wolf TV’ website. Payment confirmation was received but the ‘generator’ never appeared.  Mr Ranicar tried but failed to contact ‘Omega Wolf TV’ through their telephone number after he had noticed that the website had disappeared.

Faced with no means of contacting ‘Omega Wolf TV’ either online or by telephone about his order, he decided to contact ‘Consumer Direct Scotland’, which is the government-funded national consumer advice service.

On contacting, ‘Consumer Direct Scotland’, Mr Ranicar made an unpleasant discovery that the credit card payment he made for the generator he ordered may not be covered under Section 75 of the Consumer Credit Act 1974, as he had previously assumed.

Mr Ranicar explains: “I was concerned that I could not find ‘Omega Wolf TV’ website or contact them through their telephone number which had been advertised on their website.  When I contacted Consumer Direct I was shocked to learn that as my payment by credit card had not gone directly through Omega Wolf TV but through additional party, ‘Sage Pay’, I was not protected”.

He added: “I was then contacted by Highland Council’s Trading Standards and advised that the company may have gone into liquidation. At this stage I did not know what I could do to get my money back.”

Mr Ranicar wants to inform consumers about his experience and warn them about making payments using their credit cards through payment service providers.

Bob Jones, Highland Council’s Principal Trading Standards Officer takes up the issue and explains further:  “There does appear to be a gap in the safety net for consumers here and one which we would want to bring to their attention.  It would appear not all transactions are protected under S75 of the Consumer Credit Act 1974. Consumers are only protected under S75 of the Act if there are only three parties to any one transaction.  Only those transactions which are between the supplier (e.g. retailer), the debtor (e.g. purchaser) and the creditor (e.g. Creditcard Company) are eligible for extra protection under the Act.”

Mr Jones warns: “Payment service providers such as ‘Paypal’ and ‘Sage Pay’ do operate their own ‘Buyer protection schemes’ but this does not always fully protect consumers from traders who go out of business, who sell shoddy or counterfeit goods. This is where protection under S75 of the Consumer Credit Act 1974 is invaluable to the consumer under such circumstances.  I would strongly advise all consumers to seek advice BEFORE they make large purchases using their credit card to ensure they are protected under these rights.”

This story has a happy ending however. Mr Ranicar explains: “Luckily for me my credit card company has agreed to help out in this instance and will refund me for the generator that I never received.  So it looks like I won’t be out of pocket.”  

Consumers who want to know more about their rights can contact Consumer Direct Scotland on 08454 040506.      Alternatively you can write or visit Highland Council Trading Standards, 38 Harbour Road, Inverness IV1 1UF.

7 Sep 2009