DANGER - Online Shopping Can be Unsafe (Even with a credit card)

cressie176

Until today I believed shopping online with a credit card was safe as you were entitled to claim a refund for faulty/undelivered goods directly from your credit card provider. This isn't true.

- You aren't protected for items less than £100 even if purchased in the UK

- You aren't protected if the retailer uses a third party payment provider like nochecks, element5, paypal etc. (Although paypal provides other safeguards)

- You may not be protected for items purchased from a company that isn't registered in the UK (It's at the discression of your card provider)

The following article from the Times explains the problem.

http://business.timesonline.co.uk/article/0,,9558-1806736,00.html

Right now the 1974 Credit Card Act is being reviewed. On the 24th of October 2005 the new Credit Card Bill was accepted for second reading. If you care about this loophole why not email your MP at http://www.writetothem.com/.

realaledrinker

The three instances you quote relate to ANY credit card purchase - whether on line, phone or face-to-face.

Your on-line reference is misleading therefore.

cressie176

realaledrinker wrote:

The three instances you quote relate to ANY credit card purchase - whether on line, phone or face-to-face.

Your on-line reference is misleading therefore.

I entirely disagree. It is true that these terms also apply to over the counter transactions, but they are of particular relevance to online transactions because purchase protection is of greater importance.

When you purchase items over the counter you usually have the chance to inspect them and take them away with you immediately. If the item is out of stock or needs to be delivered you may only be asked to pay a deposit. This is not the case for online transactions.

It is far easier to purchase items from abroad using the internet (possibly without even knowing it), but it is at the discression of your credit card provider whether they will offer you purchase protection. With over the counter transactions you know whether the retailer is UK based, and that you are able to walk back into the store and kick up a fuss or take legal action. Strongly worded emails with little or no legal backup just don't have the same effect.

I'm not aware of any over the counter retailer that uses a third party payment provider. This is the biggest problem, as if the goods never arrive or are faulty your credit card provider is not legally obligated to give you a refund, even if the retailer is registered in the UK.

When you think of it this is a massive loophole. Imagine if you purchased £1000 of furniture from a UK company who's website redirected you to WorldPay (or similar), but between debiting your card and dispatching the goods went bankrupt. Even though you had bought the furniture with your credit card, you would not be able to get the money back. If this transaction had taken place over the counter, your credit card company would have been legally obligated to refund the money.

trencherpilot

I bought something on an Ebay equivalent, and got scammed (Ebid if you're wondering) contacted Barclaycard and they refunded me as soon as they got the form back. Still chasing Paypal for the money I think.

grumbler

trencherpilot wrote:

...Barclaycard and ...Still chasing Paypal for the money I think.

You think so? Have a read of this thread: Problem with CC guarantee

trencherpilot

Grumbler, thanks for that, but I've paid, and got no product from the scamming git. I hope Paypal freeze his account but all that will happen is he'll use another false address and account details to open another paypal account.

The main problem is unlike Ebay, Ebid doesn't check your address, or even your name!

greenwich

cressie176 wrote:

When you think of it this is a massive loophole. Imagine if you purchased £1000 of furniture from a UK company who's website redirected you to WorldPay (or similar), but between debiting your card and dispatching the goods went bankrupt. Even though you had bought the furniture with your credit card, you would not be able to get the money back.

Not quite correct I think. Worldpay is a credit card service provided (by the Royal Bank of Scotland I think) to small companies. Other banks, such as HSBC, provide similar services, because a small business neither wants to nor will be allowed to deal direct with the credit card companies. If you pay using these services, you have the protection of the CCA.

If you use your credit card to pay by Paypal or Nochex then you are taking part in two transactions. First you pay money using your credit card to that company. Then you use your account with that company to pay the furniture store. If Paypal or Nochex run off with your money, you are covered against them by the CCA. If the furniture store lets you down, you are not covered by the CCA because you didn't pay them using your credit card.

cressie176 wrote:

If this transaction had taken place over the counter, your credit card company would have been legally obligated to refund the money.

Wrong. As realaledrinker says, your legal position is exactly the same whether you buy online or over the counter.

MarkyMarkD

Greenwich,

Whilst I believed your account of what happens in a credit card/Paypal/merchant tripartite transactions, others have suggested on other threads that our simple understanding is wrong and there IS a CCA liability if the merchant fails to deliver.

I'm still not sure I'm convinced, but there is more than one school of thought on this and I thought I should point it out.

YorkshireBoy

MarkyMarkD wrote:

Whilst I believed your account of what happens in a credit card/Paypal/merchant tripartite transactions, others have suggested on other threads that our simple understanding is wrong and there IS a CCA liability if the merchant fails to deliver.

It would seem to depend on whether the intermediary is an "agent" or an "associate"...

There can be problems if the card is accepted by a different business from the one that provided the goods and services. We see this situation most frequently in connection with timeshare and holiday club membership, where it is not unusual for the timeshare or holiday club company to use the credit card facilities of another business. The business accepting the payment may simply be acting as agent for the supplier, in which case section 75 will not apply. In order for section 75 to apply, the business that accepts the payment and the supplier have to be ‘associates’, as defined in the Consumer Credit Act.

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/31/creditcards-31.htm

Paul_Herring

Back to the original post... what prompted it? T&C's stuff mentioned, but no instance of what went wrong. Beyond a scare story to a Murdoch paper that is.

cressie176

What prompted it...

I purchased 2 year license for a software firewall called Outpost Pro from a company called Agnitum. I'd already been using the firewall for a few years on another PC, but wanted an extra license for my laptop. The transaction was processed by Element5.

Upon installation the firewall stopped other applications from working (I'm a software developer myself, so it's not that I didn't just know how to configure it.) After failing to find a solution I emailed Agnitum asking for support. We bounced emails back and forth for two months, but they never fixed the problem. I asked for a two month extention to the license for the period of time when I had been unable to use the firewall and they refused. This went on for a bit, and finally thinking I could get a refund through my credit card comapny I wrote to NatWest.

NatWest's response was

"...as Element5 is purely the payment method, and they have fulfilled their contract with you, the Bank would be unable to assist on this occaision. In this case the fault lies with the third party for breach of contract and, I regret that the Bank has no direct relationship with this company. Therefore, the Bank would have no line of enquiry through our membership of Visa International in which to persue your claim as your dispute is with a third party and not with the aforementioned retailer."

The software wasn't that expensive, I really wanted to test the system more than anything. Glad I did, because now I know exactly what level protection you get when purchasing goods online.

I believe that this loophole and the fact that it's at the credit card companies discression whether the protect you from overseas purchases is not properly understood by the general public. In looking into things I found out about the Consumer Credit Bill currently going through parliament. By the sound of it things might change to force the credit card companies to protect overseas purchases but I could find nothing about indirect payment via companies like element5.

Hence the reason for my post, and suggesting that readers email their MPs.